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Double J Realty, LLC v. Peerless Indemnity Insurance Co.

United States District Court, D. Connecticut

March 18, 2016

DOUBLE J REALTY, LLC, Plaintiff,
v.
PEERLESS INDEMNITY INSURANCE COMPANY, and LIBERTY MUTUAL INSURANCE COMPANY, Defendants.

ORDER REGARDING SUBJECT MATTER JURISDICTION

CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE

I. BACKGROUND

Plaintiff Double J Realty, LLC ("Double J") brings this action to recover damages under a property insurance policy issued by defendants Peerless Insurance Company ("Peerless") and Liberty Mutual Insurance Company ("Liberty Mutual") (collectively "Defendants"). That policy, bearing the number 3674399, covered the period of June 1, 2013 to June 1, 2014, and allegedly provided property loss coverage for a building owned by Double J which suffered a ceiling collapse on December 11, 2013.[1] Double J submitted a claim to Defendants to recover damages for the building, but that claim was allegedly rejected by Defendants by letter, dated December 19, 2013, stating that "[t]he collapse was not the result of a specified cause of loss." Doc. 1, at 9 (¶ 9).

Double J originally commenced this action against Peerless and Liberty Mutual in Connecticut Superior Court, Judicial District of New London, on or about December 3, 2015. In that state court action, Plaintiff brought two claims against Defendants: (1) breach of contract and (2) violation of Connecticut's Unfair Insurance Practices Act ("CUIPA"), Conn. Gen. Stat. § 38a-315, et seq. In the "Statement of Amount in Demand, " Plaintiff asserted that "[t]he amount, legal interest or property in demand is Fifteen Thousand ($15, 000.00) Dollars or more, exclusive of interest and costs." Doc. 1, at 13.

Defendants thereafter removed this action from Connecticut Superior Court to the United States District Court by filing a "Notice of Removal" [Doc. 1] on January 7, 2016. In that Notice, Defendants asserted that removal of the action was pursuant to 28 U.S.C.§§ 1441 and 1446, claiming that "[t]he district court for the United States has original jurisdiction over this matter pursuant to diversity [of citizenship], " citing 28 U.S.C. § 1332(a) (1). As set forth below, upon careful review of the Complaint, the Court has determined that Defendants have failed to plead or present a jurisdictional basis for this case to proceed in federal court. Accordingly, additional submissions will be required to establish federal subject matter jurisdiction.

II. DISCUSSION

A. Subject Matter Jurisdiction

Federal district courts are courts of limited jurisdiction under Article III, Section 2 of the United States Constitution. See, e.g., Chicot Cnty. Drainage Dist. Baxter State Bank, 308 U.S. 371, 376 (1940), reh'g denied, 309 U.S. 695 (1940). The question of subject matter jurisdiction is fundamental so that a court must raise the issue sua sponte, of its own accord, when the issue is not addressed by the parties. Mansfield, Coldwater & Lake Michigan Rwy. v. Swan, 111 U.S. 379, 382 (1882). See also Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007); Univ. of South Alabama v. American Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) ("a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking").

In general, if subject matter jurisdiction is lacking, the action must be dismissed. See Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). See also, Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501, 503 (2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any party or the court sua sponte, at any stage of the proceedings, may raise the question of whether the court has subject matter jurisdiction; and, if it does not, dismissal is mandatory.").

However, if an action has been removed, as in this case, and "at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C.A. § 1447(c). See, e.g., Speranza v. Leonard, 925 F.Supp.2d 266, 269 (D.Conn. 2013) ("once the Court determines that it does not have subject matter jurisdiction, a remand is mandatory under 28 U.S.C.A. § 1447(c)") (citation and internal quotation marks omitted); Malanca v. Worth, No. 3:11 cv0056(SRU)(WIG), 2011 WL 941381, at *2 (D.Conn. Feb. 8, 2011) ("Lack of removal jurisdiction may be raised by the Court sua sponte" and upon determination that court lacks subject matter jurisdiction, "a remand is mandatory"); Vasura v. Acands, 84 F.Supp.2d 531, 540 (S.D.N.Y.2000) (remanding case to state court, concluding "because diversity jurisdiction was lacking at the time of removal, this case was improvidently removed").

In general, a federal district court may exercise subject matter jurisdiction over an action only if there is either: (1) "federal question" jurisdiction, applicable to "all civil actions arising under the Constitution, laws, or treaties of the United States, " 28 U.S.C. § 1331; or (2) there exists "diversity of citizenship, " complete diversity of citizenship between the plaintiff and all defendants and the amount in controversy exceeds "the sum or value of $75, 000, exclusive of interest and costs, " 28 U.S.C. § 1332(a).[2] See also Strawbridge v. Curtiss, 3 Cranch 267, 1806 WL 1213, at *1 (February Term 1806); Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir.2000) (delineating two categories of subject matter jurisdiction).

With respect to timing of citizenship, "[i]n an action in which jurisdiction is premised on diversity of citizenship, diversity must exist at the time the action is commenced, " Universal Licensing Corp. v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002). In addition, where removal is based on diversity of citizenship, the parties must be diverse at the time of removal as well as at the time the state court complaint was filed. See United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994) (The "usual rule is that removability is determined from the record as of the time the petition for removal is filed but where [the] basis of removal is diversity then diversity of citizenship must exist at [the] time [the] action was filed in state court as well as at [the] time of removal") (citing 14A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3723, at 311–12 (1990)). See also Albstein v. Six Flags Entm't Corp., No. 10 Civ. 5840 (RJH), 2010 WL 4371433, at *2 (S.D.N.Y. Nov. 4, 2010) ("Where removal is predicated on diversity, the parties must be diverse both at the time of removal and at the time the state court complaint was filed.") (citation omitted).

In the case at bar, there appears to be no basis for the Court to exercise "federal question" jurisdiction – i.e., no claim arising under the Constitution or federal law.[3] The sole jurisdictional basis upon which Defendants removed this action is "diversity of citizenship." However, as set forth below, the parties – Plaintiff in its complaint and Defendants in their removal notice – have plead insufficient ...


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