N.Y. Marine & Gen. Ins. Co. v. AGCS Marine Ins. Co.
| Citation | 454 F.Supp.3d 1335 |
| Decision Date | 07 April 2020 |
| Docket Number | No. 2:19-CV-104,2:19-CV-104 |
| Parties | NEW YORK MARINE AND GENERAL INSURANCE COMPANY, as subrogee of Golden Isles Cruise Lines, Inc., Plaintiff, v. AGCS MARINE INSURANCE CO., and National Union Fire Insurance Company of Pittsburgh, PA, Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
This matter is before the Court on Plaintiff New York Marine and General Insurance Company's ("New York Marine") Motion to Remand, dkt. no. 10, and Defendants AGCS Marine Insurance Co. ("AGCS") and National Union Fire Insurance Company of Pittsburgh, PA's ("National Union") Motion to Dismiss, dkt. no. 3, and Motion to Disqualify Plaintiff's Counsel, dkt. no. 4. The motions have been fully briefed and are ripe for review. For the reasons discussed below, New York Marine's motion, dkt. no. 10, will be GRANTED , and the motions filed by AGCS and National Union will be DENIED as moot .
This matter arises out of a dispute between three insurance companies over the handling of a liability claim by a non-party insured. In March 2016, Robert Lowie sued Golden Isles Cruise Lines, Inc. ("Golden Isles") in the Superior Court of Glynn County, Georgia for injuries Lowie sustained while onboard a cruise ship operated by Golden Isles (the "Lowie Action"). Dkt. No. 1-1 at 20-32. At the time of the incident, Golden Isles was insured by AGCS and National Union (collectively "Defendants" or the "Primary Carriers") with an aggregate coverage limit of $1 million. See Id. ¶¶ 12-13.1 New York Marine also insured Golden Isles under a "bumbershoot policy," which it describes as "a specialized form of excess liability insurance intended for the maritime industry." Id. ¶ 15.
In accordance with their policies, the Primary Carriers defended Golden Isles in the Lowie Action. See id. ¶ 31. Following a jury trial, Lowie was awarded a judgment of $2,236,850.28, which was affirmed on appeal by the Court of Appeals of Georgia. See id. ¶¶ 61-62. Thereafter, New York Marine paid Lowie approximately $1.6 million, reflecting the outstanding amount on the judgment after the Primary Carriers exhausted their limits, less defense costs. Id. ¶¶ 64-65.
In August 2019, New York Marine filed the present action in the Superior Court of Glynn County, Georgia, contending that Defendants had acted negligently and in bad faith in representing Golden Isles in the Lowie Action. See generally id. They argued that as a result of Defendants' poor representation, Golden Isles incurred a judgment in excess of the Primary Carriers' policy limits, thereby invoking New York Marine's coverage. They asserted causes of action for Equitable Subrogation (Count I), Negligent Failure to Settle (Count II), Bad Faith Failure to Settle (Count III), Punitive Damages (Count IV), and Attorney's Fees and Costs (Count V). Id.
In September 2019, Defendants filed a counterclaim in the 2019 Glynn County case, asserting causes of action for Misappropriation of Trade Secrets (Count I), Tortious Interference with Business Relations (Count II), Breach of Contract (Count III), and Invasion of Privacy (Count IV). Id. at 197-202. Thereafter, Defendants filed a Notice of Removal, removing the action to this Court. Dkt. No. 1. As ground for removal, Defendants contended that 1) this Court has federal question jurisdiction under 28 U.S.C. § 1331 because Defendants asserted a counterclaim for misappropriation of trade secrets under 18 U.S.C. § 1836 ; 2) this Court has federal question jurisdiction because New York Marine's Complaint asserts liability arising out of a marine insurance policy, over which the Court has original jurisdiction under 28 U.S.C. § 1333 ; and 3) this Court has diversity jurisdiction under 28 U.S.C. § 1332(a) because New York Marine, AGCS, and National Union are citizens of New Jersey, Illinois, and New York, respectively. See id. On the same day that it removed the action, Defendants also filed a motion to dismiss New York Marine's Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, dkt. no. 3, and a Motion to Disqualify Plaintiff's Counsel on the basis that New York Marine's counsel could be a necessary witness in the trial of Defendants' counterclaims, dkt. no. 4.
New York Marine moved to remand its action back to Glynn County Superior Court and further requested that this Court award attorney's fees and costs on the basis that Defendants' grounds for removal were frivolous. Dkt. No. 10. For the reasons that follow, the Court finds that while Defendants' removal petition was not so lacking in merit as to warrant attorney's fees, Defendants have not alleged a sufficient basis for removal. Therefore, the Court will GRANT New York Marine's Motion to Remand but DENY the request for fees.
On a Motion to remand, the party who removed the action to federal court bears the burden of establishing that federal jurisdiction exists. Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996). The Eleventh Circuit has also instructed that the removal statute is to be "construed narrowly with doubt construed against removal." Id. (citing Shamrock Oil * Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941) ).
As an initial matter, two of Defendants' grounds for removal are without merit. With respect to the diversity jurisdiction ground, Defendants concede in their Notice of Removal that AGCS and National Union are citizens of Illinois and New York, respectively. Dkt. No. 1 ¶¶ 20-21. They also do not challenge New York Marine's allegation from its Complaint that New York Marine is incorporated in New York. Dkt. No. 1-1 ¶ 2; see also 28 U.S.C. § 1332(c) (). Because both New York Marine and National Union are citizens of New York, this Court plainly lacks diversity jurisdiction. See Triggs v. John Crump Toyota, 154 F.3d 1284, 1287 (11th Cir. 1998) ().2
Defendants argument that this court has federal question jurisdiction because of the trade secrets claim raised in their counterclaim also must fail. It is well-settled that federal claims raised as part of a counterclaim are not sufficient to invoke federal jurisdiction for purposes of removal. See Home Depot U.S.A., Inc. v. Jackson, ––– U.S. ––––, 139 S. Ct. 1743, 204 L.Ed.2d 34 (2019). At best, Defendants urge the Court to disregard that principle here because they would have been entitled to come to federal court on the trade secrets claim but for the fact that filing their counterclaim was compelled under the federal rules. Defendants, however, have not cited to any authority in support of this proposition. Nor does the Court find Defendants' reasoning persuasive. The Court finds that neither the Defendants' trade secrets claim, nor any claims made as part of its counterclaim, are sufficient to create a federal question.
However, Defendants argument concerning this Court's maritime jurisdiction raises more complex issues of law. In essence, Defendants argue that this Court has original jurisdiction over the claims in New York Marine's Complaint because New York Marine's claims fall under this court's maritime jurisdiction pursuant to 28 U.S.C. § 1333. At bottom, Defendants' Notice of Removal raises two separate issues: whether the Complaint invokes this Court's maritime jurisdiction and, if so, whether § 1333 maritime claims filed in state court are capable of removal. Ultimately, the Court finds that while the Complaint does raise claims that invoke this Court's maritime jurisdiction, those claims are not removable absent a separate basis for federal jurisdiction. Accordingly, remand is appropriate.
In determining whether a pleading invokes federal maritime jurisdiction, courts first consider the nature of the claims raised. See Coleman Co. v. Compagnie Generale Maritime, 903 F. Supp. 45, 47-48 (S.D. Ga. 1995). Where a claim arises under contract law, courts ask whether the contract "pertain[s] directly to and [is] necessary for commerce or navigation upon navigable waters." Nehring v. S.S. M/V Point Vail, 901 F.2d 1044, 1048 (11th Cir. 1990) (internal quotations omitted). Alternatively, where a claim flows from tort law, courts look both to the location of the harm and its connection with maritime activity. Jerome B. Grubart v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S.Ct. 1043, 130 L.Ed.2d 1024 (1995). This latter test contains two prongs. The location prong asks, "whether the tort occurred on navigable water or whether injury suffered on land was caused by a vessel on navigable water." Id.; see also Broughton v. Fla. Int'l Underwriters, 139 F.3d 861, 865 (11th Cir. 1998). The connection prong contains two subparts, and asks, "(1) whether, upon assessment of the general features of the type of accident involved, the ‘incident has a potentially disruptive impact on maritime commerce;’ and (2) ‘whether the general character of the activity giving rise to the incident shows a substantial relationship to traditional maritime activity.’ " Broughton, 139 F.3d 861, 865 (quoting Grubart, 513 U.S. at 534 ).
New York Marine argues that the tort claims alleged in its Complaint do not satisfy the location prong because the alleged acts supporting their claims "were committed by individuals on land adjusting an insurance claim" rather than on navigable water. Dkt. No. 32 at 4. In support, they cite to Broughton, in which the Eleventh Circuit held, under a similar set of facts, that the plaintiff boat owner did not invoke maritime jurisdiction in a tort claim against an a surplus line insurance broker for, inter alia, beaching its...
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