Merrimack Mutual Fire Insurance Company v. Omega Flex, Inc.

United States District Court

District of Massachusetts

)

Merrimack Mutual Fire Insurance )

Company, )

)

Plaintiff, )

) Civil Action No.

v. ) 21-10917-NMG

)

Omega Flex, Inc., et al., )

)

Defendant. )

)

MEMORANDUM & ORDER

GORTON, J.

This case arises out of a residential fire that occurred on

August 17, 2018 in New Salem, Massachusetts. Merrimack Mutual

Fire Insurance Company (“Merrimack” or “plaintiff”), as subrogee

of the insured owner of the premises, brings claims for

negligence and breach of implied warranty of merchantability.

Plaintiff asserts that the fire was caused by defective

corrugated stainless-steel tubing manufactured and distributed

by Omega Flex, Inc. (“Omega”) and a defective gas appliance

connector manufactured and distributed by Dormont Manufacturing

Company (“Dormont”).

Merrimack commenced a civil action in Massachusetts

Superior Court for Essex County in April, 2021 seeking to

recover based on indemnity payments it provided to its insured.

In June, 2021, Omega filed a Notice of Removal in this Court on

the basis of complete diversity of citizenship pursuant to 28

U.S.C. § 1332(a), to which Dormont consented. Pending before

this Court is Merrimack’s motion to remand.

I. Motion to Remand

A. Legal Standard

A defendant may remove a civil lawsuit initiated in state

court to the United States District Court for the district where

the state case was filed so long as that court has “original

jurisdiction” over the relevant case. 28 U.S.C. § 1441(a). When

removal is based on a federal court’s diversity jurisdiction

under 28 U.S.C. § 1332(a), however, there is an exception to

that general rule, i.e. that such actions

may not be removed if any of the parties in interest

properly joined and served as defendants is a citizen of

the State in which such action is brought.

28 U.S.C. § 1441(b)(2). This is known as the forum-defendant

rule. See Novak v. Bank of New York Mellon Tr. Co., NA., 783

F.3d 910, n.1 (1st Cir. 2015).

For jurisdictional purposes, a domestic corporation is

deemed a citizen of both the state where it is incorporated and

the state in which it maintains its principal place of business,

28 U.S.C. § 1332(c)(1), as of the date of the lawsuit’s

commencement, see ConnectU LLC v. Zuckerberg, 522 F.3d 82, 91

(1st Cir. 2008). A corporation maintains its principal place of

business at its “nerve center,” the location from which the

corporation’s “officers direct, control, and coordinate the

corporation’s activities.” Hertz Corp. v. Friend, 559 U.S. 77,

92-93 (2010). Generally, this will

be the place where the corporation maintains its

headquarters—provided that the headquarters is the

actual center of direction, control, and

coordination...and not simply an office where the

corporation holds its board meetings.

Id. at 93. The nerve center will not necessarily be where “the

bulk of a company’s business activities visible to the public

take place” but rather where the “top officers [who] direct

those activities” sit. Id. at 96; see also Harrison v. Granite

Bay Care, Inc., 811 F.3d 36, 41 (1st Cir. 2016) (defining “nerve

center” for diversity jurisdiction as “the place where the buck

stops”).

The party invoking federal jurisdiction bears the burden of

persuasion, see Lujan v. Defenders of Wildlife, 504 U.S. 555,

561 (1992), and must support its allegations with “competent

proof,” Hertz Corp., 559 U.S. at 96–97.

B. Application

The record in this case raises questions concerning the

location of the corporate officers who direct, control and

coordinate Dormont’s corporate activities. Plaintiff asserts

that the relevant place is North Andover, Massachusetts, causing

defendant to have the same domicile as Merrimack and thus

defeating diversity jurisdiction. Omega and Dormont demur that

Nicole Solomon (“Solomon”), Dormont’s General Manager, controls

the corporation from Pennsylvania, a state in which no other

party proclaims to have as its domicile.

The Court finds that plaintiff has its principal place of

business in Pennsylvania because Solomon directs, controls and

coordinates the company’s activities from that location.

Specifically, from Pennsylvania, she oversees the company’s

sales, product management, commercial operations and

engineering. Furthermore, Pennsylvania is where more than 100

of Dormont’s employees are located, all of Dormont’s products

are manufactured and assembled, and from which Dormont’s

products are distributed. Dormont was founded and has

maintained its headquarters for the past 75 years in

Pennsylvania and it “is the actual center of direction, control,

and coordination” of the company. Hertz Corp., 559 U.S. at 93.

Dormont’s failure to object to plaintiff’s representation

in the original complaint that corporate filings locate

Dormont’s corporate officers in Massachusetts does not dissuade

the Court. “[R]un-of-the-mill corporate filings” are

insufficient to establish a corporation’s principal place of

business for diversity purposes. Harrison, 811 F.3d at 41

(citing Hertz Corp., 559 U.S. at 97); see also Transp. & Storage

Sol. Inc. v. KLT Indus., Inc., 2014 WL 5320174, at *3 (D. Mass.

2014) (“[R]epresentations made in annual reports or other

documents filed with a secretary of state...do not bind a court

for purposes of diversity jurisdiction.”). Though Solomon does

not provide an explanation for those filings in her affidavit,

Dormont has provided sufficient evidence that Pennsylvania is

the company’s nerve center.

Where, as here,

there is no evidence that the integrity of the

corporate form has been violated, the separate

corporate identities of a parent and subsidiary should

be honored when determining either one’s principal

place of business

Taber Partners, I v. Merit Builders, Inc., 987 F.2d 57, 61 (1st

Cir. 1993); see Celli v. Greenwich Ins. Co., 478 F. Supp. 3d 93,

97 (D. Mass. 2020) (“It would be inappropriate to look to the

parent corporation when the corporate operation of

the subsidiary is maintained as a separate corporate identity.”)

(internal citations omitted). The citizenship of Dormont’s

parent company, Watts Water Technologies, Inc., is therefore

irrelevant.

Defendant has established that it is domiciled in

Pennsylvania, rendering it diverse from the plaintiff.

Accordingly, the Court has diversity jurisdiction over this

case.

ORDER

For the foregoing reasons, the motion of plaintiff

Merrimack to remand (Docket No. 12) is DENIED.

So ordered.

/s/ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated October 28, 2021