The Board of Managers of the 17 Battery Place Condominium v. Twin City Fire…
The Board of Managers of the 17 Battery Place Condominium v. Twin City Fire Insurance Company
- P. Castel
- 1:24-cv-09972
- U.S. District Court · Southern District of New York
- 4
In 17 Battery Place v. Twin City, Judge Castel denied plaintiffs’ request to avoid jurisdictional discovery or send the insurance case back to state court.
The plaintiffs, Twin City Fire Insurance Company, and the proposed additional party Sonder USA, Inc. The plaintiffs remain subject to jurisdictional discovery, and the case remains in federal court while the court determines whether diversity jurisdiction exists.
What happened
The Board of Managers of the 17 Battery Place Condominium and three other plaintiffs sued Twin City Fire Insurance Company over insurance coverage after a ladder fall. The case was removed from state court, and the court required discovery to determine whether the parties were citizens of different states, as required for federal diversity jurisdiction.
The plaintiffs asked to add Sonder USA, Inc., arguing that its policy’s $500,000 self-insured retention supported adding Sonder as a party. The court rejected that proposal because the plaintiffs already had a pending contractual indemnity claim against Sonder in the underlying state case and had not shown that adding Sonder would be legally viable or would destroy diversity jurisdiction.
The court denied the plaintiffs’ request to be relieved from jurisdictional discovery or, alternatively, to return the case to state court. Judge P. Castel directed the parties to meet and confer about streamlining the discovery Twin City needed to amend its removal papers.
The detailed version
- The Board of Managers of the 17 Battery Place Condominium v. Twin City Fire… · No. 1:24-cv-09972
- P. Castel
- Apr. 9, 2025
Background
The plaintiffs originally filed the action in state court, and Twin City Fire Insurance Company removed it to federal court. The court had previously ordered jurisdictional discovery to determine whether federal diversity jurisdiction exists. Diversity jurisdiction generally requires the opposing parties to be citizens of different states, and the citizenship of a limited liability company depends on the citizenship of its members rather than simply where the company was formed.
Three named plaintiffs are limited liability companies, and one of them owns a condominium unit. Four other limited liability companies also own units in the plaintiff condominium. The court explained that determining the citizenship of those entities may require detailed investigation, but it could not proceed to the underlying insurance dispute before determining whether it had subject-matter jurisdiction.
Proposed Joinder of Sonder
The dispute arose from a ladder fall in the lobby of a building leased by Sonder USA, Inc. from Safon Owner, LLC. The plaintiffs allege that they are additional insureds under a policy issued by Twin City to Sonder. They proposed adding Sonder as a defendant, asserting that the policy’s $500,000 self-insured retention made Sonder’s participation necessary.
The court declined to allow the proposed joinder. Before filing this action, the plaintiffs had already asserted a contractual indemnity claim against Sonder in the underlying state-court case, and that claim remained pending. The court stated that it would not allow a non-diverse party to be joined on a duplicative claim merely to destroy diversity jurisdiction. It also found that the plaintiffs had not presented a plausible theory that Sonder’s insurance contract with Twin City imposed additional duties on Sonder toward the plaintiffs. The court explained that a self-insured retention does not make the policyholder a de facto insurer.
The court also noted that the plaintiffs had not demonstrated that joining Sonder would destroy diversity of citizenship. Sonder is a citizen of Delaware and California, while formation under Delaware law alone does not make a limited liability company a citizen of Delaware for jurisdictional purposes.
Ruling
The plaintiffs asked to be relieved of their jurisdictional-discovery obligations or, alternatively, to have the action remanded to state court. The court denied that application. The court had set a 45-day period for jurisdictional discovery ending April 28, 2025, and directed counsel for the plaintiffs and Twin City to meet and confer in good faith about streamlining the discovery Twin City needed to amend its removal petition.
The order addressed jurisdictional discovery and the proposed addition of Sonder; it did not decide the underlying insurance-coverage dispute.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.