Ford Motor Co. v. Insurance Co. of North America, No. 80-1574

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtLIVELY
PartiesFORD MOTOR COMPANY, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.
Docket NumberNo. 80-1574
Decision Date01 February 1982

Page 421

669 F.2d 421
FORD MOTOR COMPANY, Plaintiff-Appellant,
v.
INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.
No. 80-1574.
United States Court of Appeals,
Sixth Circuit.
Argued Dec. 10, 1981.
Decided Feb. 1, 1982.

Page 422

John L. Hopkins, Jr., Ilene Gordon, Southfield, Mich., for plaintiff-appellant.

John A. Kruse, Michael F. Schmidt, Harvey, Kruse & Westen, P. C., Detroit, Mich., for defendant-appellee.

Before WEICK * and LIVELY, Circuit Judges, and PHILLIPS, Senior Circuit Judge.

LIVELY, Circuit Judge.

In this appeal we conclude that a federal court has no jurisdiction where a party claiming damages arising out of the use of a motor vehicle sues the insurer of the vehicle under the Michigan "no-fault" statute and a policy issued thereunder, where the plaintiff and the insured owner of the vehicle, though not a party, are citizens of the same state.

I.

The plaintiff Ford Motor Company (Ford) suffered property damage when an explosion occurred on its premises at Flatrock, Michigan. It determined that the explosion was caused by the accidental mixture of a "core binder catalyst" and a resin. The catalyst was delivered to the Ford plant in a tank truck owned and operated by Refiners Transport and Terminal Corporation (Refiners). Due to the mistake of a Ford employee the catalyst was pumped from the truck into a resin storage tank, and the explosion occurred a short time later.

Claiming damage to its property in excess of $1,000,000 Ford brought this action in the district court, naming Refiner's insurer, Insurance Company of North America (INA), as the only defendant. Recovery from INA was sought under the Michigan "no-fault" insurance act, Michigan Compiled Laws Annotated (MCLA) § 500.3101 et seq. and a provision of a policy which INA had issued to Refiners. Michigan adopted a new statute entitled "Personal and Property Protection and Residual Liability Insurance," MCLA Chapter 31, in 1972. For purposes of this appeal the operative provisions are contained in MCLA §§ 500.3121 and 500.3135. Section 500.3121 is reproduced in full:

500.3121 Property protection benefits, existence, no fault; definitions, property damage, accidental damage; measure of benefits; maximum benefits

Sec. 3121. (1) Under property protection insurance an insurer is liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle subject to the provisions of this section and sections 3123, 3125 and 3127.1

(2) Property protection insurance benefits are due under the conditions stated in this chapter without regard to fault.

(3) Damage to tangible property consists of physical injury to or destruction of the property and loss of use of the property so injured or destroyed.

(4) Damage to tangible property is accidental, as to a person claiming property protection insurance benefits, unless it is suffered or caused intentionally by the claimant. Even though a person knows that damage to tangible property is substantially certain to be caused by his act or omission, he does not cause or suffer such damage intentionally if he acts or refrains from acting for the purpose of averting injury to any person, including himself, or for the purpose of averting damage to tangible property.

(5) Property protection insurance benefits consist of the lesser of reasonable repair costs or replacement costs less depreciation and, where applicable, the value of loss of use. However, property protection insurance benefits paid under 1 policy for damage to all tangible property

Page 423

arising from 1 accident shall not exceed $1,000,000.00.

P.A.1956, No. 218, § 3121, added by P.A.1972, No. 294, § 1, Eff. Oct. 1, 1973.

The pertinent language from § 500.3135 is-

(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance or use within this state of a motor vehicle with respect to which the security required by subsections (3) and (4) of section 3101 was in effect is abolished except as to: ....

(Exceptions not relevant) (Footnote omitted).

The policy provision relied upon by Ford stated:

The Company (INA) will pay, in accordance with Chapter 31 of the Michigan Insurance Code, for damage to tangible property caused by accident and arising out of the ownership, operation, maintenance or use, including loading or unloading, of the insured motor vehicle.

Ford alleged in its complaint that its loss arose out of the "ownership, operation, maintenance or use, including loading and unloading of the insured motor vehicle" of Refiners.

In its answer INA denied that Ford's loss arose out of the ownership or use of the insured tank truck and alleged that Chapter 31 was unconstitutional if it could be held to provide benefits to Ford under the facts of this case. INA also denied that the district court had subject matter jurisdiction.

In its complaint Ford had asserted jurisdiction on the basis of diversity of citizenship, 28 U.S.C. § 1332. Ford is a Delaware corporation with its principal place of business in Michigan. The defendant INA is a Pennsylvania corporation, authorized to engage in the automobile insurance business in Michigan, with its principal place of business in Pennsylvania. However, Refiners, the insured owner of the tank truck, is a Delaware corporation with its principal place of business in Ohio. Under a 1964 amendment to 28 U.S.C. § 1332(c) a proviso was added:

Provided, further, 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.

If this proviso were held to apply, there would be no diversity since both Ford and INA would be treated as corporate citizens of Delaware.

The district judge to whom the case was originally assigned upheld jurisdiction upon concluding that this was not a "direct action against the insurer" within the meaning of § 1332(c). The...

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39 practice notes
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...aspect of the definition in their interpretation of 28 U.S.C. § 1332(c). See, e.g., Ford Motor Co. v. Insurance Co. of North America, 669 F.2d 421 (6th Cir. 1982); Aetna Cas. & Sur. Ins. Co. v. Greene, 606 F.2d 123 (6th Cir.1979); Bodine's Inc. v. Federal Ins. Co., 601 F.Supp. 47 (N.D.Ill.,......
  • Wolf v. Bankers Life and Cas. Co., No. 1:07-cv-622.
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Western District Michigan)
    • September 25, 2007
    ...with the citizenship of its insured, Congress removed the basis of diversity jurisdiction. Ford Motor Co. v. Ins. Co. of North America, 669 F.2d 421, 424 (6th Cir.1982) (citations omitted). Wolf relies on language in that same decision, where our circuit seemed to give the direct-action exc......
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...a no-fault insurance contract has received limited attention, with divided results. Compare Ford Motor Co. v. Insurance Co. of N. Am., 669 F.2d 421 (6th Cir.1982) (§ 1332(c)'s proviso applies to a no-fault insurance action brought by an injured third party) and Fox v. Liberty Mut. Ins. Co.,......
  • 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
    ...See Northbrook Nat. Ins. Co. v. Brewer, 493 U.S. 6, 9-10, 110 S.Ct. 297, 107 L.Ed.2d 223 (1989); Ford Motor Co. v. Ins. Co. of N. Am., 669 F.2d 421, 424 (6th Cir.1982). The direct action statute permitted a person claiming injury at the hands of another to sue the tortfeasor's liability ins......
  • Request a trial to view additional results
39 cases
  • McNeilab, Inc. v. North River Ins. Co., Civ. A. No. 82-3934.
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • October 31, 1986
    ...aspect of the definition in their interpretation of 28 U.S.C. § 1332(c). See, e.g., Ford Motor Co. v. Insurance Co. of North America, 669 F.2d 421 (6th Cir. 1982); Aetna Cas. & Sur. Ins. Co. v. Greene, 606 F.2d 123 (6th Cir.1979); Bodine's Inc. v. Federal Ins. Co., 601 F.Supp. 47 (N.D.Ill.,......
  • Wolf v. Bankers Life and Cas. Co., No. 1:07-cv-622.
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Western District Michigan)
    • September 25, 2007
    ...with the citizenship of its insured, Congress removed the basis of diversity jurisdiction. Ford Motor Co. v. Ins. Co. of North America, 669 F.2d 421, 424 (6th Cir.1982) (citations omitted). Wolf relies on language in that same decision, where our circuit seemed to give the direct-action exc......
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...a no-fault insurance contract has received limited attention, with divided results. Compare Ford Motor Co. v. Insurance Co. of N. Am., 669 F.2d 421 (6th Cir.1982) (§ 1332(c)'s proviso applies to a no-fault insurance action brought by an injured third party) and Fox v. Liberty Mut. Ins. Co.,......
  • 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
    ...See Northbrook Nat. Ins. Co. v. Brewer, 493 U.S. 6, 9-10, 110 S.Ct. 297, 107 L.Ed.2d 223 (1989); Ford Motor Co. v. Ins. Co. of N. Am., 669 F.2d 421, 424 (6th Cir.1982). The direct action statute permitted a person claiming injury at the hands of another to sue the tortfeasor's liability ins......
  • Request a trial to view additional results

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