As bar exam results from the July 2022 exam begin to be released in states around the country, we will be posting several real MBE questions every week, with the answer to be posted the following day. Please feel free to email us with any questions about these, and if you were unsuccessful on the bar exam, submit your score report here for a free score report evaluation from our bar exam experts!

MBE Question of the Day – Answer

(C) is correct.

Issue: The issue is whether a plaintiff insurer is diverse from a defendant when the policy holder is from the same state as the defendant.

Rule: When a plaintiff sues an insurance company, but not its policy holder, it is treated the same as any other corporation for diversity jurisdiction purposes. However, the insurance company is also considered a citizen of the same state as the policy holder. Similarly, when an insurance company sues a defendant for damage sustained by its policy holder, it is considered a citizen of the same state as the policy holder. Analysis: Here, the policy holder and the defendant are from the same state and thus there is no diversity between them. Because the insurer is considered a citizen of the same state as its policy holder, there can be no diversity between the insurer and the defendant. Thus, the court does not have jurisdiction over the case and (C) is correct.

(A) is incorrect because the insurer is a citizen of its place of incorporation, its principal place of business, and the state of its policy holder. Thus, diversity jurisdiction is not satisfied between the insurer and the installer since the policy holder and the installer are from the same state. (B) is incorrect because even if damages are greater than $75,000, the requirements for diversity jurisdiction are not satisfied. Furthermore, it is not necessary that the plaintiff prove that the amount in controversy is greater than $75,000. The plaintiff need only make a good faith claim for damages greater than $75,000. (D) is incorrect because the law firm is not a necessary party to the action under these facts; the insurer may “step into the shoes” of its policy holder and exercise the policy holder’s rights against a defendant that caused damage to the policy holder. Moreover, diversity jurisdiction is destroyed even if the law firm is not a necessary party.