The Roches, citizens of Virginia, sued Lincoln, INVESCO, and the State of Wisconsin Investment Board over mold contamination in their apartment and related losses. Their complaints named Lincoln as the manager of the apartment complex, and Lincoln admitted it managed the property. The defendants removed the case to federal court alleging complete diversity, identifying Lincoln as a Texas corporation with its principal place of business in Texas, while no Virginian was joined and served as a defendant. Only after summary judgment did the Roches argue that federal jurisdiction was lacking because some unidentified Lincoln-affiliated Virginia entity might be the real party in interest.
Issue
In a removed diversity case, must the removing defendant disprove the existence of an unnamed affiliated entity whose presence as a defendant might destroy diversity? More specifically, can an entity not named or joined as a defendant nonetheless be treated as the real party in interest so as to defeat removal jurisdiction?
Rule
For removal based on diversity, the relevant inquiry is whether there is complete diversity between all named plaintiffs and all named defendants and whether any properly joined and served defendant is a citizen of the forum state. A properly joined defendant need not negate the existence of a potential additional defendant, and a corporation's citizenship is determined by its state of incorporation and principal place of business under 28 U.S.C. § 1332(c)(1), not by the citizenship of its affiliates.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Nina Alvarez, a citizen of Colorado, sued Harbor Crest Management, Inc. in Colorado state court for injuries allegedly caused by unsafe conditions in her apartment building in Denver. Harbor Crest is incorporated in Delaware and has its principal place of business in Arizona; in its answer, it admitted managing the building. After removal, Nina argued remand was required because discovery suggested an affiliated Colorado entity may also have participated in maintenance.
How should the federal court rule on Nina's motion to remand?
Explanation. The majority held that removal based on diversity is proper when there is complete diversity between all named plaintiffs and all named defendants and no properly joined and served defendant is a citizen of the forum state. A removing defendant is not required to negate the existence of some unnamed possible defendant whose presence would destroy diversity. Because Harbor Crest is a named defendant, is diverse from Nina, and no Colorado defendant was joined and served, remand should be denied.