Davis v. State Farm Auto. Ins. Co., No. 05-72354.

CourtUnited States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
Writing for the CourtCohn
Citation382 F.Supp.2d 957
Docket NumberNo. 05-72354.
Decision Date18 August 2005
PartiesMichael DAVIS, Plaintiff, v. STATE FARM AUTOMOBILE INSURANCE COMPANY, Defendant.

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382 F.Supp.2d 957
Michael DAVIS, Plaintiff,
v.
STATE FARM AUTOMOBILE INSURANCE COMPANY, Defendant.
No. 05-72354.
United States District Court, E.D. Michigan, Southern Division.
August 18, 2005.

Adrienne D. Logeman-Cox, Robert E. Logeman, Logeman, Iafrate, Ann Arbor, MI, for Plaintiff.

James F. Hewson, Hewson & Van Hellemont, Warren, MI, for Defendant.

MEMORANDUM AND ORDER DENYING PLAINTIFF'S MOTION TO REMAND1

COHN, District Judge.


I. Introduction

This is an insurance dispute. Plaintiff Michael Davis is suing defendant State Farm Mutual Automobile Insurance Company (State Farm) for breach of contract for refusal to provide coverage for expenses incurred after an automobile accident.

Before the Court is Davis' motion to remand. For the reasons that follow, the motion is DENIED.

II. Background

On September 7, 1987, Davis was struck by an automobile while riding a moped and suffered injuries. At the time, Davis was insured with State Farm under a no-fault policy. State Farm apparently refused coverage.

On March 1, 2005, Davis filed suit against State Farm in Washtenaw County Circuit Court claiming breach of contract and seeking a declaration of rights between the parties.

On June 14, 2005, State Farm removed the case to federal court on the grounds of diversity of citizenship. Davis has moved to remand on the grounds that there is no diversity of citizenship because State Farm is considered a citizen of the same state under 28 U.S.C. § 1332(c)(1).

III. Analysis
A.

28 U.S.C. § 1332(c)(1) provides:

In any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated,

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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.

Davis is a citizen of Michigan. State Farm is an Illinois corporation with its principal place of business in Illinois. It is undisputed that Davis seeks in excess of $75,000.000. Thus, diversity of citizenship appears to exist. The question before the Court, however, is whether 28 U.S.C. § 1332(c)(1) applies to the dispute such that Davis' Michigan citizenship is imputed to State Farm, thereby destroying diversity jurisdiction.

B.

Davis cites Faiman v. Travelers Property Casualty, 99-60525 (E.D.Mich. Nov. 17, 1999) (Steeh, J.), in which another judge in this district held that section 1332(c)(1) applied to a dispute filed by an insured against the insurer such that the plaintiff/insured's citizenship was imputed to the defendant/insurer. In other words, the district court held that a suit by an insured against the insurer was a "direct action" within the meaning of section 1332(c)(1). The district court in Faiman relied on the Court of Appeals for the Sixth Circuit's decision in Ford Motor Co. v. Ins. Co. of North Am., 669 F.2d 421 (6th Cir.1982). In Ford, Ford suffered property damages when an explosion occurred on its premises. The catalyst of the explosion was delivered to Ford in a tank truck owned by a third party. Ford sued the third party's insurer under Michigan's no-fault act. Ford sued in federal court on the grounds of diversity jurisdiction. The Sixth Circuit held that the defendant/insurer was a citizen of the state of its insured, the unnamed third party. As Ford and the third party were citizens of Delaware, the Sixth Circuit held that diversity jurisdiction did not exist.2

State Farm, however, relies on the Sixth Circuit's more recent decision in Lee-Lipstreu v. Chubb Group of Ins. Companies, 329 F.3d 898 (6th Cir.2003). In Lee-Lipstreu, the Sixth Circuit considered whether a Scott-Pontzer3 claim under Ohio law, in which an employee sues its employer's insurance carrier to recover underinsured motorist benefits, is a "direct action" under

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§ 1332(c)(1). The Sixth Circuit held that it was not, explaining:

This application of the direct action provision of § 1332(c)(1) ignores a fundamental concept of a Scott-Pontzer claim — that the entire suit rests on the conclusion...

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2 practice notes
  • Dushaj v. State Farm Mut. Auto. Ins. Co., Case No. 13-11642
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • November 20, 2013
    ..."direct action" provision, does not apply to "an action by an insured against its insurer. . . ." Davis v. State Farm Auto. Ins. Co., 382 F. Supp. 2d 957, 959 (E.D. Mich. 2005). See also Lee-Lipstreu v. Chubb Ins. Co., 329 F.3d 898-900 (6th Cir. 2003). Under Michigan law, "[a] personal prot......
  • Waskowski v. State Farm Mut. Auto. Ins. Co., Case No.: 11-12979
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • July 11, 2012
    ...action provision applies to a dispute between an insured and his or her own insurance company. See Davis v. State Farm Auto. Ins., 382 F.Supp.2d 957 (E.D. Mich. 2005) (Judge Cohn); Herring v. State Farm Mutual Automobile Insurance Co., 2005 WL 3071902 (E.D. Mich. 2005) (Judge Steeh); Sonkis......
2 cases
  • Dushaj v. State Farm Mut. Auto. Ins. Co., Case No. 13-11642
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • November 20, 2013
    ..."direct action" provision, does not apply to "an action by an insured against its insurer. . . ." Davis v. State Farm Auto. Ins. Co., 382 F. Supp. 2d 957, 959 (E.D. Mich. 2005). See also Lee-Lipstreu v. Chubb Ins. Co., 329 F.3d 898-900 (6th Cir. 2003). Under Michigan law, "[a] personal prot......
  • Waskowski v. State Farm Mut. Auto. Ins. Co., Case No.: 11-12979
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • July 11, 2012
    ...action provision applies to a dispute between an insured and his or her own insurance company. See Davis v. State Farm Auto. Ins., 382 F.Supp.2d 957 (E.D. Mich. 2005) (Judge Cohn); Herring v. State Farm Mutual Automobile Insurance Co., 2005 WL 3071902 (E.D. Mich. 2005) (Judge Steeh); Sonkis......

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