Unreported / Non-Citable
Background
This action concerns coverage under two insurance policies that Progressive Michigan Insurance Company and its co-plaintiffs issued to National Capital Logistics LLC and Venita K Logistics LLC, and whether the insurers must defend the insured parties in an underlying lawsuit. That suit, called the Carmack Case, was filed by Aculliance Holdings, Inc. on August 11, 2025, in the Northern District of California. It alleges state-law violations and violations of the federal Carmack Amendment, 49 U.S.C. § 14706, arising from cargo lost while the insured parties had agreed to deliver it from California to Florida.
The insurers filed this action on January 6, 2026, in Sacramento County Superior Court. They sought only declarations that they have no duty to defend or indemnify various parties in the Carmack Case under the policies. Aculliance removed the case on January 14, 2026, invoking diversity, federal question and supplemental jurisdiction. The insurers moved to remand. According to their counsel, Aculliance conceded during meet-and-confer efforts that diversity jurisdiction was lacking, and its opposition did not rely on it.
Aculliance argued that the Carmack Amendment broadly preempts state-law claims about loss of goods in interstate shipment, that the dispute necessarily implicates the federal scheme governing cargo loss, and, alternatively, that supplemental jurisdiction applied. The court decided the motion on the papers.
The Court’s Holding
Judge Dena Coggins granted the motion and remanded the case to Sacramento County Superior Court under 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. Applying the well-pleaded complaint rule, and the rule that removal statutes are strictly construed with any doubt resolved in favor of remand, the court found that the complaint seeks only declaratory relief about duties under two insurance policies. Because construction of an insurance policy is governed by state law, the complaint contains only state-law claims and no federal question appears on its face.
The court rejected the Carmack Amendment arguments. That statute preempts state common-law claims against carriers for loss of or damage to goods shipped in interstate commerce, but it was not intended to displace actions against non-carriers, and the insurers assert no claim for damaged goods. The court found Aculliance's cases inapposite. In Atlantic Mutual and Nichols the insurer had accepted coverage and sued carriers on the insured's behalf, so there was no coverage dispute, and White was a suit against a carrier for damaged goods. Citing Millers National Insurance Co. v. Axel's Express, the court added that even if resolving coverage involves determinations related to the Carmack Amendment, that alone does not confer federal question jurisdiction. Interpreting the policies does not necessarily require resolving a federal question or determining liability in the Carmack Case.
Supplemental jurisdiction under 28 U.S.C. § 1367 also failed, because it requires a hook of original jurisdiction in the same civil action and none existed. That remained true even if the coverage issues arise from the same transaction and facts as the Carmack Case. The court did not address diversity. It directed the Clerk to correct the spelling of Aculliance on the docket and to close the case.
Key Takeaways
- A removed insurance coverage action seeking declarations about duties to defend and indemnify arises under state contract law and presents no federal question on the face of the complaint.
- The Carmack Amendment's preemption of claims against carriers for cargo loss did not reach an insurers' declaratory action that seeks no remedy for damaged goods.
- That a coverage ruling may involve determinations related to federal law in an underlying case does not, by itself, confer federal question jurisdiction.
- Supplemental jurisdiction cannot support removal without an independent basis for original jurisdiction, even when a related federal action is pending.
- The remand order does not decide whether the insurers owe a duty to defend or indemnify; that question remains for the Sacramento County Superior Court.
Why It Matters
The order is a short, practical application of settled limits on removal. A party resisting remand cannot turn a state-law coverage dispute into a federal case by pointing to federal law that governs the underlying liability claims. The removing party also carries the burden of establishing jurisdiction by a preponderance of the evidence.
The ruling is an unreported federal district court order and not a decision on the merits of the coverage dispute. The coverage questions remain open in state court, and the Carmack Case in the Northern District of California is unaffected. The remand rests solely on lack of subject matter jurisdiction under § 1447(c).