Lassiter v. State Farm Mutual Automobile Insurance Co., B-73-C-44.

• Decision Date: 05 March 1974
• Docket Number: No. B-73-C-44.,B-73-C-44.
• Parties: C. G. LASSITER, Adm. of the Estate of Edith Lassiter, Deceased, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

371 F. Supp. 1221

C. G. LASSITER, Adm. of the Estate of Edith Lassiter, Deceased, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.

No. B-73-C-44.

United States District Court, E. D. Arkansas, N. D.

March 5, 1974.

Wayne Boyce, Pickens, Boyce, McLarty & Watson, Newport, Ark., for plaintiff.

David A. Hodges, Hodges, Hodges & Hodges, Newport, Ark., for defendant.

Memorandum and Order of Remand

HENLEY, Chief Judge.

This cause is now before the Court on the motion of the plaintiff, C. G. Lassiter, Administrator of the Estate of Edith Lassiter, Deceased, to remand the case to the Circuit Court of Jackson County, Arkansas, where it was commenced in April 1972 by Mrs. Lassiter personally. On December 7, 1973, Mr. Lassiter was substituted as party plaintiff following the suicide of his wife, and on December 28, 1973, the case was removed here.

The position of the plaintiff is that there is an absence of diversity of citizenship between the parties, and that in any event the removal was untimely. Defendant contends that diversity of citizenship in fact exists, and would justify the long delay in the removal on the theory that when the cause was revived in the name of the personal representative of the original plaintiff, the cause of action was substantially altered.

The suit arises out of the fact that in 1970 Mrs. Lassiter was injured in a collision between her automobile and a truck belonging to the City of Newport, Arkansas, and being operated by a City employee, William B. Bigham.

As an Arkansas municipal corporation, the City of Newport was immune from suit in tort under the provisions of Ark.Stats., Ann., Cum.Supp., section 12-2901. The complaint alleges, however, that at the time of the accident there was in force a liability insurance policy issued by the defendant, State Farm Mutual Automobile Insurance Co., and covering the City and its employees. And plaintiff filed her suit against the Company, in lieu of the City, under the provisions of Ark.Stats., Ann., section 66-3240, which permits direct actions against liability insurance companies in instances where the insureds are not legally subject to tort liability under Arkansas law.

There is no question that at all relevant times defendant has been a foreign corporation with its principal place of business in a State other than Arkansas. Hence, it normally would be considered that for jurisdictional purposes diversity of citizenship exists between citizens of Arkansas on the one hand and the defendant on the other hand.

Plaintiff contends, however, that in a suit brought against a liability insurance company under the Arkansas statute just mentioned the citizenship of the defendant must be determined by reference to the proviso of 28 U.S.C.A., section 1332(c), which was adopted by Congress in 1964. Act of August 14, 1964, P.L. 88-439, 78 Stat. 445. Section 1332(c), including the proviso, now reads as follows:

"(c) For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business: 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."

For jurisdictional purposes a municipal corporation is deemed to be a citizen of the State wherein it is located, and it is evident that if the 1964 statute is applicable to this case, there has never been any diversity of citizenship between the parties.¹

It is inferable that counsel for defendant initially shared the view of counsel for plaintiff that the 1964 statute applied to this case and for that reason made no effort to remove it within the basic thirty day period prescribed by 28 U.S.C.A., section 1446(b). Counsel for the defendant has now changed his position and contends that the statute in question is not applicable to a suit brought under Ark.Stats., section 66-3240, and that it would be unconstitutional to apply it to such an action.

Defendant also contends that when the suit was revived, the revivor amounted to the assertion of a new or different cause of action, and that the case became removable under the second paragraph of section 1446(b) which is as follows:

"If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable."

The contention that the revivor introduced a new cause of action which made the case removable seems to be based on the anticipation of counsel that the present plaintiff is going to contend at some stage that the death of his wife, as well as her initial injuries, was proximately caused by the alleged negligence of Bigham while acting within the scope of his employment by the City of Newport.

The burden is on the defendant, of course, to establish that there is diversity of citizenship between the parties and that the removal was timely.

Federal courts in Arkansas have held that section 1332(c), as amended in 1964, is not applicable to a suit brought by an Arkansas insured against his own insurance company to recover on the basis of the uninsured motorist endorsement in his policy, the view being taken that section 1332(c) is limited in application to a direct action brought by an injured person against the liability insurance carrier of a third party tort feasor. Bishop v. Allstate Insurance Co., 1970, 313 F.Supp. 875; Inman v. MFA Mutual Insurance Co., E.D., Ark., 1967, 264 F.Supp. 727. However, those courts have not been confronted heretofore with the question of whether section 1332(c) applies to the limited type of direct action permitted by Ark.Stats., Ann., section 66-3240.

The legislative history of the 1964 amendment to section 1332(c) cited by counsel for the...