California Automobile Insurance Company v. Brasscraft Manufacturing Company
5:19-cv-02259
C.D. Cal.Feb 13, 2020Background
- Plaintiffs are multiple insurers (including USAA, a reciprocal inter-insurance exchange) who allege subrogation claims for property damage caused by defective water-supply lines manufactured/marketed by Basscraft and Masco.
- Defendants are non-California business defendants (Basscraft: Michigan corp; Masco: Delaware LLC with principal place in Michigan).
- Plaintiffs filed the action in Riverside County Superior Court alleging strict products liability, negligence, negligent failure to warn, UCL violations, and breach of implied warranty.
- Defendants removed to federal court invoking diversity jurisdiction; Plaintiffs moved to remand, arguing USAA is an unincorporated association whose citizenship is that of its members.
- USAA submitted an unrebutted declaration stating it has policyholders/members in all 50 states (including Michigan and Delaware).
- The Court assessed whether complete diversity existed, considered extrinsic jurisdictional evidence (the affidavit), denied discovery into member identities, and granted remand; the motion to dismiss was denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether USAA's citizenship is that of its members, destroying diversity | USAA is a reciprocal inter-insurance exchange; its citizenship is the citizenship of each member; it has members in all 50 states | USAA is not alleged to be a citizen of Michigan or Delaware; removal relied on the complaint and defendants had no duty to investigate; affidavit is insufficient | USAA is an unincorporated association whose citizenship is that of its members; affidavit shows members in all 50 states; complete diversity lacking; remand granted |
| Whether the court may consider evidence outside the complaint to decide jurisdiction | Court may consider jurisdictional facts by affidavit or other evidence | Defendants contended removal should be judged only by the complaint | Court held extrinsic evidence (Johnson affidavit) may be considered on jurisdictional facts and did so |
| Whether the Johnson affidavit was sufficient to establish non-diversity | Affidavit from USAA VP states USAA has members in all 50 states, including Michigan and Delaware | Affidavit is vague, authored by a lawyer, and fails to identify members; defendants sought discovery | Affidavit deemed sufficient and unrebutted; no obligation to produce member names; discovery denied |
| Whether plaintiffs are entitled to attorneys’ fees under 28 U.S.C. § 1447(c) | Plaintiffs sought costs and fees for improper removal | Defendants argued removal was reasonable given complaint didn't plead USAA membership | Fees denied because removal was not frivolous and defendants reasonably relied on complaint; remand ordered |
Key Cases Cited
- Abrego v. The Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006) (removing defendant bears burden of establishing removal jurisdiction)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (doubts about removal jurisdiction resolved in favor of remand)
- Hunter v. Philip Morris USA, 582 F.3d 1039 (9th Cir. 2009) (diversity jurisdiction requires complete diversity and amount in controversy threshold)
- Baer v. United Servs. Auto. Ass'n, 503 F.2d 393 (2d Cir. 1974) (reciprocal insurance exchange is an unincorporated association; citizenship is that of policyholders)
- Tuck v. United Servs. Auto. Ass'n, 859 F.2d 842 (10th Cir. 1988) (dismissing nondiverse members does not cure jurisdictional defect when association remains a party)
- Green v. United States, 630 F.3d 1245 (9th Cir. 2011) (jurisdictional facts may be proven by affidavit or other evidence)