Penn-America Ins. Co. v. Haros L.L.C.
| Decision Date | 03 April 2023 |
| Docket Number | CIVIL 1:22-CV-00706 |
| Parties | PENN-AMERICA INSURANCE CO., Plaintiff v. HAROS, L.L.C., ET AL., Defendants |
| Court | U.S. District Court — Western District of Louisiana |
REPORT AND RECOMMENDATION
JOSEPH H.L. PEREZ-MONTES, UNITED STATES MAGISTRATE JUDGE.
Defendant Malcolm X. Larvadain (“Larvadain”) filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No 5) and, alternatively, a Motion to Dismiss for Failure to State a Claim (ECF No. 5). Defendant Haros, L.L.C. (“Haros”) filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No. 10) and, Alternatively a Motion to Abstain (ECF No. 10).
Because Haros has not carried its burden of showing to a legal certainty that Larvadain's claim does not meet the jurisdictional threshold, his Motion to Dismiss for lack of subject matter jurisdiction (ECF No. 10) should be denied.
Because Larvadain and Haros have the same ultimate interest in the coverage issue, Larvadain's Motion to Realign Haros as a Plaintiff and Dismiss the action for lack diversity jurisdiction (ECF No. 5) should be DENIED.
Likewise Haros's Motion to Realign Larvadain as a Plaintiff and Dismiss the action for lack diversity jurisdiction (ECF No. 10) should also be DENIED.
Because, under the Anti-Injunction Act, this Court lacks authority to enter a declaratory judgment in this case, this action should be DISMISSED WITH PREJUDICE for lack of subject matter jurisdiction.
Alternatively, Larvadain's Motion to Dismiss pursuant to Rule 12(b)(6) (ECF No. 5) and Haros's Motion to Abstain and Dismiss (ECF No. 10) should be GRANTED and Penn-America's declaratory judgment action should be DISMISSED WITHOUT PREJUDICE.
Plaintiff Penn-America Insurance Co. (“Penn-America”) issued a commercial general liability insurance policy (“the Policy”) to Haros, a construction company. Haros contracted with Larvadain to renovate his office building. During the demolition phase of the renovation, Larvadain's building collapsed. Larvadain contends that, according to his structural engineer, the building would not have collapsed had Haros installed temporary bracing. Larvadain filed a claim against Penn-America, Haros's liability insurer, contending contractor error caused the full collapse of his building.
Larvadain made his informal claim in correspondence with Penn-America on January 6, 2022. ECF No. 5-2 at 9, ¶ 66. Penn-America denied his claim the same day. ECF No. 5-2 at 9, ¶ 67. Larvadain submitted a formal claim to Penn-America on February 8, 2022. ECF No. 5-2 at 10, ¶ 69. About five days after Penn-America's deadline to respond to Larvadain's claim ran out, Penn-America filed this declaratory action, without responding to Larvadain's claim. ECF No. 1. Two weeks later, Larvadain filed his state court action for damages. ECF No. 5-2.
In its Complaint, Penn-America asks this Court to find: (1) that Defendant Larvadain's claims and damages are excluded under the Policy; and (2) that it does not have a duty to defend or indemnify Haros.
Penn-America asserts diversity jurisdiction, alleging that: it is incorporated in and has its principal place of business in Pennsylvania; Haros is a limited liability company whose members are citizens of Louisiana; and Larvadain is a citizen of Louisiana.
Larvadain filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (b)(6). ECF No. 5. Haros also filed a Motion to Dismiss pursuant to Fed.R.Civ.P. as(b)(1) and a Motion to Abstain or, in the alternative, a Motion to Stay this case pending the outcome of the state court action. ECF No. 10.
Penn-America opposes those motions. ECF Nos. 8. 14.
Federal courts have limited subject matter jurisdiction and cannot entertain cases unless authorized by the Constitution and legislation. See Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996). There is a presumption against subject matter jurisdiction, which must be rebutted by the party bringing an action to federal court. See Coury, 85 F.3d at 248. The party seeking to invoke the jurisdiction of the federal court has the burden of proving that jurisdiction exists. See Aetna Cas. & Sur. Co. v. Hillman, 796 F.2d 770, 775 (5th Cir. 1986). Thus, Defendants have the burden of proving this Court has diversity jurisdiction.
The general-diversity statute permits federal district court jurisdiction over suits for more than $75,000 between citizens of different States. See 28 U.S.C. § 1332(a); Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996); Stangel v. A-1 Freeman North America, Inc., 64 Fed.Appx. 416, *1 (5th Cir. 2003). Subject matter jurisdiction must exist at the time of removal to federal court, based on the facts and allegations contained in the complaint. See St. Paul Reinsurance Co. Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998). Remand is proper if at any time the Court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c). The removal statute, 28 U.S.C. § 1441, is strictly construed, and any doubt as to the propriety of removal must be resolved in favor of remand. See Gasch v. Hartford Accident & Indemnity Co., 491 F.3d 278, 281-82 (5th Cir. 2007).
Haros contends this Court lacks subject matter jurisdiction because the amount in controversy is below $75,000.
Because the Declaratory Judgment Act does not, itself, confer subject matter jurisdiction on the Court, Penn-America must show diversity jurisdiction as asserted in its Complaint. “In an action for declaratory relief, the amount in controversy is the value of the right to be protected or the extent of the injury to be prevented.” Hartford Ins. Group v. Lou-Con, Inc., 293 F.3d 908, 910 (5th Cir. 2002). “[W]hen an insurer seeks a declaratory judgment regarding the coverage provided by an insurance policy, the ‘value of the right to be protected' is the ‘plaintiff's potential liability under the policy,' plus potential attorneys' fees, penalties, statutory damages, and punitive damages.” Hartford Insurance Group, 293 F.3d at 911-12 (citing St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1250 (5th Cir. 1998); see also Certain Underwriters at Lloyds London v. Corp. Pines Realty Corp., 355 Fed.Appx. 778, 779 (5th Cir. 2009). “Where a claim exceeds policy limits, the policy limits are the measure for determining whether the amount in controversy requirement is satisfied.” Tonia's Levee Landing, Inc. v. Colony Ins. Co., 2021 WL 2905551, at *1 (W.D. La. 2021) (citing Payne v. State Farm Mutual Auto Ins. Co., 266 F.2d 63, 65 (5th Cir. 1959)); see also Certain Underwriters at Lloyds London, 355 Fed.Appx. at 779 (citing Harford Insurance Group, 293 F.3d at 912).
If a plaintiff's demand exceeds the jurisdictional threshold amount, “[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938); see also In re 1994 Exxon Chemical Fire, 558 F.3d 378, 387 (5th Cir. 2009); Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte, 536 F.3d 439, 455 n. 6 (5th Cir. 2008).
“[I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.” St. Paul Mercury Indemnity Co., 303 U.S. at 289.
Haros argues that, in 2014 and 2015, Larvadain's building was valued at $21,300 and the land was valued at $10,000 by the Rapides Parish Tax Assessor. ECF No. 10-4 at 7-10. Subsequent to that valuation, but before it was purchased by Larvadain in 2016, there was a partial collapse of the building. In 2016, after the partial collapse of the building, the land was valued at $7,000, and the building was valued at $0 by the Rapides Parish Tax Assessor. ECF No. 10-4 at 11-13. Larvadain paid $6000 for the property. ECF No. 10-3.
In 2017, 2018, 2019, 2020, and 2021, Larvadain's land was still valued at $7000 and the building was valued at $0 by the Rapides Parish Tax Assessor. ECF No. 10-4 at 1-5, 14-22. The building fully collapsed in 2022. Larvadain alleges that collapse was caused by contractor error.
Haros contends the tax assessor's records shows the amount at issue is less than $75,000.
However, Larvadain stated in his demand letter to Penn-America that the building was approximately 100 years old and made entirely of brick, and that he had intended to restore the structure. ECF No. 5-2 at 57. Larvadain sent Penn-America a repair estimate for $1,087,268.90. ECF No. 5-2 at 58. Larvadain demanded that Penn-America pay the policy limits of $1,000,000 plus statutory penalties and attorney fees. ECF No. 5-2 at 58.
Because Haros has not carried its burden of showing to a legal certainty that Larvadain's claim does not meet the jurisdictional threshold, his Motion to Dismiss for lack of subject matter jurisdiction (ECF No. 10) should be denied.
Larvadain contends the Court lacks subject matter jurisdiction because, when they are correctly aligned, the parties are not diverse. He argues the parties should be realigned to cast Haros as a Plaintiff since Haros is actually Penn-America's insured, and Penn-America advocates for both itself and Haros in Paragraph 12 of its Complaint.[1]
Penn-America contends that Larvadain and Haros are aligned in...
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