McClellon v. Lemonade Insurance Company

Background

Donte McClellon, representing himself, sued Lemonade Insurance Company (LIC) and Lemondate Insurance Agency LLC (LIA). He asserted claims including breach of contract, breach of the implied promise of good faith, unfair claims handling, fraud and misrepresentation, violations of New York statutes, invasion of privacy, forgery, identity theft, oppression, and malice. He sought damages, attorney fees, and injunctive relief.

McClellon alleged that the defendants breached an insurance contract involving his property and released a claims video to the government. He alleged that the video contained or was used to identify him, that the defendants collected and used biometric information, and that their conduct contributed to his detention and the denial of his insurance claims. He also alleged that the defendants represented that they did not use biometric data and that he had overpaid for the insurance policies.

McClellon initially alleged that he was a New York citizen and that both defendants were incorporated and had their principal places of business in New York. In a later supplement, he stated that his pre-incarceration domicile was Washington and again identified New York as the defendants’ state. He invoked diversity jurisdiction, which allows a federal court to hear state-law claims when the parties are citizens of different states and more than $75,000 is in controversy.

Subject-Matter Jurisdiction

The court explained that complete diversity requires that no plaintiff share a state of citizenship with any defendant. It also explained that an LLC’s citizenship is determined by the citizenship of each of its members, rather than simply by its place of incorporation or principal place of business.

The court held that McClellon’s complaint and supplement did not establish complete diversity. Even assuming that McClellon was a Washington citizen and LIC was a New York citizen, McClellon had not alleged the citizenship of LIA’s members. The court therefore could not determine whether McClellon and LIA were citizens of different states.

The court separately found that McClellon had not provided non-conclusory facts showing that the amount in controversy exceeded $75,000. His complaint requested $120,000 in damages, and his supplement stated that the jurisdictional amount was satisfied, but he did not provide supporting facts explaining how the alleged claims reached the required amount.

Under Federal Rule of Civil Procedure 12(h)(3), the court dismissed the action for lack of subject-matter jurisdiction. The court granted McClellon 30 days to replead by filing an amended complaint with facts showing that the parties are completely diverse and that the state-law claims satisfy the $75,000 jurisdictional requirement. The court also stated that any defendants named in the amended complaint could not be citizens of the same state as McClellon. The amended complaint should also provide an address where each defendant can be served.

Other Rulings

The court construed McClellon’s supplement as requesting reconsideration of the court’s September 11, 2025 order, which had denied his requests concerning service and appointed or requested pro bono counsel. The court denied reconsideration because McClellon did not show that the court had overlooked controlling law or facts. The court also denied his requests for attorney fees.

The court certified under 28 U.S.C. § 1915(a)(3) that an appeal would not be taken in good faith and denied permission to proceed without prepaying fees for an appeal. It directed the Clerk of Court to keep the matter open until a civil judgment is entered. If McClellon does not file an amended complaint within 30 days, the court will direct entry of a civil judgment dismissing the action for lack of subject-matter jurisdiction.

Ruling

Judge Laura Taylor Swain dismissed the action for lack of subject-matter jurisdiction, granted leave to replead within 30 days, denied reconsideration of the earlier order, denied attorney fees, and denied permission to proceed without prepaying appellate fees.