SAN FRANCISCO (LN) — U.S. District Judge Jacqueline Scott Corley on Monday ordered Fidelity National Title Insurance Company to explain why a lawsuit brought by Oakhurst Income Fund I LP shouldn't be sent back to California state court, ruling the insurer failed to properly allege the citizenship of both parties needed to establish diversity jurisdiction.
Corley, who oversees the Northern District of California's complex litigation docket, issued the order to show cause on May 11, giving Fidelity until May 18 to demonstrate that complete diversity exists between the parties.
The dispute began when Fidelity removed the case from San Mateo Superior Court to federal court on April 30, asserting that the federal court had original jurisdiction because the plaintiff was a Delaware limited partnership and the defendant was a corporation with its principal place of business in Florida.
However, Corley noted that neither the removal notice nor the plaintiff's complaint properly alleged the specific citizenship required for diversity jurisdiction.
Under federal law, a limited partnership's citizenship is determined by the citizenship of all its partners, not just its state of formation. Similarly, a corporation is a citizen of both its state of incorporation and its principal place of business.
"Absent citizenship allegations related to Plaintiff's members and Defendant's incorporation, the Court cannot conclude there is complete diversity," Corley wrote in the order.
The judge emphasized that the party seeking removal bears the burden of establishing that removal is proper and that the removal statute is strictly construed against removal jurisdiction.
Because the current record does not show that the parties are citizens of different states, the federal court lacks subject matter jurisdiction.
Corley warned that if Fidelity cannot cure the defect, the case will be remanded to state court.
Fidelity did not immediately respond to requests for comment on Monday.
The case is Oakhurst Income Fund I LP v. Fidelity National Title Insurance Company, case number 3:26-cv-03797-JSC.