Bumberger v. Insurance Co. of North America, No. 91-1044

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore STAPLETON, HUTCHINSON and ROSENN; HUTCHINSON
Citation952 F.2d 764
PartiesJeannette BUMBERGER, Individually and on behalf of Kevin Bumberger, a Minor v. INSURANCE COMPANY OF NORTH AMERICA and ADT Company, Inc., Appellant.
Docket NumberNo. 91-1044
Decision Date31 December 1991

Page 764

952 F.2d 764
Jeannette BUMBERGER, Individually and on behalf of Kevin
Bumberger, a Minor
v.
INSURANCE COMPANY OF NORTH AMERICA and ADT Company, Inc., Appellant.
No. 91-1044.
United States Court of Appeals,
Third Circuit.
Argued July 8, 1991.
Decided Dec. 31, 1991.

Richard K. Masterson, Andrew L. Braunfeld, (argued), Andrea M. Gennetti, Masterson, Braunfeld, Himsworth & Maguire, Norristown, Pa., for appellant.

Edwin P. Smith, (argued), Smith, McEldrew & Levenberg, Philadelphia, Pa., for appellee Jeannette Bumberger, Individually and on behalf of Kevin Bumberger, a Minor.

Before STAPLETON, HUTCHINSON and ROSENN, Circuit Judges.

Page 765

OPINION OF THE COURT

HUTCHINSON, Circuit Judge.

ADT Company, Incorporated (ADT) appeals an order of the United States District Court for the Eastern District of Pennsylvania which dismissed ADT's insurance company and co-defendant, Insurance Company of North America (ADT's Insurer), from the case and an award of judgment to the plaintiff, Jeannette Bumberger (Bumberger). Bumberger had sued ADT claiming she was entitled, under New Jersey law, to recover medical expenses her son had incurred as a result of injuries he suffered when a truck owned by ADT collided with his bicycle.

Bumberger is a citizen of Pennsylvania for purposes of diversity jurisdiction, and ADT is not. ADT's Insurer is a citizen of Pennsylvania. Accordingly, ADT's Insurer's inclusion as a party destroyed diversity. In dismissing ADT's Insurer, the district court held that it was merely a nominal party to the action. The district court based this conclusion on the fact that ADT's Insurer provided coverage only after the exhaustion of ADT's $500,000.00 deductible. By stipulation, the parties limited Bumberger's recovery in this case to slightly less than $350,000.00. However, the district court failed to consider other expenses that could deplete ADT's deductible. These other expenses could include damages, costs and fees ADT might incur as a defendant in various other cases filed on behalf of Bumberger's son for damages in tort she says he allegedly suffered in the same accident. Therefore, we will vacate the district court's order and judgment and remand this case for reexamination of whether ADT's Insurer is merely a nominal party whose presence does not affect diversity and thereafter for further proceedings consistent with this opinion.

I.

Kevin Bumberger (Kevin) was riding his bicycle on June 1, 1989 in Bristol, Pennsylvania when he was struck by a pickup truck owned by ADT and driven by Harry Duff (Duff), an ADT employee. At the time of the accident, Kevin was residing in Bristol with his grandmother, Alice Hems. She was insured under an automobile liability policy issued in Pennsylvania. Under Pennsylvania law, Kevin is entitled to $10,000.00 of first-party coverage under his grandmother's policy. 1

ADT's Insurer had issued ADT a liability policy covering the vehicle Duff was driving when Kevin was injured. This policy had a number of endorsements providing coverage in accord with the laws of various states in which ADT might transact business, including New Jersey. The New Jersey endorsement extends coverage to pedestrians, including bicyclists.

Bumberger filed this action against ADT, on behalf of herself and her son, Kevin, for the medical expenses incurred in connection with the personal injuries Kevin sustained when he was struck by the ADT truck. 2 Bumberger and her son are both citizens of Pennsylvania. ADT is not a citizen of Pennsylvania. When Bumberger discovered

Page 766

that ADT was insured, she amended her complaint to add ADT's Insurer as a defendant. ADT's Insurer is incorporated in Pennsylvania.

Bumberger sought partial summary judgment on the issue of her right to insurance benefits under the Personal Injury Protection provisions of ADT's insurance policy. ADT and ADT's Insurer, represented by the same counsel, responded to the partial summary judgment motion. ADT's Insurer also filed a motion seeking its dismissal from the case because, like Bumberger, ADT's Insurer was a citizen of Pennsylvania and its inclusion in the suit as a defendant would deprive the district court of diversity jurisdiction. 3 The record shows no other basis for the district court's subject-matter jurisdiction over this case.

The district court granted Bumberger's motion for partial summary judgment, holding that the Personal Injury Protection provisions of ADT's insurance policy covered Bumberger and then ruled that ADT's Insurer was a nominal party and dismissed it from the suit. On December 21, 1990, the district court entered judgment, in accordance with Bumberger and ADT's stipulation, against ADT in the amount of $343,033.76 plus interest from August 2, 1990, the date partial summary judgment for Bumberger was granted. At the same time, the court denied Bumberger's request for counsel fees. ADT filed a timely notice of appeal on January 16, 1991.

II.

The subject-matter jurisdiction of the district court, based on diversity of citizenship under 28 U.S.C.A. § 1332(a)(1) (West Supp.1991), is a threshold issue in this case. We have appellate jurisdiction based on the final order of the district court entering judgment for Bumberger against ADT following the dismissal of ADT's Insurer. See 28 U.S.C.A. § 1291 (West Supp.1991).

We exercise plenary review in deciding whether the district court had subject-matter jurisdiction. See Pennsylvania, Dep't of Pub. Welfare v. Markiewicz, 930 F.2d 262, 265 (3d Cir.1991). Here, the district court's subject-matter jurisdiction is dependent partly on general principles of diversity jurisdiction and partly on a construction of the terms of the New Jersey endorsement to ADT's insurance policy. We also exercise plenary review over the construction of the applicable terms of ADT's insurance contract. See STV Eng'rs, Inc. v. Greiner Eng'g, Inc., 861 F.2d 784, 787 (3d Cir.1988); Pacific Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985).

III.

A.

ADT argues the district court erred in holding that ADT's Insurer was a nominal party and so dismissing it from the litigation. The continuing presence of ADT's Insurer in this litigation would destroy diversity. According to ADT, its Insurer may have to pay part of the medical expenses Bumberger seeks in this case. Bumberger says ADT waived this issue by failing to raise it in the district court. ADT contends the fact that it did not raise the question in the district court is of no moment since classification of ADT's Insurer as a nominal party goes to the heart of the district court's jurisdiction.

We have an independent duty to ascertain not only our own appellate jurisdiction but also the subject-matter jurisdiction of the district court. See Pomper v. Thompson, 836 F.2d 131, 132 (3d Cir.1987) (per curiam). Such questions are not subject to waiver. 4 See Shendock v. Director,

Page 767

OWCP, 893 F.2d 1458, 1461 n. 7 (3d Cir.) (in banc), cert. denied, --- U.S. ----, 111 S.Ct. 81, 112 L.Ed.2d 53 (1990). Thus, we reject Bumberger's waiver argument and go on to consider the effect ADT's Insurer's status as a defendant has on the district court's jurisdiction.

"[D]iversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff."...

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75 practice notes
  • Johnson v. Smithkline Beecham Corp., Nos. 12–2561
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • June 7, 2013
    ...can base its jurisdiction only upon the citizenship of parties with “a real interest in the litigation,” Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991). Plaintiffs are correct that, generally speaking, Pennsylvania law preserves for a limited time a dissolved corporation's......
  • Gallagher v. Johnson & Johnson Consumer Cos., Civil No. 15-6163 (JBS/AMD)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 14, 2016
    ...Since “the federal court must disregard nominal or formal parties” in determining diversity, see Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991), and the state was seeking damages for individual policyholders who were not named in the action, Caldwell looked to the policyho......
  • Johnson v. Smithkline Beecham Corp., Civ. No. 11–5782.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • March 29, 2012
    ...496]to the controversy”). Nominal parties are “those without a real interest in the litigation.” Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991). Plaintiffs argue that because SmithKline Beecham did not consent, the “rule of unanimity” requires remand. (Id. at 10–13.) I dis......
  • Gentry v. Sikorsky Aircraft Corp., CIVIL ACTION No. 18-1326
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • April 22, 2019
    ...have "no actual interest in the outcome of the litigation[.]" Johnson , 724 F.3d at 359 ; see also Bumberger v. Ins. Co. of N. Am. , 952 F.2d 764, 767 (3d Cir. 1991) ("Nominal parties are generally those without a real interest in the litigation.") (citation omitted). They "tend to be forma......
  • Request a trial to view additional results
75 cases
  • Johnson v. Smithkline Beecham Corp., Nos. 12–2561
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • June 7, 2013
    ...can base its jurisdiction only upon the citizenship of parties with “a real interest in the litigation,” Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991). Plaintiffs are correct that, generally speaking, Pennsylvania law preserves for a limited time a dissolved corporation's......
  • Gallagher v. Johnson & Johnson Consumer Cos., Civil No. 15-6163 (JBS/AMD)
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 14, 2016
    ...Since “the federal court must disregard nominal or formal parties” in determining diversity, see Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991), and the state was seeking damages for individual policyholders who were not named in the action, Caldwell looked to the policyho......
  • Johnson v. Smithkline Beecham Corp., Civ. No. 11–5782.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • March 29, 2012
    ...496]to the controversy”). Nominal parties are “those without a real interest in the litigation.” Bumberger v. Ins. Co. of N. Am., 952 F.2d 764, 767 (3d Cir.1991). Plaintiffs argue that because SmithKline Beecham did not consent, the “rule of unanimity” requires remand. (Id. at 10–13.) I dis......
  • Gentry v. Sikorsky Aircraft Corp., CIVIL ACTION No. 18-1326
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • April 22, 2019
    ...have "no actual interest in the outcome of the litigation[.]" Johnson , 724 F.3d at 359 ; see also Bumberger v. Ins. Co. of N. Am. , 952 F.2d 764, 767 (3d Cir. 1991) ("Nominal parties are generally those without a real interest in the litigation.") (citation omitted). They "tend to be forma......
  • Request a trial to view additional results

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