BEARBONES, INC., d/b/a Morningside Bakery and AMARAL ENTERPRISES LLC, Plaintiffs, Appellants,
PEERLESS INDEMNITY INSURANCE COMPANY, Defendant, Appellee.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Katherine A. Robertson, U.S. Magistrate
Richard W. Gannett, with whom Gannett & Associates was on
brief, for appellants.
William O. Monahan, with whom Edward A. Bopp and Monahan
& Associates, P.C., were on brief, for appellee.
Thompson, Selya, and Barron, Circuit Judges.
case, which floats to the surface in the water-logged
aftermath of a ruptured pipe in a commercial bakery, pits two
affiliated insureds against their insurer. Although the
insureds (qua appellants) proffer several assignments of
error, we are held at the starting line by an apparent
jurisdictional barrier. Concluding, as we do, that additional
factfinding may be enlightening, we remand to the district
court (albeit retaining appellate jurisdiction).
facts are undisputed. Bearbones, Inc. and Amaral Enterprises
LLC (collectively, the insureds or the appellants) operated
and owned a commercial bakery in Pittsfield, Massachusetts.
At the times material hereto, defendant-appellee Peerless
Indemnity Insurance Company had in effect a commercial
business insurance policy covering the bakery. A pipe
ruptured on February 19, 2013, causing a number of covered
parties were unable to settle the ensuing insurance claims.
Consequently, the appellants commenced a civil action against
Peerless in the United States District Court for the District
of Massachusetts. The complaint identified Bearbones as a
Massachusetts corporation with its principal place of
business there; identified Amaral Enterprises as a
Massachusetts limited liability company with its sole member
residing in New York; and identified Peerless as an Illinois
corporation with its principal place of business in that
state. Based on these allegations and the claimed amount in
controversy, the appellants invoked federal diversity
jurisdiction. See 28 U.S.C. § 1332.
did not challenge the propriety of diversity jurisdiction;
instead, it simply answered the complaint. In its answer,
Peerless admitted that it was an Illinois corporation, but
averred that its principal place of business was located in
Massachusetts. Peerless filed a corporate disclosure
statement that same day, see Fed.R.Civ.P. 7.1, which
appeared to confirm that its principal place of business was
the discrepancy relating to Peerless's principal place of
business seems to have gone unnoticed by either the parties
or the district court. Thus, the case proceeded in the
ordinary course. Along the way, the parties consented to
allow a magistrate judge to preside. See 28 U.S.C.
§ 636(c); Fed.R.Civ.P. 73. Following considerable
skirmishing, not relevant here, the magistrate judge granted
Peerless's motion for summary judgment, see
Fed.R.Civ.P. 56(a), and the appellants filed a notice of
the appeal was fully briefed and an argument date was set, we
noticed an apparent jurisdictional glitch (described below).
Recognizing that "[i]n the absence of jurisdiction, a
court is powerless to act," Am. Fiber &
Finishing, Inc. v. Tyco Healthcare Grp.,
LP, 362 F.3d 136, 138 (1st Cir. 2004), we directed the
parties to show cause why the case should not be sent back to
the district court with instructions to vacate the judgment
and dismiss the action without prejudice for want of
said, the appellants filed this action based on the putative
existence of diversity jurisdiction. Diversity jurisdiction
requires both an amount in controversy in excess of $75, 000
and complete diversity of citizenship between all plaintiffs,
on the one hand, and all defendants, on the other hand.
See 28 U.S.C. § 1332(a); Barrett
v. Lombardi, 239 F.3d 23, 30-31 (1st Cir.
2001); see also Strawbridge v.
Curtiss, 7 U.S. (3 Cranch) 267, 267 (1806). The
allegations of the complaint satisfy the amount in
controversy requirement, and we will make no further
reference to that component of the jurisdictional calculus.
The problem lies with diversity of citizenship.
of citizenship is measured by the "facts that existed at
the time of filing-whether the challenge be brought shortly
after filing . . . or even for the first time on
appeal." Grupo Dataflux v.
Atlas Glob. Grp., L.P., 541 U.S. 567, 570-71 (2004);
see ConnectU LLC v. Zuckerberg,
522 F.3d 82, 91 (1st Cir. 2008) (citing Mollan
v. Torrance, 22 U.S. (9 Wheat.) 537, 539
(1824)). Special rules guide the citizenship inquiry for
corporations. Congress has declared (by a statute enacted in
1958 and amended in 2011) that "a corporation shall be
deemed to be a citizen of every State . . . by which it has
been incorporated and of the State . . . where it has its
principal place of business." 28 U.S.C. §
1332(c)(1) (2011). Although Congress did not give any
interpretive guidance as to how to identify a
corporation's principal place of business, the Supreme
Court has filled this gap, instructing lower courts to use
the "nerve center" test. Hertz Corp.
v. Friend, 559 U.S. 77, 93 (2010). For
purposes of this test, "[a] corporation's 'nerve
center' . . . is the particular location from which its
'officers direct, control, and coordinate the
corporation's activities.'" Harrison
v. Granite Bay Care, Inc., 811 F.3d 36, 40
(1st Cir. 2016) (quoting Hertz, 559 U.S. at 92-93).
A corporation's "nerve center" is often the
location of its headquarters. Id.
with the neurological metaphor, "a corporate
'brain' . . . suggests a single location."
Hertz, 559 U.S. at 95. Seen in this light, the test
demands facts sufficient to "find the one location from
which a corporation ...