Klossner v. Zurich American Insurance Company et al

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DAVID KLOSSNER, Individually
and d/b/a KDA REALTY LLC,
§
§
§
Plaintiff, 	§
§
V. 	§ 	No. 3:25-cv-3251-G-BN
§
ZURICH AMERICAN INSURANCE
COMPANY and AMERICAN
ZURICH INSURANCE COMPANY,
§
§
§
§
Defendants. 	§
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
This case has been referred to the undersigned United States magistrate judge
for pretrial management pursuant to 28 U.S.C. § 636(b) and a standing order of
reference from Senior United States District Judge A. Joe Fish. See Dkt. No. 3.
Pro se Plaintiff David Klossner, individually and doing business as KDA Realty
LLC, filed a petition in state court against Defendant Zurich American Insurance
Company (“ZAIC”) and Defendant American Zurich Insurance Company (“AZIC”)
(collectively, “Defendants”). See Dkt. No. 1.
Defendants removed the action to federal court on the basis of diversity
jurisdiction under 28 U.S.C. § 1332. See id.
On December 1, 2025, Klossner filed a Motion to Remand the action back to
state court based on alleged jurisdictional and procedural defects. See Dkt. No. 5.
Considering Defendants’ notice of removal, the undersigned recommends that
the Court should remand this action for lack of subject-matter jurisdiction. But if,
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within the 14-day period for objections, Defendants file a written response that
sufficiently explains, or provide evidence of, Klossner’s citizenship, the Court should
retain jurisdiction over this lawsuit and, for the reasons explained below, deny the
Motion for Remand [Dkt. No. 15].
Legal Standards
A defendant may remove an action filed in state court to federal court if the
action is one that could have originally been filed in federal court. See 28 U.S.C. §
1441(a).
Because Defendants chose to remove this lawsuit to federal court, they
undertook the burden to establish federal jurisdiction. See St. Paul Reinsurance Co.
v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (“The burden of establishing subject
matter jurisdiction in federal court rests on the party seeking to invoke it.” (cleaned
up)).
And the federal courts’ jurisdiction is limited, so they generally may only hear
a case of this nature if it involves a question of federal law or where diversity of
citizenship exists between the parties. See 28 U.S.C. §§ 1331 & 1332.
Subject-matter jurisdiction exists under 28 U.S.C. § 1332 only when there is
complete diversity of citizenship between the parties and the amount in controversy
exceeds $75,000. See Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir.
2014). “Complete diversity requires that all persons on one side of the controversy be
citizens of different states than all persons on the other side.” Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (citing 28 U.S.C. § 1332).
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The party invoking jurisdiction under Section 1332 is responsible for showing
that the parties are completely diverse. See Menchaca v. Chrysler Credit Corp., 612
F.2d 507, 511 (5th Cir. 1980); see also Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d
1254, 1259 (5th Cir. 1988) (“The burden of proving that complete diversity exists rests
upon the party who seeks to invoke the court’s diversity jurisdiction.”).
And, “[i]f at any time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c).
Analysis
I. 	The Court should remand this lawsuit for lack of subject-matter
jurisdiction 	because 	Defendants 	have 	not 	properly 	alleged 	the
citizenship of the parties.
Defendants’ notice of removal alleges that (1) Klossner “is a citizen and
resident of Norton, Ohio”; (2) “Klossner is also the sole member of KDA Realty, LLC”;
(3) ZAIC “is a New York corporation” “with a statutory home office located” in New
York and “its principal place of business located” in Illinois; and (4) AZIC “is an
Illinois corporation” “with a statutory home office and its principal place of business”
in Illinois.” Dkt. No. 1 at 3.
Defendants also allege that, in his petition, Klossner “seeks monetary relief of
$2.3 million for alleged property damage.” Dkt. No. 1 at 4. The petition, which
Defendants attached to their notice of removal, states that Klossner “seeks judgment
for the full $2.3 million claimed loss, less any credits for sums recovered from other
insurers, plus statutory interest and exemplary damages.” Dkt. No. 1-3 at 32.
And, so, as to the amount in controversy, Defendants have sufficiently alleged
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that it exceeds the $75,000 threshold.
For diversity jurisdiction purposes, “a corporation shall be deemed to be a
citizen of every State and foreign state by which it has been incorporated and of the
State or foreign state where it has its principal place of business.” 28 U.S.C. §
1332(c)(1).
A corporation’s “‘principal place of business’ is best read as referring to the
place where a corporation’s officers direct, control, and coordinate the corporation’s
activities.” Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). Put another way, a
corporation’s principal place of business is its “nerve center.” Id. at 93.
Defendants’ notice of removal states that ZAIC is “a New York corporation …
with a statutory home office located” in New York. Dkt. No. 1 at 3. And it states that
ZAIC’s principal place of business is in Illinois. See id.
The notice of removal also states that that AZIC is “an Illinois corporation …
with a statutory home office and principal place of business” in Illinois. Id.
A corporation’s statutory home office is evidence of its principal place of
business, not the state of incorporation. See Terry Black’s Barbecue, LLC v. State
Auto. Mut. Ins. Co., No. 1:20-cv-665-RP, 2020 WL 6537230, at *2; (W.D. Tex. Nov. 5,
2020); Ind. Affordable Storage, Inc. v. Ohio Cas. Ins. Co., No. 5:24-cv-50, at *5 (N.D.
Tex. Aug. 29, 2025). And, so, Defendants’ notice of removal alleged their principal
places of business but not their states of incorporation.
But, in their response to Klossner’s motion to remand, Defendants clarify that
“ZAIC is a resident of New York, where it is incorporated,” and “AZIC is a resident of
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Illinois, where it is incorporated.” Dkt. No. 18 at 2.
And, so, the undersigned finds that Defendants have properly alleged that
ZAIC is a citizen of New York and Illinois and that AZIC is a citizen of Illinois.
But Defendants have not properly pleaded Klossner’s citizenship.
“For natural persons, § 1332 citizenship is determined by domicile, which
requires residency plus an intent to make the place of residency one's permanent
home.” SXSW v. Fed. Ins. Co., 83 F.4th 405, 407 (5th Cir. 2023).
And, while the party invoking subject-matter jurisdiction is not required to
prove an intent to make the place of residency a party's permanent home,
[i]n determining a litigant’s domicile, the court must address a variety
of factors. No single factor is determinative. The court should look to all
evidence shedding light on the litigant's intention to establish domicile.
The factors may include the places where the litigant exercises civil and
political rights, pays taxes, owns real and personal property, has driver's
and other licenses, maintains bank accounts, belongs to clubs and
churches, has places of business or employment, and maintains a home
for his family.
Coury v. Prot, 85 F.3d 244, 251 (5th Cir. 1996) (citations omitted).
So, where the party invoking subject-matter jurisdiction under Section 1332
(1) merely concludes that a party is domiciled where he or she is alleged to currently
reside and (2) fails to meaningfully address any Coury factor as to any party, a court
cannot find that a party's domicile has been plausibly alleged and that complete
diversity supports subject-matter jurisdiction under Section 1332.
Defendants allege that “Plaintiff is a citizen and resident of Norton, Ohio.” Dkt.
No. 1 at 3. In doing so, they cite to Klossner’s state court petition, which lists only
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Klossner’s home address. See id.; Dkt. No. 1-3 at 2.
Because they rely only on Klossner’s current residence and do not allege or
provide additional allegations or evidence to support his place of domicile, the
undersigned finds that Defendants have not properly alleged Klossner’s citizenship.
And the Court should remand this action for lack of subject-matter jurisdiction.
But if, within the 14-day period for objections, Defendants file a written
response that sufficiently explains or provides evidence of Klossner’s citizenship, the
Court should retain jurisdiction over this lawsuit and, for the reasons explained
below, deny the Motion for Remand [Dkt. No. 15].
II. 	But, 	if 	Defendants 	provide 	additional 	allegations 	or 	evidence
supporting the parties’ citizenship, the Court should deny the Motion
to Remand.
Klossner does not directly challenge the sufficiency of Defendants’ allegations,
but he challenges removal and moves for remand on other grounds. The undersigned
addresses each argument in turn.
First, Klossner argues that Defendants failed to “provide competent evidence
of jurisdiction.” Dkt. No. 6 at 2.
But the United States Court of Appeals for the Fifth Circuit has explained that,
in a diversity case under 28 U.S.C. § 1332,
• 	“[a]t the pleading stage, the party invoking the federal court's jurisdiction
must allege the citizenship of each” party;
• 	“[a]t the summary judgment stage,” the party invoking the federal court's
jurisdiction “must provide evidence sufficient to support a jury finding of the
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citizenship of” each party; and,
• 	“at trial,” the party invoking the federal court's jurisdiction “must prove the
citizenship of each” party.
Megalomedia Inc. v. Philadelphia Indem. Ins. Co., 115 F.4th 657, 659 (5th Cir. 2024);
accord J.A. Masters Invs. v. Beltramini, 117 F.4th 321, 323 (5th Cir. 2024); MidCap
Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 315 n.* (5th Cir. 2019).
If this lawsuit were at the summary judgment stage, Defendants would need
to provide evidence of citizenship. But here, at the pleading stage, Defendants need
only allege the parties’ citizenship. And, so, although the undersigned finds that
Defendants’ citizenship allegations are insufficient and that additional allegations or
evidence could remedy those deficiencies, it disagrees that Defendants are required
to provide evidence of citizenship to support their allegations.
Second, Klossner contends that the Court should remand for lack of subject-
matter jurisdiction because he “filed suit in his individual capacity,” and, so,
Defendants’ 	references 	to 	KDA 	Realty’s 	citizenship 	are 	“improper 	and 	legally
irrelevant.” Dkt. No. 5 at 3, 4; see Dkt. No. 6 at 2.
But Klossner’s own petition contradicts this argument, as it lists the plaintiffs
as “David Klossner / KDA Realty LLC. Dkt. No. 1-3 at 2.
And, even accepting that Klossner brings this suit solely in his individual
capacity, 	subject-matter jurisdiction 	would be 	unaffected. 	Klossner is 	the 	sole
member of KDA Realty. And, so, his citizenship determines KDA Realty’s citizenship.
See SXSW, 83 F.4th at 407-08. And neither including nor excluding KDA Realty’s
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citizenship in the analysis would destroy complete diversity.
Third, Klossner argues that Defendants’ “own certificate of interested persons
contradicts its removal allegations.” Dkt. No. 5 at 4 (caps omitted). Klossner points
out that Defendants’ “Notice of Removal asserts that AZIC was improperly included”
but that their “Certificate of Interested Persons filed in this Court identifies both
ZAIC and AZIC as entities with a financial or legal interest in the outcome of this
case.” Dkt. No. 6 at 3 (emphasis omitted).
Defendants respond that AZIC was described as an improper defendant
because KDA Realty purchased the relevant insurance policy from ZAIC only – “AZIC
did not issue a policy to Plaintiff nor did AZIC issue the property policy at issue in
this case.” Dkt. No. 18 at 6.
Regardless of whether AZIC may be liable to Klossner for any acts or
omissions, Klossner named both ZAIC and AZIC in his petition. See Dkt. No. 1-3. And
both ZAIC and AZIC have appeared, and they jointly filed the notice of removal. See
Dkt. No. 1. And, so, their removal of this lawsuit was procedurally proper. Cf. Home
Depot U. S. A., Inc. v. Jackson, 588 U.S. 435, 446, 437 (2019) (holding that “neither
[28 U.S.C.] § 1441(a) nor § 1453(b) permits removal by a third-party counterclaim
defendant” “[b]ecause in the context of these removal provisions the term ‘defendant’
refers only to the party sued by the original plaintiff”).
Defendnats also argue that, in any case, ZAIC is alleged to be a citizen of New
York and Illinois, and AZIC is alleged to be a citizen of Illinois. And, so, if Defendants
provide additional allegations or evidence that Klossner is a citizen of Ohio, the Court
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should find that AZIC’s citizenship is not the same as Klossner’s, such that neither
including nor excluding it as a defendant would destroy complete diversity.
Fourth, Klossner argues that removal was improper because Defendants
“failed to comply with 28 U.S.C. § 1446(a) by omitting material filings from the
removal record.” Dkt. No. 6 at 3; see Dkt. No. 5 at 5.
“Under § 1446(a), a defendant seeking to remove a case to federal court is
required to include in its notice of removal ‘all process, pleadings, and orders’ from
the state court.” Cooper v. Barrett Burke Wilson Castle Daffin & Frappier, L.L.P., No.
3:07-cv-0427-G, 2007 WL 9717419, at *2 (N.D. Tex. July 23, 2007).
But Defendants claim that Klossner did not serve Defendants with the
subrogation demand or attach it to his complaint – a contention that Klossner does
not dispute. See Dkt. No. 18 at 6. And, so, they were not required to attach the letter
to their notice of removal.
And, even if they were, failure to submit the required documents with a notice
of removal is, in most cases, a “nonjurisdictional” procedural defect, for which “the
proper remedy is to allow the missing documents to be supplemented” rather than to
remand. Cooper, 2007 WL 9717419, at *2 (citing Covington v. Indemnity Ins. Co., 251
F.2d 930, 933 (5th Cir. 1958), cert. denied, 357 U.S. 921 (1958)).
Klossner further argues that the subrogation letter was “material” to the issue
of jurisdiction because it “contradicts [Defendants’] jurisdictional presentation and
establishes that the dispute is rooted entirely in Texas insurance-handling conduct.”
Dkt. No. 6 at 3. But this argument also fails.
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Insofar as Klossner means to argue that this evidence destroys complete
diversity, Klossner is – albeit insufficiently – alleged to be a citizen of Ohio. Klossner
provides no arguments or evidence that he is a citizen of Texas. And, so, even if the
subrogation letter could show that ZAIC, AZIC, or both are citizens of Texas, complete
diversity would not be destroyed.
And, insofar as Klossner means to argue that the case arises only out of Texas
law, Section 1332 is the appropriate vehicle for jurisdiction over state-law contract
claims such as these. See Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d
255, 259 (5th Cir. 2014) (“EMS’s suit concerns a contract dispute that presents only
state-law questions.”). Section 1332 jurisdiction does not depend on the existence of
a federal question. See id. at 258-59 (“A federal district court may exercise original
jurisdiction over any civil action that either satisfies diversity requirements or that
arises under the federal constitution, statutes or treaties….” (emphasis added)).
And, so – if Defendants properly allege that complete diversity exists – the
Court should find that Klossner has presented no reason to remand the lawsuit and
should deny his Motion for Remand [Dkt. No. 15].
Recommendation
For the reasons explained above, the Court should remand this lawsuit for lack
of subject-matter jurisdiction.
But if, within the 14-day period for objections, Defendants Zurich American
Insurance Company and American Zurich Insurance Company file a written response
or submit evidence that sufficiently explains the parties’ citizenship, the Court should
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retain jurisdiction over this lawsuit and, for the reasons explained below, deny the
Motion for Remand [Dkt. No. 15].
A copy of these findings, conclusions, and recommendation shall be served on
all parties in the manner provided by law. Any party who objects to any part of these
findings, conclusions, and recommendation must file specific written objections
within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); F ED. R. CIV.
P. 72(b). In order to be specific, an objection must identify the specific finding or
recommendation to which objection is made, state the basis for the objection, and
specify the place in the magistrate judge’s findings, conclusions, and recommendation
where the disputed determination is found. An objection that merely incorporates by
reference or refers to the briefing before the magistrate judge is not specific. Failure
to file specific written objections will bar the aggrieved party from appealing the
factual findings and legal conclusions of the magistrate judge that are accepted or
adopted by the district court, except upon grounds of plain error. See Douglass v.
United Servs. Auto. Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996)
DATED: February 12, 2026
_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE
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