Opinion
3:21-cv-647-YY
06-28-2021
ZURICH AMERICAN INSURANCE COMPANY, LIBERTY MUTUAL FIRE INSURANCE COMPANY, ACE AMERICAN INSURANCE COMPANY, a/s/o/ Aimbridge Hospitality LLC, Plaintiffs, v. CENTIMARK CORPORATION, a Pennsylvania corporation, Defendant.
FINDINGS AND RECOMMENDATIONS
YOULEE YIM YOU, UNITED STATES MAGISTRATE JUDGE
FINDINGS
In this subrogation action, plaintiffs allege that defendant CentiMark Corporation (“CentiMark”) negligently performed roof replacement and repairs on the DoubleTree Beaverton hotel in 2017. Compl., ECF 1-2. Plaintiffs, who are insurance companies, provided coverage to Aimbridge Hospitality, LLC (“Aimbridge”) for the hotel, and have paid Aimbridge $1,060,000 pursuant to applicable insurance policies. Id. ¶ 14. Plaintiffs initially filed this suit against CentiMark in Washington County Circuit Court on March 30, 2021. CentiMark removed the case to this court on April 28, 2021, on the basis of diversity jurisdiction. Def.'s Notice Removal, ECF 1.
Plaintiff Ace American Insurance Company (“AAIC”) has filed a motion to remand this case back to Washington Circuit Court. Mot. Remand, ECF 12. AAIC claims it is a Pennsylvania corporation, just like CentiMark, and therefore complete diversity does not exist. For the reasons discussed below, AAIC's motion to remand should be GRANTED and this case should be remanded back to Washington County Circuit Court.
I. Relevant Law Regarding Diversity Jurisdiction
Under 28 U.S.C. § 1332, federal courts have diversity jurisdiction where the matter in controversy is between citizens of different states and the amount in controversy exceeds $75,000. “To demonstrate citizenship for diversity purposes a party must (a) be a citizen of the United States, and (b) be domiciled in a state of the United States.” Lew v. Moss, 797 F.2d 747, 749 (9th Cir. 1986). “[A] corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C. § 1332(c)(1).
For this court to have jurisdiction, there must be complete diversity between the parties. The “general-diversity statute . . . applies only to cases in which the citizenship of each plaintiff is diverse from the citizenship of each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (citations omitted). “[T]he jurisdiction of the court depends upon the state of things at the time of the action brought.” Grupo Dataflux v. Atlas Glob. Group, L.P., 541 U.S. 567, 570 (2004) (quoting Mollan v. Torrance, 9 Wheat. 537, 539 (1824)).
Federal courts construe the removal statute strictly. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941) (“Not only does the language of the Act of 1887 evidence the Congressional purpose to restrict the jurisdiction of federal courts on removal, but the policy of the successive acts of Congress regulating the jurisdiction of federal courts is one calling for the strict construction of such legislation.”). “This is especially so in diversity cases, since concerns of comity mandate that state courts be allowed to decide state cases unless the removal action falls squarely within the bounds Congress has created.” Phillips v. Allstate Ins. Co., 702 F.Supp. 1466, 1467-68 (C.D. Cal. 1989).
“[T]he party asserting diversity jurisdiction bears the burden of proof.” Lew, 797 F.2d at 749 .
II. Analysis
At the time this suit was filed in March 2021, AAIC was incorporated in Pennsylvania. Juliet Schweidel, the secretary and vice president of AAIC, attests that AAIC has been incorporated in Pennsylvania since 1945 and has operated continuously as a Pennsylvania corporation since that time. Schweidel Decl. ¶ 2, ECF 13. Schweidel also attests that AAIC's principal place of business is in Philadelphia, Pennsylvania. Id. ¶ 3. Her testimony is supported by AAIC's annual statement for 2020, which corroborates that AAIC has been incorporated in Pennsylvania since 1945 and its main administrative office is in Philadelphia. Id., Ex. A, ECF 13-1.
CentiMark argues that because ACE Limited merged with Chubb Corporation (“Chubb”), a New Jersey corporation, in 2016, and began operating under Chubb's name, AAIC is a citizen of New Jersey. In support, CentiMark has offered the following evidence:
(1) A January 15, 2016 Insurance Journal article titled ACE and Chubb Are Now One; New Chubb Brand Logo Unveiled. Ho Decl., Ex. A, ECF 15-1. This article states that “ACE Limited completed its acquisition of Chubb” on January 14, 2016. Id. at 2. Chubb's CEO is also quoted as saying, “ACE and Chubb are now one.” Id.
(2) An excerpt from Chubb's website, https://www.chubb.com /de-en/aboutus/ about-history.html, which states that in January 2016, “ACE Limited acquired Chubb.” Id., Ex. B, at 2, ECF 15-2.
(3) An excerpt from Chubb's website, https://www.chubb.com/us-en/about-chubb/chubb-history.html, which states that in 1985, “American Casualty Excess Insurance Company Ltd. and parent ACE Limited form.” Id., Ex. C, at 18, ECF 15-3. It also states that in 2016, “ACE and Chubb become one and adopt the Chubb name.” Id. at 23.
(4) A copy of Chubb's Form S-8 registration statement filed with the Securities and Exchange Commission (“SEC”) in 2014, listing Chubb's state of incorporation as New Jersey and principal executive offices in Warren, New Jersey. Id., Ex. D, at 1, ECF 15-4.
(5) A printout from the SEC's website indicating that Chubb Limited is incorporated in Switzerland and its principal place of business is in Zurich, Switzerland. Id., Ex. E, ECF 15-5.
CentiMark argues that, “[i]n the Ninth Circuit, a company which merges with another, takes on the citizenship of the corporation into which it merged.” Resp. 3, ECF 14 (citing Meadows v. Bicrodyne Corp., 785 F.2d 670, 671-72 (9th Cir. 1986)); Mireles et al v. Wells Fargo, 845 F.Supp.2d 1034, 1046 (C.D. Cal. 2013)). In Meadows, the Ninth Circuit found that diversity jurisdiction existed where a California corporation “merged into” a Delaware corporation and the California Corporations Code provided that “[u]pon merger . . . the separate existence of the disappearing corporation ceases....” 785 F.2d at 671-72 (quoting Cal.Corp.Code § 1107(a)).
Here, there is some evidence that ACE Limited and Chubb became “one.” See Ho Decl., Ex. A, at 2, ECF 15-1 (“ACE and Chubb are now one.”). However, there is also evidence that ACE Limited acquired Chubb and merely adopted the Chubb name. Id.; see also id., Ex. B, at 2, ECF 15-2 (“ACE Limited acquired Chubb.”); id., Ex. C, at 23, ECF 15-3 (“ACE and Chubb become one and adopt the Chubb name.”). In sum, there is insufficient evidence that Chubb is the surviving corporation and ACE Limited is the disappearing corporation such that the analysis in Meadows would apply.
Also, importantly, CentiMark offers no evidence showing how AAIC is related to ACE Limited or how as the result of whatever transaction took place between ACE Limited and Chubb, AAIC disappeared. In fact, AAIC contends that ACE Limited's acquisition of Chubb “did not change AAIC's distinct corporate existence, and it continued to operate and sell products under its own name after its parent company acquired The Chubb Corporation.” Mot. 5, ECF 12. CentiMark offers no evidence to refute that contention.
Regardless, even if AAIC is a subsidiary of Chubb, “in a suit involving a subsidiary corporation, the court looks to the state of incorporation and principal place of business of the subsidiary, and not its parent.” Danjaq, S.A. v. Pathe Commun. Corp., 979 F.2d 772, 775 (9th Cir. 1992) (quoting 1 James W. Moore et al., Moore's Federal Practice ¶ 0.77[2.-5] (2d ed. 1992)). “The only recognized exception to this rule is where the subsidiary is the alter ego of the parent corporation. Under these circumstances, courts view the formal separateness between the two corporations as merely a legal fiction.” Id. But CentiMark has proffered no evidence on that point either.
Thus, CentiMark has failed to meet its burden of establishing that diversity jurisdiction exists. See Lew, 797 F.2d at 749 . Federal jurisdiction “must be rejected if there is any doubt as to the right of removal in the first instance.” Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). Because this court lacks jurisdiction, the case must be remanded back to Washington County Circuit Court.
RECOMMENDATIONS
Plaintiff Ace American Insurance Company's motion to remand (ECF 12) should be GRANTED and this case should be remanded back to Washington County Circuit Court.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Monday, July 12, 2021. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.