Aetna Cas. & Sur. Ins. Co. v. Greene, No. 79-1126

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtBefore ENGEL, Circuit Judge, PECK, Senior Circuit Judge, and BROWN; JOHN W. PECK
PartiesAETNA CASUALTY & SURETY INSURANCE COMPANY, Plaintiff-Appellant, v. Leyron Alvin GREENE, Defendant-Appellee.
Docket NumberNo. 79-1126
Decision Date11 September 1979

Page 123

606 F.2d 123
56 A.L.R.Fed. 606
AETNA CASUALTY & SURETY INSURANCE COMPANY, Plaintiff-Appellant,
v.
Leyron Alvin GREENE, Defendant-Appellee.
No. 79-1126.
United States Court of Appeals,
Sixth Circuit.
Argued June 13, 1979.
Decided Sept. 11, 1979.

Page 124

H. Richard Marcus, Luther, Anderson, Cleary, Luhowiak & Cooper, Chattanooga, Tenn., for plaintiff-appellant.

Perla I. Periut, Etowah, Tenn., R. Jerome Shepherd, Cleveland, Tenn., for defendant-appellee.

Before ENGEL, Circuit Judge, PECK, Senior Circuit Judge, and BROWN, District Judge. *

JOHN W. PECK, Senior Circuit Judge.

In 1964 Congress limited the diversity jurisdiction of the federal courts by adding the following language to 28 U.S.C. § 1332(c):

. . . in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.

This provision of § 1332(c), through explicit language, applies to " . . . any direct action Against an insurer of a policy or contract of liability insurance . . . ." 28 U.S.C. § 1332(c) (emphasis added). In the light of this language, it is settled law that the 1964 amendment to § 1332(c) destroys diversity jurisdiction in certain direct actions brought against an insurance company. However, the present appeal does not involve an action that is technically Against an insurance company. To the contrary, the present appeal involves an action in which the insurance company is the moving party. The critical issue now before this Court, therefore, is whether § 1332(c) destroys diversity jurisdiction in a direct action brought, not Against, but By a liability insurer.

Page 125

The "insurer" in the present case is the plaintiff, Aetna Casualty & Surety Company, a corporation organized under the laws of the State of Connecticut with its principal place of business there. The "injured party" in the case is the defendant, Leyron Greene, a citizen of Tennessee. The "insured" is defendant's former employer, Marvin Johnson. Johnson is also a citizen of Tennessee, but he has not been joined as a party to the action. 1

The facts of the case need not be explained in detail. Suffice it to say that defendant allegedly sustained work-related injuries in August 1976. At that time, defendant was employed by Johnson, and Aetna was Johnson's workers' compensation insurance carrier. The present appeal stems from a declaratory judgment action brought by Aetna for the purpose of settling any compensation claims that might arise as a result of defendant's 1976 accident. Aetna based its action on diversity jurisdiction, claiming that it was a citizen of Connecticut while defendant was a citizen of Tennessee. 28 U.S.C. § 1332(a). At the outset of the action, defendant moved for dismissal on the ground that Aetna took on the citizenship of the insured employer, in accordance with § 1332(c) (" . . . a (liability) insurer shall be deemed a citizen of the State of which the insured is a citizen . . ." for jurisdictional purposes). The district court, agreeing that § 1332(c) controlled the present case, dismissed the action for lack of diversity. If, as the district court concluded, § 1332(c) is applicable to this action, the court was clearly correct in granting defendant's motion for dismissal. On appeal, therefore, this Court must decide whether the provisions of § 1332(c) apply to a declaratory judgment action brought, not against, but by a workers' compensation insurance carrier.

Congress amended § 1332(c) in 1964, after the States of Louisiana and Wisconsin had enacted what are commonly called "direct action" statutes. La.Rev.Stat.Ann. § 22:655 (1959); Wis.Stat. §§ 204.30(4), 260.11(1) (1963). These statutes allow an injured party to pursue a right of action against an out-of-state insurance company, without joining the in-state insured. As is readily apparent, direct action statutes tend to expand diversity jurisdiction by doing away with an injured party's obligation to join an insured who is a resident of the same state. This tendency is documented in the histories of the direct action statutes of Louisiana and Wisconsin. Immediately after these states had provided for direct actions against out-of-state insurers, the civil dockets of the federal courts there swelled with suits based on diversity of citizenship. 2 Congress amended § 1332(c) both to remedy the docket problems that had developed in Louisiana and Wisconsin, and to prevent similar problems from developing in other states. See S.Rep.No.1308, 88th Cong., 2d Sess. 1, U.S.Code Cong. & Admin.News 1964, p. 2778 Et seq.; 1 J. Moore, Federal Practice and Procedure P 0.77(4); Weckstein, The 1964 Diversity Amendment: Congressional Indirect Action against State "Direct Action" Laws, 1965 Wis.L.Rev. 268.

The present appeal involves both the type of "direct action" procedure as well as the type of liability claim that Congress intended to regulate through § 1332(c). The workers' compensation law of Tennessee, on which the present appeal is...

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29 practice notes
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...See, e.g., Ford Motor Co. v. Insurance Co. of North America, 669 F.2d 421 (6th Cir. 1982); Aetna Cas. & Sur. Ins. Co. v. Greene, 606 F.2d 123 (6th Cir.1979); Bodine's Inc. v. Federal Ins. Co., 601 F.Supp. 47 (N.D.Ill., 1984); Spooner v. Paul Revere Life Ins., 578 F.Supp. 369 (E.D. Mich.......
  • Hayes v. Allstate Ins. Co., No. 83-1456
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • December 2, 1983
    ...of Sec. 1332(c) since the policy here is not "liability insurance." See Aetna Casualty & Surety Insurance Company v. Greene, 606 F.2d 123, 126 (6th 4 In Shahan, the court noted that "[t]he intention to make arbitration a condition precedent to the right of action may be e......
  • Continental Cas. Co. v. Canadian Universal Ins. Co., No. 77-2374
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 5, 1979
    ...applies to an action by the insurer against the injured party. Contra, Aetna Casualty & Surety Insurance Co. v. Greene, 6 Cir. 1979, 606 F.2d 123. This is neither a direct action by the injured party against the insurer nor the obverse situation considered in Campbell. Hence, the eviden......
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...indemnity agreement which protects the insured against his liability to others.' " E.g. Aetna Casualty & Sur. Ins. Co. v. Greene, 606 F.2d 123, 126 (6th Cir.1979) (quoting Twin City Fire Ins. Co. v. Wilkerson, 247 F.Supp. 766, 767 (E.D.Tenn.1965)) (worker's compensation insurance p......
  • Request a trial to view additional results
29 cases
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...See, e.g., Ford Motor Co. v. Insurance Co. of North America, 669 F.2d 421 (6th Cir. 1982); Aetna Cas. & Sur. Ins. Co. v. Greene, 606 F.2d 123 (6th Cir.1979); Bodine's Inc. v. Federal Ins. Co., 601 F.Supp. 47 (N.D.Ill., 1984); Spooner v. Paul Revere Life Ins., 578 F.Supp. 369 (E.D. Mich.......
  • Hayes v. Allstate Ins. Co., No. 83-1456
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • December 2, 1983
    ...of Sec. 1332(c) since the policy here is not "liability insurance." See Aetna Casualty & Surety Insurance Company v. Greene, 606 F.2d 123, 126 (6th 4 In Shahan, the court noted that "[t]he intention to make arbitration a condition precedent to the right of action may be e......
  • Continental Cas. Co. v. Canadian Universal Ins. Co., No. 77-2374
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 5, 1979
    ...applies to an action by the insurer against the injured party. Contra, Aetna Casualty & Surety Insurance Co. v. Greene, 6 Cir. 1979, 606 F.2d 123. This is neither a direct action by the injured party against the insurer nor the obverse situation considered in Campbell. Hence, the eviden......
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...indemnity agreement which protects the insured against his liability to others.' " E.g. Aetna Casualty & Sur. Ins. Co. v. Greene, 606 F.2d 123, 126 (6th Cir.1979) (quoting Twin City Fire Ins. Co. v. Wilkerson, 247 F.Supp. 766, 767 (E.D.Tenn.1965)) (worker's compensation insurance p......
  • Request a trial to view additional results

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