Mid-Continent Casualty — Court orders insurer to correct deficient diversity allegations

Unreported / Non-Citable

Background

Mid-Continent Casualty Company sued Federal Insurance Company and invoked diversity jurisdiction under 28 U.S.C. § 1332 as the sole basis for federal subject-matter jurisdiction.

The complaint alleged that Mid-Continent was organized under Ohio law and had its principal place of business in Oklahoma, while Federal was organized under Indiana law and had its principal place of business in New Jersey. It did not, however, state whether either insurance company was a corporation or an unincorporated entity.

The Court’s Holding

The court held that the complaint did not adequately allege the parties’ citizenship for diversity purposes. A corporation is a citizen of its state of incorporation and the state of its principal place of business, but an unincorporated association has the citizenship of each of its members. Merely describing the parties as insurance companies organized under particular states’ laws did not establish which rule applied.

Because Mid-Continent bore the burden of establishing federal jurisdiction, the court ordered it to file a written response properly pleading the citizenship of every party by October 8, 2025. The court did not dismiss the case at this stage but warned that failure to comply would result in a recommendation of dismissal under Federal Rule of Civil Procedure 12(h)(3).

Key Takeaways

• A party invoking diversity jurisdiction must identify each entity’s legal form, not merely its state of organization and principal place of business.
• If a party is unincorporated, the pleading must allege the citizenship of each member.
• The court may examine subject-matter jurisdiction on its own initiative and require deficient jurisdictional allegations to be corrected.

Why It Matters

The order underscores that conclusory allegations about where business entities are organized and headquartered may not establish complete diversity. Counsel must determine and plead whether each entity is incorporated or unincorporated and apply the corresponding citizenship test.

Although the court allowed Mid-Continent an opportunity to cure the deficiency, its warning of a dismissal recommendation shows that incomplete entity-citizenship allegations can place an otherwise viable federal action at risk.