Amex Assurance Co. v. Giordano
| Decision Date | 21 February 2013 |
| Docket Number | Civil Action No. AW–12–cv–2640. |
| Parties | AMEX ASSURANCE COMPANY, Plaintiff, v. Gary Vincent GIORDANO, Defendant. |
| Court | U.S. District Court — District of Maryland |
OPINION TEXT STARTS HERE
Deirdre G. Johnson, Olivia L. Lynch, Thomas A. Hanusik, Crowell and Moring LLP, Washington, DC, for Plaintiff.
Anthony Michael Conti, Conti Fenn and Lawrence LLC, Baltimore, MD, Christopher MacDonald Ridgeway, Scott Richard White, Macaluso and Associates APC, Carlsbad, CA, for Defendant.
Plaintiff AMEX Assurance Company (AMEX) brings this action against DefendantGary Vincent Giordano, seeking declaratory relief under 28 U.S.C. § 2201 as well as alleging fraud and negligent misrepresentation. Pending before the Court is Giordano's Motion to Dismiss. Doc. No. 18. The Court has reviewed the motion papers and finds that no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons articulated below, the Court DENIES Giordano's Motion to Dismiss.
The following factual allegations are drawn from the Complaint, motion papers, and attached exhibits. On July 27, 2011, Plaintiff AMEX issued a travel insurance policy (the Policy) to Defendant Giordano for a trip to Aruba scheduled for July 31, 2011 to August 5, 2011. Under the Policy, Giordano and his traveling companion, Robyn Lynn Gardner, were both identified as Covered Persons. In connection with this trip, Giordano faxed and mailed to AMEX Beneficiary Designation Forms for himself and Ms. Gardner. Ms. Gardner's form designated Giordano as her sole beneficiary and listed their relationship as “Partner.”
The Policy included Accidental Death and Dismemberment coverage up to $1,500,000. To recover on these benefits, a claimant must provide both Notice of Claim and Proof of Loss. Furthermore, a Covered Person may not bring legal action to recover on the Policy until sixty days after AMEX has received Proof of Loss.
On August 2, 2011, Giordano reported Ms. Gardner missing to Aruban authorities, stating that she had disappeared while the two were snorkeling. At present, Ms. Gardner remains missing and there has been no official declaration of her death.
On August 4, 2011, two days after he reported Ms. Gardner missing to Aruban authorities, Giordano called AMEX. According to AMEX, Giordano inquired about the Beneficiary Designation Forms, but did not make a death benefits Notice of Claim with respect to Ms. Gardner. However, in February 2012, Giordano contacted AMEX again, seeking to recover death benefits on the Policy and arguing that he had made a Notice of Claim with respect to Ms. Gardner on August 4, 2011.
On June 14, 2012, Giordano filed a complaint against AMEX in the Circuit Court of Cook County, Illinois. The complaint alleges breach of contract (Count I) and seeks a declaration that AMEX has a duty to pay Giordano $3,500,000 (Count II). AMEX responded on September 17, 2012, by filing a motion to dismiss on forum non conveniens grounds and a motion to dismiss for failure to state claims. These motions are still pending, and AMEX has not filed any counterclaims or asserted any defenses in this Illinois action.1
In the meantime, Giordano sent a demand letter to AMEX in August 2012. AMEX interpreted the letter as a Notice of Claim and initiated the claims investigation process. As part of that process, AMEX requested that Giordano submit several supplemental claims materials, including Proof of Loss materials. On September 21, 2012, AMEX indicated to Giordano that the information he had provided to date remained incomplete and detailed the additional materials required to fulfill the request. According to AMEX, Giordano has not yet responded in full to AMEX's requests, including its request to provide a complete Proof of Loss.
On September 6, 2012, AMEX filed this diversity action for declaratory relief pursuant to 28 U.S.C. § 2201 (Counts I and II), fraud (Count III), and negligent misrepresentation (Count IV). Specifically, AMEX seeks declarations that the Accidental Death and Dismemberment coverage of the Policy is void ab initio for lack of insurable interest and that no valid claim may be made under the Policy. On October 29, 2012, Giordano filed this Motion to Dismiss.
As a preliminary matter, the Court addresses Giordano's erroneous conclusion that the Court lacks subject matter jurisdiction to hear this case. According to Giordano, AMEX cannot invoke diversity jurisdiction because both parties are Maryland citizens. Doc. No. 24 at 1. Yet, Giordano provides no appropriate authority to support his argument that a corporation is deemed a resident of any state in which it does business.2 Rather, a corporation is a citizen of its place of incorporation and of the state where it has its principle place of business. 28 U.S.C. § 1332(c). AMEX is an insurance company incorporated in Illinois with its principal place of business in Phoenix, Arizona, Compl. ¶ 16, while Giordano is a Maryland resident, id. ¶ 17. Therefore, since the matter in controversy exceeds $75,000 and is between citizens of different states, the Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332.
Having established jurisdiction to adjudicate this case, the Court turns to Giordano's Motion to Dismiss. Giordano argues that the Court should abstain from this action in deference to the concurrent Illinois state court action. In the alternative, he seeks to dismiss Counts II–IV of the Complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court holds that dismissal on either ground is unwarranted and thereby denies Giordano's Motion to Dismiss.
I. Motion to Dismiss Under Abstention Doctrine
It is well-established that our dual system of federal and state governments allows for parallel litigation. The pendency of a state action is “no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (quotations omitted). This rule stems from the federal courts' “virtually unflagging obligation” to exercise their jurisdiction. Id.; see also Great Am. Ins. Co. v. Gross, 468 F.3d 199, 206 (4th Cir.2006) ().
As such, abstention from the duty to exercise federal jurisdiction is not the rule, but “an extraordinary and narrow exception.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 14, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (quoting Colorado River, 424 U.S. at 813, 96 S.Ct. 1236). It is justified only in the exceptional circumstances where denying a federal forum “clearly serve[s] an important countervailing interest.” Id. In general, the circumstances appropriate for abstention are confined to three categories, all relating to federal-state comity or avoidance of constitutional decisions. See Colorado River, 424 U.S. at 814–17, 96 S.Ct. 1236.
In Colorado River, the Supreme Court held that—apart from traditional grounds for abstention—abstention is also proper for reasons of “wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Id. at 817, 96 S.Ct. 1236 (quotations omitted). However, because Colorado River abstention does not rest on the weightier concerns of federal-state relations and proper constitutional adjudication, it is to be applied sparingly. See id. at 817–18.
The threshold question in determining whether Colorado River abstention is appropriate is whether there are parallel state and federal actions. If parallel suits exist, courts then balance six non-exclusive factors to determine whether exceptional circumstances compel abstention:
(1) whether the subject matter of the litigation involves property where the first court may assume in rem jurisdiction to the exclusion of others; (2) whether the federal forum is inconvenient; (3) the desirability of avoiding piecemeal litigation; (4) the relevant order in which the courts obtained jurisdiction and progress achieved in each action; (5) whether state law or federal law provides the rule of decision on the merits; and (6) the adequacy of the state proceedings to protect the parties' rights.
Great Am. Ins., 468 F.3d at 207–08;see also Moses H. Cone, 460 U.S. at 15–16, 19–27, 103 S.Ct. 927;Colorado River, 424 U.S. at 818–19, 96 S.Ct. 1236. In this analysis, the balance of factors is “heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone, 460 U.S. at 16, 103 S.Ct. 927.
A prerequisite to applying the Colorado River factors is that the state and federal proceedings must be parallel. The Court recognizes that the actions here arise from the same insurance policy and share some common factual allegations. However, an overlap in facts and legal theories does not automatically demand a conclusion that the suits are parallel. See McLaughlin v. United Va. Bank, 955 F.2d 930, 935 (4th Cir.1992) (). As the Fourth Circuit explained, “[t]he Colorado River doctrine does not give federal courts carte blanche to decline to hear cases within their jurisdiction merely because issues or factual disputes in those cases may be addressed in past or pending proceedings before state tribunals.” New Beckley Mining Corp. v. Int'l Union, United Mine Workers of Am., 946 F.2d 1072, 1074 (4th Cir.1991) (quotations omitted).
Rather, “[s]uits are parallel if substantially the same parties litigate substantially the same issues in different forums.” Great Am. Ins., 468 F.3d at 208 (quotations omitted). While...
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