Top Line Apparel v. Ategrity Specialty Insurance Company et al.

C.D. California

Top Line Apparel v. Ategrity Specialty Insurance Company et al.

DecidedJuly 7, 2026

Docket2:26-cv-02053

StatusUnknown

This text of Top Line Apparel v. Ategrity Specialty Insurance Company et al. (Top Line Apparel v. Ategrity Specialty Insurance Company et al.) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Top Line Apparel v. Ategrity Specialty Insurance Company et al., (C.D. Cal. 2026).

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7 8 United States District Court 9 Central District of California 10

11 TOP LINE APPAREL, Case № 2:26-cv-02053-ODW (SPx)

12 Plaintiff, ORDER DENYING MOTION TO 13 v. REMAND [11] 14 15 ATEGRITY SPECIALTY INSURANCE COMPANY et al., 16

17 Defendants.

18 19 I. INTRODUCTION 20 Plaintiff Top Line Apparel initiated this breach of insurance contract action in 21 state court against Defendant Ategrity Specialty Insurance Company. (Notice Removal 22 (“NOR”) Ex. 1 (“Compl.”), Dkt. No. 1.) Ategrity removed the action to this Court 23 based on diversity jurisdiction. (NOR ¶ 2, Dkt. No. 1.) Top Line now moves to remand 24 on the grounds that Ategrity lacks capacity to litigate in this Court by virtue of its 25 “failure to register to do business in California.” (Mot. Remand (“Motion” or “Mot.”) 2, 26 Dkt. No. 11.) For the reasons discussed below, the Court DENIES Top Line’s Motion.1 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 Top Line, a clothing wholesaler, is a California limited liability company with its 3 principal place of business in California. (Compl. ¶¶ 1, 6.) Ategrity, a nonadmitted 4 insurer2, is incorporated in Delaware with its principal place of business in Arizona. 5 (Id. ¶ 2; NOR ¶¶ 5–6.) 6 In January 2024, Top Line purchased insurance coverage for its warehouse from 7 Ategrity. (Compl. ¶¶ 7–9; NOR Ex. 3 (“Policy”), Dkt. No. 1.) On April 6, 2024, a fire 8 damaged Top Line’s warehouse. (Compl. ¶ 11.) Top Line reported the loss and 9 submitted a claim to Ategrity under the Policy. (Id. ¶ 12.) Ategrity denied coverage 10 after investigating the claim. (Id. ¶¶ 12–17.) 11 On January 16, 2026, Top Line filed this action against Ategrity in state court for 12 breach of insurance contract and breach of the covenant of good faith and fair dealing. 13 (Id. ¶¶ 18–35.) On February 26, 2026, Ategrity removed the action to this Court based 14 on diversity jurisdiction. (NOR ¶ 2.) Top Line now moves to remand, asserting 15 Ategrity lacks capacity to litigate in this Court by virtue of its “failure to register to do 16 business in California.” (Mot. 1.) 17 III. LEGAL STANDARD 18 Federal courts are courts of limited jurisdiction and possess only that jurisdiction 19 authorized by the Constitution and federal statutes. U.S. Const. art. III, § 2, cl. 1; 20 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Under 28 U.S.C. 21 § 1441(a), a party may remove a civil action brought in a state court to a district court 22 only if the plaintiff could have originally filed the action in federal court. Federal 23 district courts have original jurisdiction where an action arises under federal law, or 24 where each plaintiff’s citizenship is diverse from each defendant’s citizens (i.e., 25 26

27 2 Nonadmitted insurers have “no presence” in California but may issue policies to California residents 28 in some circumstances. Silvers v. Bd. of Equalization, 188 Cal. App. 4th 1215, 1217–18 (2010) (citing Cal. Ins. Code §§ 1763, 1765.1). 1 diversity is “complete”), and the amount in controversy exceeds $75,000. 28 U.S.C. 2 §§ 1331, 1332(a). 3 There is a strong presumption that a court is without jurisdiction until 4 affirmatively proven otherwise. Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 5 1187, 1190 (9th Cir. 1970); see Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 6 (“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in 7 the first instance.”). When a case is removed from state court, the removing party bears 8 the burden of demonstrating that removal is proper. Corral v. Select Portfolio 9 Servicing, Inc., 878 F.3d 770, 773 (9th Cir. 2017). Removal is strictly construed, and 10 any doubt as to removal is to be resolved in favor of remand. Id. at 773–74. 11 IV. DISCUSSION 12 Top Line argues that Ategrity’s removal was improper because it may not appear 13 before California courts. (Mot. 1.) Ategrity argues that it has capacity to “pursue and 14 defend” litigation in California courts because it is an “eligible surplus line insurer” 15 under California Insurance Code section 1765.1. (Opp’n 1, Dkt. No. 13.) 16 Surplus line insurers are a subset of nonadmitted insurers; they provide insurance 17 needs that “cannot always be met through the admitted insurance market.” Cal. Ins. 18 Code § 1780.50(a). A nonadmitted insurer is an “ surplus line insurer” if it (1) is 19 licensed in its “domiciliary jurisdiction” to write the same type of insurance it is placing 20 in California, and (2) maintains a minimum of $45 million in capital and surplus, unless 21 excepted. Id. § 1765.1(a). Surplus line insurers “may be sued upon any cause of action 22 arising in [California] under any surplus line insurance contract made by it.” Id. 23 § 1772(a); see also Tutor-Saliba Corp. v. Starr Excess Liability Ins. Co., No. 2:15-cv- 24 01253-PSG (RZx), 2015 WL 13285089, at *5 (C.D Cal. Apr. 23, 2015) (finding that 25 the plain language of section 1772(a) “effectively grants California courts jurisdiction 26 over a surplus line insurer”). 27 Ategrity has sufficiently proven it is an eligible surplus line insurer. First, 28 Ategrity provides evidence that it is licensed to write property insurance policies—such 1 as the one issued to Top Line—in Delaware, its state of incorporation and domicile. 2 (Decl. Eric Crespolini ISO Opp’n (“Crespolini Decl.”) ¶¶ 3–4, Dkt. No. 13-1; see also 3 Decl. Rebekah Yanni ISO Opp’n ¶ 5, Dkt. No. 13-2.) Second, Ategrity provides 4 evidence that it maintains capital and a surplus in excess of $45 million. (Crespolini 5 Decl. ¶ 5.) As it meets both requirements of Insurance Code section 1765.1(a), Ategrity 6 has proven it is a surplus line insurer and is entitled to appear in California courts to 7 defend lawsuits. Cal. Ins. Code § 1772(a). 8 Instead of providing evidence to rebut Ategrity’s showing, Top Line argues 9 Ategrity is not an “approved non-admitted insurer” because it does not appear on the 10 “List of Approved Surplus Line Insurers” (“LASLI”) maintained by the California 11 Department of Insurance (“CDI”). (Mot. 6; Reply 1.) Setting aside that Top Line fails 12 to support this argument with any legal authority, LASLI is an optional list of 13 nonadmitted insurers. LASLI Carriers, Cal. Dep’t Ins., https://www.insurance.ca.gov/ 14 01-consumers/120-company/07-lasli/LASLI-CARRIERS.cfm (last visited June 22, 15 2026). It does not purport to list every surplus line insurer that meets the requirements 16 of section 1765.1. 17 Top Line also argues Ategrity “lacks capacity to maintain an action in California” 18 because Ategrity was “doing business” in California without registering as such. 19 (Mot. 4–5.) Specifically, Top Line asserts a corporation doing business in California 20 must register to do business in California to maintain an action in California state courts.

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O 1

3 4

7 8 United States District Court 9 Central District of California 10

11 TOP LINE APPAREL, Case № 2:26-cv-02053-ODW (SPx)

12 Plaintiff, ORDER DENYING MOTION TO 13 v. REMAND [11] 14 15 ATEGRITY SPECIALTY INSURANCE COMPANY et al., 16

17 Defendants.

18 19 I. INTRODUCTION 20 Plaintiff Top Line Apparel initiated this breach of insurance contract action in 21 state court against Defendant Ategrity Specialty Insurance Company. (Notice Removal 22 (“NOR”) Ex. 1 (“Compl.”), Dkt. No. 1.) Ategrity removed the action to this Court 23 based on diversity jurisdiction. (NOR ¶ 2, Dkt. No. 1.) Top Line now moves to remand 24 on the grounds that Ategrity lacks capacity to litigate in this Court by virtue of its 25 “failure to register to do business in California.” (Mot. Remand (“Motion” or “Mot.”) 2, 26 Dkt. No. 11.) For the reasons discussed below, the Court DENIES Top Line’s Motion.1 27

28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND 2 Top Line, a clothing wholesaler, is a California limited liability company with its 3 principal place of business in California. (Compl. ¶¶ 1, 6.) Ategrity, a nonadmitted 4 insurer2, is incorporated in Delaware with its principal place of business in Arizona. 5 (Id. ¶ 2; NOR ¶¶ 5–6.) 6 In January 2024, Top Line purchased insurance coverage for its warehouse from 7 Ategrity. (Compl. ¶¶ 7–9; NOR Ex. 3 (“Policy”), Dkt. No. 1.) On April 6, 2024, a fire 8 damaged Top Line’s warehouse. (Compl. ¶ 11.) Top Line reported the loss and 9 submitted a claim to Ategrity under the Policy. (Id. ¶ 12.) Ategrity denied coverage 10 after investigating the claim. (Id. ¶¶ 12–17.) 11 On January 16, 2026, Top Line filed this action against Ategrity in state court for 12 breach of insurance contract and breach of the covenant of good faith and fair dealing. 13 (Id. ¶¶ 18–35.) On February 26, 2026, Ategrity removed the action to this Court based 14 on diversity jurisdiction. (NOR ¶ 2.) Top Line now moves to remand, asserting 15 Ategrity lacks capacity to litigate in this Court by virtue of its “failure to register to do 16 business in California.” (Mot. 1.) 17 III. LEGAL STANDARD 18 Federal courts are courts of limited jurisdiction and possess only that jurisdiction 19 authorized by the Constitution and federal statutes. U.S. Const. art. III, § 2, cl. 1; 20 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Under 28 U.S.C. 21 § 1441(a), a party may remove a civil action brought in a state court to a district court 22 only if the plaintiff could have originally filed the action in federal court. Federal 23 district courts have original jurisdiction where an action arises under federal law, or 24 where each plaintiff’s citizenship is diverse from each defendant’s citizens (i.e., 25 26

27 2 Nonadmitted insurers have “no presence” in California but may issue policies to California residents 28 in some circumstances. Silvers v. Bd. of Equalization, 188 Cal. App. 4th 1215, 1217–18 (2010) (citing Cal. Ins. Code §§ 1763, 1765.1). 1 diversity is “complete”), and the amount in controversy exceeds $75,000. 28 U.S.C. 2 §§ 1331, 1332(a). 3 There is a strong presumption that a court is without jurisdiction until 4 affirmatively proven otherwise. Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 5 1187, 1190 (9th Cir. 1970); see Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) 6 (“Federal jurisdiction must be rejected if there is any doubt as to the right of removal in 7 the first instance.”). When a case is removed from state court, the removing party bears 8 the burden of demonstrating that removal is proper. Corral v. Select Portfolio 9 Servicing, Inc., 878 F.3d 770, 773 (9th Cir. 2017). Removal is strictly construed, and 10 any doubt as to removal is to be resolved in favor of remand. Id. at 773–74. 11 IV. DISCUSSION 12 Top Line argues that Ategrity’s removal was improper because it may not appear 13 before California courts. (Mot. 1.) Ategrity argues that it has capacity to “pursue and 14 defend” litigation in California courts because it is an “eligible surplus line insurer” 15 under California Insurance Code section 1765.1. (Opp’n 1, Dkt. No. 13.) 16 Surplus line insurers are a subset of nonadmitted insurers; they provide insurance 17 needs that “cannot always be met through the admitted insurance market.” Cal. Ins. 18 Code § 1780.50(a). A nonadmitted insurer is an “ surplus line insurer” if it (1) is 19 licensed in its “domiciliary jurisdiction” to write the same type of insurance it is placing 20 in California, and (2) maintains a minimum of $45 million in capital and surplus, unless 21 excepted. Id. § 1765.1(a). Surplus line insurers “may be sued upon any cause of action 22 arising in [California] under any surplus line insurance contract made by it.” Id. 23 § 1772(a); see also Tutor-Saliba Corp. v. Starr Excess Liability Ins. Co., No. 2:15-cv- 24 01253-PSG (RZx), 2015 WL 13285089, at *5 (C.D Cal. Apr. 23, 2015) (finding that 25 the plain language of section 1772(a) “effectively grants California courts jurisdiction 26 over a surplus line insurer”). 27 Ategrity has sufficiently proven it is an eligible surplus line insurer. First, 28 Ategrity provides evidence that it is licensed to write property insurance policies—such 1 as the one issued to Top Line—in Delaware, its state of incorporation and domicile. 2 (Decl. Eric Crespolini ISO Opp’n (“Crespolini Decl.”) ¶¶ 3–4, Dkt. No. 13-1; see also 3 Decl. Rebekah Yanni ISO Opp’n ¶ 5, Dkt. No. 13-2.) Second, Ategrity provides 4 evidence that it maintains capital and a surplus in excess of $45 million. (Crespolini 5 Decl. ¶ 5.) As it meets both requirements of Insurance Code section 1765.1(a), Ategrity 6 has proven it is a surplus line insurer and is entitled to appear in California courts to 7 defend lawsuits. Cal. Ins. Code § 1772(a). 8 Instead of providing evidence to rebut Ategrity’s showing, Top Line argues 9 Ategrity is not an “approved non-admitted insurer” because it does not appear on the 10 “List of Approved Surplus Line Insurers” (“LASLI”) maintained by the California 11 Department of Insurance (“CDI”). (Mot. 6; Reply 1.) Setting aside that Top Line fails 12 to support this argument with any legal authority, LASLI is an optional list of 13 nonadmitted insurers. LASLI Carriers, Cal. Dep’t Ins., https://www.insurance.ca.gov/ 14 01-consumers/120-company/07-lasli/LASLI-CARRIERS.cfm (last visited June 22, 15 2026). It does not purport to list every surplus line insurer that meets the requirements 16 of section 1765.1. 17 Top Line also argues Ategrity “lacks capacity to maintain an action in California” 18 because Ategrity was “doing business” in California without registering as such. 19 (Mot. 4–5.) Specifically, Top Line asserts a corporation doing business in California 20 must register to do business in California to maintain an action in California state courts. 21 (Id. at 4 (citing United Med. Mgmt. Ltd. v. Gatto, 49 Cal. App. 4th 1732, 1740 (1996)).) 22 However, Top Line’s argument fails because “a surplus line insurer that directly places 23 policies in California is . . . not doing business in California.” Silvers, 188 Cal. App. 24 4th at 1220–21 (citing Cal. Ins. Code § 1776). As Ategrity placed the insurance policy 25 at issue here while acting as an eligible surplus line insurer, Ategrity was not “doing 26 business” in California and need not have registered to do business in California. 27 In conclusion, Ategrity has met its burden of demonstrating it is an eligible 28 surplus line insurer and therefore has capacity to maintain an action in California, the 1 || state in which this federal court sits. Top Line has not demonstrated otherwise. 2 || Accordingly, the Court DENIES Top Line’s Motion to Remand. 3 Vv. CONCLUSION 4 For the reasons discussed above, the Court DENIES Top Line’s Motion to 5 || Remand. (Dkt. No. 11.) 6 7 IT IS SO ORDERED. 8 9 July 7, 2026

11 OTIS D. WRIGHT, II 3 UNITED STATES DISTRICT JUDGE

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