PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

ATHENA AUTOMOTIVE, INCORPORATED,
Plaintiff-Appellee,

v.
                                                                   No. 98-1446
JOHN J. DIGREGORIO; J & D
AUTOMOTIVE, INCORPORATED,
Defendants-Appellants.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
J. Frederick Motz, Chief District Judge.
(CA-97-2556-MJG)

Argued: October 27, 1998

Decided: January 25, 1999

Before NIEMEYER and MICHAEL, Circuit Judges, and G. ROSS
ANDERSON, JR., United States District Judge for the District of
South Carolina, sitting by designation.

_________________________________________________________________

Affirmed and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Judge Michael and Judge Anderson joined.

_________________________________________________________________

COUNSEL

ARGUED: Jeffrey Warren Harab, LAW OFFICES OF JEFFREY W.
HARAB, P.C., Chevy Chase, Maryland, for Appellants. Stephen
Joseph O'Brien, O'BRIEN & LONG, Washington, D.C., for Appel-
lee.

_________________________________________________________________
OPINION

NIEMEYER, Circuit Judge:

For purposes of determining a federal court's subject matter juris-
diction based on diversity of citizenship, a corporation is considered
to be a citizen of (1) the state of its incorporation and (2) the state
"where it has its principal place of business." 28 U.S.C. § 1332(c)(1).
The question of first impression presented by this appeal is whether
a Georgia corporation, which had conducted business only in Mary-
land but had ceased those activities three years before commencement
of this action, remained a Maryland citizen for purposes of diversity
jurisdiction. We hold that at the time it commenced this action, the
corporation was only a citizen of Georgia. Accordingly, we affirm the
district court's ruling that complete diversity of citizenship existed in
this corporation's suit against two Maryland citizens and remand for
further proceedings.

I

Athena Automotive, Inc., a Georgia corporation, conducted an
automobile repair business under the trade name"Brakes for Less" in
Silver Spring, Maryland, until August 10, 1994, when it ceased all
operations. The Silver Spring location was Athena Automotive's only
place of business. Even though it ceased its business operations,
Athena Automotive continued to maintain its corporate charter in
good standing with the Georgia Secretary of State. Since 1994, how-
ever, Athena Automotive's only other activity has been to prosecute
this litigation, which it commenced in August 1997. John T. Graham,
a Virginia resident and a stockholder of Athena Automotive, has
directed and continues to direct the corporation's litigation activities
from his office in Fairfax, Virginia.

On August 8, 1997, Athena Automotive commenced this action in
federal court in Maryland, naming as defendants John DiGregorio and
J&D Automotive, Inc., a corporation owned by DiGregorio. DiGre-
gorio is a Maryland resident, and J&D Automotive is a Maryland cor-
poration with its principal place of business in Maryland. In the suit,
Athena Automotive alleged that J&D breached its agreement to pur-
chase the assets of Athena Automotive and that, through fraud, both

                     2
DiGregorio and J&D obtained and converted to their own use Athena
Automotive's assets. Athena Automotive demanded $270,000 in
compensatory damages and $1 million in punitive damages.

DiGregorio and J&D Automotive filed a motion to dismiss this
action for lack of subject matter jurisdiction, contending that Athena
Automotive remained a Maryland citizen for diversity jurisdiction
purposes because it conducted its last business there. The district
court denied the motion, reasoning that complete diversity existed
because the three years that elapsed between Athena Automotive's
last business activity in Maryland and the date it filed this action was
"sufficient to shed [Athena Automotive] of its local character."

The district court granted permission to DiGregorio and J&D Auto-
motive to file an interlocutory appeal pursuant to 28 U.S.C.
§ 1292(b), and we did likewise.

II

Section 1332 of Title 28 confers subject matter jurisdiction upon
federal courts over civil actions in which "the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs"
and the action is between "citizens of different States." 28 U.S.C.
§ 1332(a)(1). In enacting this statute, Congress intended to "provide
a separate forum for out-of-state citizens against the prejudices of
local courts and local juries by making available to them the benefits
and safeguards of the federal court." S. Rep. No. 1830, at 5 (1958),
reprinted in 1958 U.S.C.C.A.N. 3099, 3101-02.

Courts have consistently interpreted § 1332 and its predecessors to
require complete diversity such that the state of citizenship of each
plaintiff must be different from that of each defendant. See Owen
Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978);
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806); United Capitol
Ins. Co. v. Kapiloff, 155 F.3d 488, 492 (4th Cir. 1998). Because diver-
sity jurisdiction depends on the citizenship status of the parties at the
time an action commences, we must focus our jurisdictional inquiry
solely on that time. See Freeport-McMoRan, Inc. v. K N Energy, Inc.,
498 U.S. 426, 428 (1991); see also Leimbach v. Allen, 976 F.2d 912,
917 (4th Cir. 1992); Mullins v. Beatrice Pocahontas Co., 489 F.2d

                     3
260, 261 (4th Cir. 1974). This conclusion is supported by the govern-
ing language of § 1332 which speaks in the present tense of civil
actions where the matter in controversy "is between citizens of differ-
ent States" and, in the case of a corporation, where the corporation
"has its principal place of business." 28 U.S.C. § 1332(a)(1), (c)(1)
(emphasis added). Because jurisdiction attaches at the commencement
of an action, even if the citizenship of the parties changes after the
commencement of the action so as to destroy complete diversity, sub-
ject matter jurisdiction is not destroyed, and the federal court contin-
ues to have authority to decide the case. See Freeport-McMoRan, 498
U.S. at 428.

With respect to the citizenship of a corporation for diversity pur-
poses, § 1332 provides, "a corporation shall be deemed to be a citizen
of any State by which it has been incorporated and of the State where
it has its principal place of business." 28 U.S.C. § 1332(c)(1). To
determine where a corporation has its principal place of business, we
have recognized two tests, the "nerve center test" and the "place of
operations test." See Peterson v. Cooley, 142 F.3d 181, 184 (4th Cir.
1998) (citing Mullins, 489 F.2d at 262). For instance, when a corpora-
tion engages primarily in the ownership and management of geo-
graphically diverse investment assets, we apply the"nerve center
test," which establishes the corporation's principal place of business
as that place where the corporation "makes the`home office,' or place
where the corporation's officers direct, control, and coordinate its
activities." Id. But when the corporation has "multiple centers of man-
ufacturing, purchasing, or sales," we apply the"place of operations
test," focusing on "the place where the bulk of corporate activity takes
place." Id.

In the case before us, Athena Automotive maintained no place of
business on August 8, 1997, the date it commenced this action. This
appeal therefore presents the novel question of what the citizenship
for diversity jurisdiction purposes of an inactive corporation is.
Although we have not addressed this question until now, several other
circuits have, each reaching a different conclusion.

The Second Circuit has concluded that an inactive corporation is
a citizen of both the state of its incorporation and the state where "it
last transacted business." Wm. Passalacqua Builders, Inc. v. Resnick

                     4
Developers South, Inc., 933 F.2d 131, 141 (2d Cir. 1991) (emphasis
added). The court rested its conclusion on the presumption that a cor-
poration must have a principal place of business for diversity jurisdic-
tion purposes because even a defunct corporation could still be "local
in character." Id. The Third Circuit, on the other hand, has concluded
that an inactive corporation has no place of business and is therefore
only a citizen of its state of incorporation. See Midlantic Nat'l Bank
v. Hansen, 48 F.3d 693, 696 (3d Cir. 1995). And finally, the Fifth Cir-
cuit has reached a conclusion that falls somewhere between the other
two holdings, rejecting a bright-line approach and adopting instead a
facts-and-circumstances test. See Harris v. Block Clawson Co., 961
F.2d 547, 551 (5th Cir. 1992). The court concluded that a corporation
which has been inactive "for a substantial period of time, in this case
five years," is a citizen only where it is incorporated. Id. It did, how-
ever, state that if the corporation had not been inactive for a substan-
tial period of time, the place of its last business activity would be
relevant to, but not dispositive of, the determination of its principal
place of business. Id.

Because we are required to view the corporation's citizenship for
purposes of diversity jurisdiction at the time the action is commenced,
we cannot categorically conclude that an inactive corporation is a citi-
zen of its last place of business, as the Second Circuit concluded in
Wm. Passalacqua, 933 F.2d at 141. On the other hand, to adopt a
"bright-line" rule, as announced by the Third Circuit in Hansen, 48
F.3d at 696, that a corporation inactive at the commencement date of
the litigation has no place of business and is therefore only a citizen
of its state of incorporation could overlook the realities of a corpora-
tion's business activities and their geographical nexus, yielding a
result demonstrably at odds with the statute.

A corporation's business does not usually end with the abruptness
of closing its doors. Even when a corporation has ceased all opera-
tions and has become inactive, the continuing impact of its business
in a given locale could linger on to an extent sufficient to give it a
geographical identity there as its principal place of business. Indeed,
a corporation's winding up of its business affairs may well constitute
a significant activity and consume a considerable period of time.

These observations prompt us to emphasize that determinations of
a corporation's principal place of business must be made on a case by

                    5
case basis. And a court must analyze the facts of each case to deter-
mine as of the date the action was commenced whether a corpora-
tion's business activity was sufficient to make it a citizen of the state
of such activity.

III

With these principles in hand, we turn to the circumstances of
Athena Automotive. From August 10, 1994, until August 8, 1997,
when Athena Automotive commenced this action, its only activity
was in Georgia, where it maintained its charter in good standing, and
in Virginia, where its shareholder Graham was coordinating the cor-
poration's litigation. Even though this litigation arose out of Athena
Automotive's last business transactions in Maryland, between the
time that all business activity in Maryland ended and the time this
action commenced, almost three years had elapsed, and nothing fur-
ther is shown to have happened in Maryland.

Prior to August 1994, Athena Automotive was effectively a local
Maryland corporation. Its presence in Maryland at that time presum-
ably eliminated any incentives of Maryland state courts to discrimi-
nate against it as an out-of-state citizen. But Athena Automotive did
nothing in Maryland for approximately three years after August 1994.
For practical purposes, at the time it commenced this action, Athena
Automotive was an out-of-state corporation prosecuting an action in
Maryland under the direction and effort of an out-of-state stockholder.
Any local impact of its business had long dissipated. The fact that
Athena Automotive's principal, indeed, only place of business was
Maryland up until August 10, 1994, thus was of no consequence.

Accordingly, by taking a "facts and circumstances" approach simi-
lar to the one employed by the Fifth Circuit in Harris, we conclude
that as of the date Athena Automotive filed suit against the defen-
dants, it had become just the type of out-of-state citizen for whom
Congress sought to provide a federal forum by creating diversity
jurisdiction. See Harris, 961 F.2d at 551. Because complete diversity
of citizenship existed between Athena Automotive as plaintiff and
both DiGregorio and J&D Automotive as defendants and the amount
alleged to be in controversy exceeds $75,000 exclusive of interest and

                     6
costs, we conclude that the district court has subject matter jurisdic-
tion to hear this case.

While Athena Automotive was unquestionably a citizen of Geor-
gia, its state of incorporation, see 28 U.S.C. § 1332(c)(1), whether it
also actually had a place of business at the commencement of this
action is not a matter that we need to decide, since it did not have its
principal place of business in Maryland. Because the defendants were
Maryland citizens and Athena Automotive was not a Maryland citizen
and was at least a Georgia citizen, complete diversity therefore
existed. If, however, we were required to find a principal place of
business for applying § 1332, we might, by applying our "nerve cen-
ter test," conclude that Athena Automotive's only business was to
pursue this litigation, an activity that was being conducted from Fair-
fax, Virginia.

The order of the district court is accordingly affirmed, and this case
is remanded for further proceedings.

AFFIRMED AND REMANDED

                     7
