Elkins v. American Intern. Special Lines Ins. Co.
| Decision Date | 28 April 2009 |
| Docket Number | Case No. 2:08-CV-568. |
| Citation | 611 F.Supp.2d 752 |
| Parties | Shirley E. ELKINS, Plaintiff, v. AMERICAN INTERNATIONAL SPECIAL LINES INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Lloyd Pierre-Louis, Esq., Pierre-Louis & Associates, LLC, Columbus, OH, for Plaintiff.
Steven G. Janik, Esq., Kurt D. Anderson, Esq., Janik, Dorman & Winter, LLP, Cleveland, OH, for Defendant.
This is an action brought by plaintiff Shirley E. Elkins against defendant American international Special Lines Insurance Company. On March 20, 2008, plaintiff filed a supplemental complaint pursuant to Ohio Rev.Code § 3929.06 against the defendant in the Court of Common Pleas of Franklin County, Ohio. Plaintiff alleged that on January 31, 2008, she obtained a judgment against Chelsea Title Agency of Columbus, Inc. ("Chelsea Title") in the amount of $90,113.28, stemming from Chelsea Title's negligent failure to properly file a lien on her behalf. Plaintiff further alleged that since the defendant provided errors and omissions liability coverage to Chelsea Title, the defendant was liable for the damages awarded in her favor against Chelsea Title. In her prayer for relief, plaintiff demands judgment against the defendant in the amount of $90,113.28, plus pre-judgment and post-judgment interest, fees, costs, attorney's fees, and any other available relief.
On June 11, 2008, the defendant filed a notice of the removal of the action to this court on the basis of diversity of citizenship. On October 9, 2008, plaintiff filed a motion to remand the action to the Franklin County Common Pleas Court, arguing that diversity is lacking and that the jurisdictional amount in controversy has not been satisfied. On October 31, 2008, defendant filed a motion for summary judgment. Those motions are now before the court for a ruling.
Under 28 U.S.C. § 1332(a)(1), federal district courts have jurisdiction over actions between citizens of different states where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs. The removal of an action to federal court based on diversity jurisdiction is proper only when complete diversity exists at the time of removal, that is, when all parties on one side of the litigation are of a different citizenship from all parties on the other side of the litigation. Coyne v. American Tobacco Co., 183 F.3d 488, 492 (6th Cir.1999). The party seeking to bring the case into federal court bears the burden of establishing diversity jurisdiction. Certain Interested Underwriters at Lloyd's, London, England v. Layne, 26 F.3d 39, 41 (6th Cir. 1994); Her Majesty The Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989).
According to the supplemental complaint, plaintiff is a resident of Columbus, Ohio. Defendant is an Illinois corporation having its principal place of business in New York. See Motion for Summary Judgment, Ex. 2, Keane Aff. ¶ 2. Nonetheless, plaintiff argues that complete diversity is lacking because Chelsea Title is also an Ohio citizen.
Defendant correctly argues that Chelsea Title is not a party to this action. The supplemental complaint was filed pursuant to Ohio Rev.Code § 3929.06(A), which provides:
(A)(1) If a court in a civil action enters a final judgment that awards damages to a plaintiff for injury, death, or loss to a person or property of the plaintiff or another person for whom the plaintiff is a legal representative and if, at the time that the cause of action accrued against the judgment debtor, the judgment debtor was insured against liability for that injury, death, or loss, the plaintiff or the plaintiff's successor in interest is entitled as judgment creditor to have an amount up to the remaining limit of liability coverage provided in the judgment debtor's policy of liability insurance applied to the satisfaction of the final judgment.
(2) If, within thirty days after the entry of the final judgment referred to in division (a)(1) of this section, the insurer that issued the policy of liability insurance has not paid the judgment creditor an amount equal to the remaining limit of liability coverage provided in that policy, the judgment creditor may file in the court that entered the final judgment a supplemental complaint against the insurer seeking the entry of a judgment ordering the insurer to pay the judgment creditor the requisite amount. Subject to division (C) of this section, the civil action based on the supplemental complaint shall proceed against the insurer in the same manner as the original civil action against the judgment debtor.
Ohio Rev.Code § 3929.06(A)(1) and (2). Section 3929.06 creates a subrogation action, wherein the injured party stands in the shoes of the insured against his or her insurer, and the statute may be used only to bring insurers into an action. See Doepker v. Everest Indemnity Insurance Co., No. 5:07cv2456, 2008 WL 163606 *3 (N.D.Ohio Jan. 16, 2008)(the insurer is the only properly-named defendant in an action under § 3929.06); see also Ridge v. National American Insurance Company, 46 F.3d 1131 (table), 1995 WL 11210 *1 (6th Cir. Jan. 11, 1995)( that complete diversity of citizenship existed between the parties, stating "this Court has previously recognized the propriety of bring a diversity action based on section 3929.06.")(citing Ayers v. Kidney, 333 F.2d 812 (6th Cir.1964)). Since Chelsea Title is not and cannot be a named defendant to the supplemental complaint, the fact that Chelsea Title is an Ohio citizen does not undermine diversity jurisdiction in this case.
This court further notes that diversity jurisdiction in this case is not impacted by 28 U.S.C. § 1332(c)(1), which states 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[.]" 28 U.S.C. § 1332(c)(1). The term "direct action" as used in § 1332(c)(1) refers to the situation where the injured party forgoes suing the tortfeasor and instead sues the tortfeasor's liability insurer directly on the issue of liability. See Estate of Monahan v. American States Insurance Co., 75 Fed.Appx. 340, 343 (6th Cir.2003); Peterson v. TIG Specialty Ins. Co., 211 F.Supp.2d 1013, 1015 (S.D.Ohio 2002)(the term "direct action" is one in which the injured party is entitled to bring suit against the tortfeasor's liability insurer without joining the insured or first obtaining a judgment against him). This type of action is not permitted under § 3929.06. Rather, § 3929.06(A)(2) "does not authorize the commencement of a civil action against an insurer until a court enters the final judgment described in division (A)(1) of this section in the distinct civil action for damages between the plaintiff and an insured tortfeasor and until the expiration of the thirty-day period referred to in division (A)(2) of this section." Ohio Rev.Code § 3929.06(B). Therefore, the instant case is not a "direct action" within the meaning of § 1332(c)(1) which would require imputing the citizenship of Chelsea Title to defendant, the insurer in this case.
Plaintiff argues that the $75,000 amount-in-controversy requirement is not satisfied in this case. Plaintiff contends that although she requests damages in the amount of $90,113.28, her recovery may be limited to $15,113.28 due to the $75,000 retention in the liability insurance policy.
"The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 82 L.Ed. 845 (1938)(footnotes omitted). "It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." Id. at 289, 58 S.Ct. 586 (footnote omitted). The fact that the plaintiff may be unable to recover an amount over the jurisdictional limit does not establish bad faith or defeat jurisdiction. Id. Likewise, the fact that the complaint discloses the existence of a valid defense to the plaintiff's claim does not defeat jurisdiction. Id.
Where, as here, an action is filed in state court and then removed,
[t]here is a strong presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on a federal court or that the parties have colluded to that end. For if such were the purpose suit would not have been instituted in the first instance in the state but in the federal court. It is highly unlikely that the parties would pursue this roundabout and troublesome method to get into the federal court by removal when by the same device the suit could be instituted in that court. Moreover, the status of the case as disclosed by the plaintiff's complaint is controlling in the case of a removal, since the defendant must file his petition before the time for answer or forever lose his right to remove. Of course, if, upon the face of the complaint, it is obvious that the suit cannot involve the necessary amount, removal will be futile and remand will follow. But the fact that it appears from the face of the complaint that the defendant has a valid defense, if asserted, to all or a portion of the claim, or the circumstance that the rulings of the district court after removal reduce the amount recoverable below the jurisdictional requirement, will not justify remand.
Id. at 290-91, 58 S.Ct. 586 (footnotes omitted); see also Gafford v. General Electric Co., 997 F.2d 150,...
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