Danaby Rentals, Inc. v. MT. Hawley Insurance Company

Background

Danaby Rentals, Inc. filed this action in the Southern District of Texas and invoked federal diversity jurisdiction under 28 U.S.C. § 1332. The action was transferred to the Southern District of New York on or about May 6, 2024.

The complaint alleged that Danaby was a Texas corporation with its principal place of business in Hidalgo County, Texas. It described MT. Hawley Insurance Company as a corporation doing business in Texas that could be served through a registered agent there. Although the complaint stated conclusorily that the parties were citizens of different states, it did not identify MT. Hawley’s state of incorporation or principal place of business.

Jurisdictional issue

For diversity-jurisdiction purposes, a corporation is a citizen of both the state where it is incorporated and the state where it has its principal place of business. The court stated that diversity jurisdiction is unavailable when a complaint fails to allege both facts for a corporation. The complaint also alleged MT. Hawley’s activities in Texas, the same state where Danaby was alleged to be a citizen.

Order

The court ordered Danaby Rentals, Inc. to amend its complaint by May 14, 2024, to properly allege MT. Hawley’s citizenship and, if appropriate, establish diversity jurisdiction under 28 U.S.C. § 1332(a). The court stated that it may dismiss the action for lack of subject-matter jurisdiction without further notice if Danaby fails to amend or otherwise properly establish jurisdiction. The order did not itself dismiss the action or decide the parties’ underlying dispute.