Butler v. Zurich American Ins. Co., No. 3-01-07641-DAK.

CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
Writing for the CourtKatz
Citation184 F.Supp.2d 695
Docket NumberNo. 3-01-07641-DAK.
Decision Date06 February 2002
PartiesLisa BUTLER, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants.
184 F.Supp.2d 695
Lisa BUTLER, Plaintiff,
v.
ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants.
No. 3-01-07641-DAK.
United States District Court, N.D. Ohio, Western Division.
February 6, 2002.

Page 696

Claudia A. Ford, E.J. Leizerman & Associates, LLC, Michael J. Leizerman, Law Office of E.J. Leizerman, Myron Duhart, Ronald F. Leonhardt, E.J. Leizerman & Associates, LLC, Toledo, OH, for Plaintiff.

Dale E. Markworth, Mansour Gavin Gerlack & Manos, David J. Fagnilli, Davis & Young, Cleveland, OH, for Defendants.

MEMORANDUM OPINION

KATZ, District Judge.


This matter is before the Court on Plaintiff's motion to remand (Doc. No. 10) for lack of subject matter jurisdiction. For the following reasons, the motion will be granted, and the case remanded to the Court of Common Pleas for Lucas County, Ohio.

BACKGROUND1

On November 9, 1999, in Toledo, Lucas County, Ohio, Plaintiff Lisa Butler suffered bodily injury when the vehicle in which she was a passenger collided with a utility pole. At the time of the accident Butler was employed by Wendy's Restaurant ("Wendy's"), and her father (not involved in the accident) was an employee of Reiter Automotive ("Reiter").

On October 30, 2001, Butler filed suit for benefits under policies of uninsured/underinsured motorist coverage ("UM/UIM") against Twin City Fire Insurance Company ("Twin City") and Zurich American Insurance Company ("Zurich") in the Court of Common Pleas for Lucas County, Ohio.2 Her suit was based on an insurance policy, issued by Twin City to Wendcentral Corporation, that insured Wendy's, and on a policy issued by Zurich to Reiter.

Butler claimed that she was entitled to coverage pursuant to the rule stated in Scott-Pontzer v. Liberty Mut. Fire Ins. Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999). Scott-Pontzer stands for the proposition that an employee may recover under the UM/UIM coverage of her employer's commercial automobile liability policy, even though the employee was not

Page 697

acting in the scope of employment at the time of her accident. In Ezawa v. Yasuda Fire & Marine Ins. Co., 86 Ohio St.3d 557, 715 N.E.2d 1142 (1999), the Ohio Supreme Court, without comment, extended Scott-Pontzer to include coverage of the child of an employee of a corporation.

On December 14, 2001, purportedly pursuant to 28 U.S.C. § 1441(a) and 28 U.S.C. § 1332(a)(1), Twin City, with the consent of Zurich, removed the action to this Court.3 Twin City claimed that complete diversity between the parties existed because Butler was an Ohio resident, Twin City was an Indiana corporation with principal place of business in Indiana, and Zurich was a New York corporation with principal place of business in Illinois.

On December 27, 2001, Butler filed a motion to remand, claiming that complete diversity was destroyed by operation of 28 U.S.C. § 1332(c)(1), which, in certain situations, deems an insurance company to share the citizenship of its insured. If the statute were to operate as Butler suggests, Twin City would be a citizen of both Indiana and Ohio.4 Twin City opposed the motion, arguing that § 1332(c) did not apply. Butler filed a reply. The parties' contentions are addressed below.

DISCUSSION

Butler claims that diversity is destroyed by 28 U.S.C. § 1332(c)(1), which provides,

(c) For the purposes of this section and section 1441 of this title —

(1) a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business, except that 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.

28 U.S.C. § 1332(c)(1).

The Supreme Court has noted that the so-called "direct action exception" to diversity jurisdiction was enacted in an effort to trim the burgeoning dockets of district courts in Wisconsin and Louisiana, both of which were experiencing increased diversity filings due to state statutes that permitted an injured party to sue an instate tortfeasor's out-of-state insurer without joining the tortfeasor:

Believing that such suits did "not come within the spirit or the intent of the basic purpose of the diversity jurisdiction of the Federal judicial system," S.Rep. No. 1308, [88th Cong.2d Sess.], at 7, Congress enacted the proviso "to eliminate under the diversity jurisdiction of the U.S. district courts, suits on certain tort claims in which both parties are local residents, but which, under a State `direct action' statute, may be brought directly against a foreign insurance carrier without joining the local tort-feasor as a defendant[.]" id. at 1 (emphasis added).

Northbrook Nat'l Ins. Co. v. Brewer, 493 U.S. 6, 10, 110 S.Ct. 297, 299, 107 L.Ed.2d 223 (1989).

Twin City argues that § 1332(c)(1) is inapplicable to Scott-Pontzer actions for two reasons. First, it contends that Butler's complaint does not constitute a "direct action." Second, it maintains that a policy providing UM/UIM coverage...

To continue reading

Request your trial
5 practice notes
  • Dolly v. Old Republic Ins. Co., No. 5:00CV1685.
    • United States
    • U.S. District Court — Northern District of Ohio
    • May 8, 2002
    ...Ins. Co., — F.Supp.2d —, 2002 WL 312819, No. 3:01 CV 7611 (N.D.Ohio Feb. 15, 2002) (Katz, J.); Butler v. Zurich American Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.). See also, Monahan v. American States Ins. Co., No. 5:00 CV 1191, slip op. (N.D.Ohio Dec. 20, 2001) (Economus, J.) ......
  • Peterson v. Tig Specialty Ins. Co., No. C-2-02-311.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • July 26, 2002
    ...(N.D.Ohio 2002) (Karr, J.); Griffin v. Wausau Ins. Cos., 189 F.Supp.2d 714 (N.D.Ohio 2002) (Katz, J.); Butler v. Zurich Am. Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.). C. Northern District Cases Denying Remand Several judges of the Northern District have found that the direct ac......
  • Estate of Taylor v. St. Paul Fire and Marine Inc., No. 1-00-02397-AA.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • September 19, 2002
    ...(Aldrich, J.). At last count, seven courts have disagreed, and have held that jurisdiction is lacking. Butler v. Zurich Am. Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.); Stubbins v. Nationwide Agribusiness Ins. Co., 181 F.Supp.2d 805 (N.D.Ohio 2002) (Carr, J.); Cornelia v. St. Pau......
  • Griffin v. Wausau Ins. Companies, No. 3:01CV7611.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • February 15, 2002
    ...including this one, have adopted similar reasoning when remanding Scott-Pontzer cases. See Butler v. Zurich American Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.); Stubbins v. Nationwide Agribusiness, 181 F.Supp.2d 805 (N.D.Ohio 2002) (Carr, J.) (collecting cases); Comella v. St. P......
  • Request a trial to view additional results
5 cases
  • Dolly v. Old Republic Ins. Co., No. 5:00CV1685.
    • United States
    • U.S. District Court — Northern District of Ohio
    • May 8, 2002
    ...Ins. Co., — F.Supp.2d —, 2002 WL 312819, No. 3:01 CV 7611 (N.D.Ohio Feb. 15, 2002) (Katz, J.); Butler v. Zurich American Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.). See also, Monahan v. American States Ins. Co., No. 5:00 CV 1191, slip op. (N.D.Ohio Dec. 20, 2001) (Economus, J.) ......
  • Peterson v. Tig Specialty Ins. Co., No. C-2-02-311.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • July 26, 2002
    ...(N.D.Ohio 2002) (Karr, J.); Griffin v. Wausau Ins. Cos., 189 F.Supp.2d 714 (N.D.Ohio 2002) (Katz, J.); Butler v. Zurich Am. Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.). C. Northern District Cases Denying Remand Several judges of the Northern District have found that the direct ac......
  • Estate of Taylor v. St. Paul Fire and Marine Inc., No. 1-00-02397-AA.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • September 19, 2002
    ...(Aldrich, J.). At last count, seven courts have disagreed, and have held that jurisdiction is lacking. Butler v. Zurich Am. Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.); Stubbins v. Nationwide Agribusiness Ins. Co., 181 F.Supp.2d 805 (N.D.Ohio 2002) (Carr, J.); Cornelia v. St. Pau......
  • Griffin v. Wausau Ins. Companies, No. 3:01CV7611.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • February 15, 2002
    ...including this one, have adopted similar reasoning when remanding Scott-Pontzer cases. See Butler v. Zurich American Ins. Co., 184 F.Supp.2d 695 (N.D.Ohio 2002) (Katz, J.); Stubbins v. Nationwide Agribusiness, 181 F.Supp.2d 805 (N.D.Ohio 2002) (Carr, J.) (collecting cases); Comella v. St. P......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT