LOCATION OF MAJORITY OF BOARD OF DIRECTORS AND MEETINGS IS INSUFFICIENT EVIDENCE OF A CORPORATION’S “NERVE CENTER”
In a suit between an insurer and Louisiana-based reinsurance intermediaries over the return of an excess deposit on a reinsurance contract, the court sua sponte found that the insurer failed to demonstrate diversity of citizenship under the recently established “nerve center” test and dismissed for lack of subject matter jurisdiction. While the insurer had alleged in the complaint that it was domiciled in Nevada, it failed to allege the location of its principal place of business. The court found that information regarding where the majority of the insurer’s board of directors is located and holds meetings is insufficient under the “nerve center” test. Rather, the court held, the nerve center was the “single place” where direction, control and coordination originates. The evidence showed that to be Louisiana, the state where the insurer’s president, secretary, and director were located. Health Facilities of California Mutual Insurance Co., Inc. v. British American Insurance Group, Ltd., Case No. CV 10-3736 (USDC C.D. Cal. Jan. 11, 2011).
This post written by Michael Wolgin.
