Unreported / Non-Citable
Background
On July 31, 2026, WJK Development Co. filed a complaint in Los Angeles County Superior Court against Ategrity Specialty Insurance Company and Does 1 through 10, asserting state law insurance claims. On September 25, 2026, Ategrity removed the action to the United States District Court for the Central District of California based on diversity jurisdiction under 28 U.S.C. § 1332(a). The notice of removal asserted that the amount in controversy exceeded $75,000, but the complaint itself did not specify a damages amount.
The court reviewed the notice of removal and the attached complaint sua sponte to determine whether subject matter jurisdiction existed. Citing the well-established principle that federal courts are courts of limited jurisdiction and that the removing defendant bears the burden of establishing removal is proper, the court evaluated whether diversity jurisdiction requirements were satisfied. The court noted that any doubts regarding jurisdiction must be resolved in favor of remand. The court emphasized that federal courts have a duty to examine jurisdiction sua sponte before proceeding to the merits, even in the absence of a challenge from any party, citing Arbaugh v. Y&H Corp. and Ruhrgas AG v. Marathon Oil Co.
The Court’s Holding
The court held that it lacked subject matter jurisdiction because the defendant failed to meet its burden of proving by a preponderance of the evidence that the amount in controversy exceeded $75,000. The complaint did not set forth a specific damages amount, and the defendant merely cited the plaintiff's requested forms of relief as ipso facto proof of the jurisdictional amount. The court found these unsubstantiated assertions insufficient to overcome the strong presumption against removal jurisdiction, citing Ninth Circuit precedent requiring the removing party to set forth underlying facts supporting the jurisdictional amount.
Because the defendant did not competently allege facts supplying diversity jurisdiction, the court concluded that removal was improper under 28 U.S.C. § 1441(a) and Caterpillar Inc. v. Williams. The court ordered the action remanded to the Superior Court of the State of California, County of Los Angeles, pursuant to 28 U.S.C. § 1447(c), and directed the clerk to send a certified copy of the order to the state court. The court also noted that the order was not intended for publication or submission to online services such as Westlaw or Lexis.
Key Takeaways
- The removing defendant bears the burden of proving the amount in controversy by a preponderance of the evidence when it is not facially evident from the complaint.
- Unsubstantiated assertions that the requested relief meets the jurisdictional threshold are insufficient to establish diversity jurisdiction.
- Any doubt regarding the existence of subject matter jurisdiction must be resolved in favor of remanding the action to state court.
- A complaint that does not specify a damages amount cannot support removal based on diversity jurisdiction without additional factual proof from the removing party.
- The court has a duty to examine jurisdiction sua sponte before proceeding to the merits, even absent a challenge from any party.
Why It Matters
This order reinforces the strong presumption against removal jurisdiction and the defendant's burden to affirmatively establish federal jurisdiction with concrete evidence. It serves as a reminder that boilerplate allegations in a notice of removal are insufficient when the complaint does not specify damages, and that courts will remand cases where the jurisdictional amount is not clearly established. The decision aligns with Ninth Circuit precedent emphasizing that doubts about removal jurisdiction must be resolved in favor of state court adjudication.
The order also illustrates the practical consequences of failing to provide factual support for the amount in controversy in a notice of removal. By remanding the case, the court ensured that the state court would adjudicate the insurance claims, consistent with the principle that federal courts are courts of limited jurisdiction. The decision underscores the importance of careful pleading and evidentiary support when invoking diversity jurisdiction.