1 C Trucking's motion amounts to an assertion that there is no diversity jurisdiction. (There's no federal-question claim, so the suit must be based on diversity if there is to be subject-matter jurisdiction at all.) For diversity to exist, (1) no plaintiff may be the citizen of the same state as any defendant, and (2) the amount in controversy must exceed $75,000.
A plaintiff is deemed to be a citizen of the state where she resides at the time the suit is filed (not where she resides at the earlier time when the cause of action accrued). Therefore, Paula and Pete are citizens of Florida, not California. A corporation is deemed to be a citizen of both the state in which it is incorporated and the state in which it has its principal place of business. Under the “nerve center” test adopted by the Supreme Court in 2010 (Hertz Corp. v. Friend), a corporation's principal place of business is deemed to be the state in which its headquarters are located, not the state in which it does the most business or has the most employees. Therefore, Trucking is a citizen of both Michigan and Delaware, but not of Florida. Thus we have Florida vs. Michigan/Delaware, which satisfies the requirement of complete diversity. Consequently, C is correct.
Choice A is incorrect because diversity subject matter jurisdiction is not dependent on the plaintiff's state of citizenship at the time the cause of action accrued, just the state at the time the action was filed. Choice B is incorrect because a corporation is a citizen (only) of the states in which it is incorporated and in which it has its principal place of business, and as noted above neither of these is Florida despite the fact that Trucking does more daily activities there than elsewhere.
Choice D is incorrect because, although it reaches the correct result, it does so based on incorrect logic; as explained above in the discussion of Choice (C), no plaintiff can be a citizen of either the corporate defendant's state of incorporation or the latter's state of principal-place-of-business.