Redmon v. Sumitomo Marine Management (U.S.A.), No. 1:01CV1871.

CourtUnited States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
Writing for the CourtAnn Aldrich
Citation179 F.Supp.2d 787
PartiesJudy L. REDMON, Executor of the Estate of Shelby Ann Lust, Plaintiff, v. SUMITOMO MARINE MANAGEMENT (U.S.A.), INC., Defendant.
Decision Date30 October 2001
Docket NumberNo. 1:01CV1871.
179 F.Supp.2d 787
Judy L. REDMON, Executor of the Estate of Shelby Ann Lust, Plaintiff,
v.
SUMITOMO MARINE MANAGEMENT (U.S.A.), INC., Defendant.
No. 1:01CV1871.
United States District Court, N.D. Ohio, Eastern Division.
October 30, 2001.

Page 788

Patrick T. Murphy, Bucyrus, OH, for plaintiff.

Alan H. Abes, Gregory A. Harrison, John D. Luken, Dinsmore & Shohl, Cincinnati, OH, Robert S. Marshall, Bates & Carey, Chicago, IL, for defendant.

MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.


This is an insurance contract case arising out of an automobile accident. The plaintiff, Judy L. Redmon, on behalf of the estate of Shelby Ann Lust, seeks to recover under Lust's employer's underinsured motorist contract with the defendant, Sumitomo Marine Management (U.S.A.), Inc. ("Sumitomo"). Now before the Court are Redmon's motion to remand this action to the Common Pleas Court of Crawford County, Ohio (Doc. # 14), and Redmon's motion to consolidate this case with two other pending cases arising out of the same accident (Doc. # 13). For the following reasons, this Court denies the motion to remand and grants the motion to consolidate.

I. Background

Shelby Ann Lust, John H. Bargar II, and Heather Armstrong were occupants of a vehicle driven by Kurt Lauthers. All four died when Mr. Lauthers, apparently due to his own negligence, lost control of the car and drove off the road. Mr. Lauthers was insured by Ohio Mutual Insurance Group ("Ohio Mutual"), but his policy carried maximum per accident liability coverage of $50,000. Ohio Mutual tendered its policy limits to the estates of the three passengers. All four individuals were also employees of Imasen Bucyrus Technology, Inc. ("Bucyrus"), which had an automobile insurance contract with Sumitomo. Redmon seeks to recover under that policy's underinsured motorist clause, and filed suit in the Crawford County Court of Common Pleas. Sumitomo subsequently removed to this Court. The executor of Mr. Bargar's estate likewise filed suit in state court claiming

Page 789

breach of the same insurance contract, and Sumitomo again removed. See Bargar v. Sumitomo Marine Mgmt. (U.S.A.), Inc., No. 1:01CV1938 (N.D.Ohio Aug. 10, 2001). Sumitomo meanwhile filed a declaratory judgment action against the executor of the estate of the third passenger, Ms. Armstrong, and that case is also currently pending. See Sumitomo Marine Mgmt. (U.S.A.), Inc. v. Armstrong, No. 1:01CV1937 (N.D.Ohio Aug. 10, 2001). Redmon now moves the Court to remand this case to the Crawford County Court of Common Pleas for lack of subject matter jurisdiction. Sumitomo opposes this motion. Redmon also seeks an order consolidating this case with the companion Bargar and Armstrong cases. This motion is unopposed.

II. Analysis

A. Motion to Remand

In her motion to remand, Redmon argues that this Court lacks jurisdiction relying on 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, as well as any State by which the insurer has been incorporated and of the State where it has its principal place of business.

28 U.S.C. § 1332(c)(1) (1994). Thus, while Sumitomo is a New York corporation with its principal place of business in New Jersey and Ms. Lust and Ms. Redmon as executor of her estate are Ohio residents, Redmon argues that Sumitomo is nondiverse because it is deemed to be a citizen of Ohio, the state of Lust's citizenship. The vast majority of federal courts, however, have interpreted the term "direct action" to apply only to tort actions brought by third parties against the insurer as a substitute for the insured. See, e.g., Bowers v. Cont'l Ins. Co., 753 F.2d 1574, 1576 (11th Cir.1985) (holding that suits by insureds against insurers are not direct actions within the meaning of the statute); White v. United States Fid. & Guar. Co., 356 F.2d 746, 747-48 (1st Cir.1966) (same); Kimball Small Props. v. Am. Nat'l Fire Ins., 755 F.Supp. 1465 (N.D.Cal.1991) (same); Field v. Liberty Mut. Ins. Co., 769 F.Supp. 1135, 1138 (D.Haw.1991) (same); McGlinchey v. Hartford Accident & Indem. Co., 666 F.Supp. 70, 71 (E.D.Pa.1987) (same); Smith v. State Farm Ins. Co., 615 F.Supp. 453, 455 (D.Haw.1985) (same). Courts reaching this conclusion have generally relied on legislative history, which suggests that "direct action" was meant by Congress as a term of art to refer to the so-called direct action statutes enacted in Louisiana and certain other states in the early 1960s, which allowed tort plaintiffs to sue a tortfeasor's insurance carrier directly, without joining the tortfeasor as a party. See Rosa v. Allstate Ins. Co., 981 F.2d 669, 674-75 (2d Cir.1992) (summarizing the relevant legislative history). Since these statutes often had the effect of removing nondiverse tortfeasors from basic tort actions, many federal courts saw an increase of up to 50% in their caseloads due largely to insurers' newfound ability to remove tort actions brought by diverse plaintiffs. The insurance provision of section 1332(c)(1) was enacted to respond to this problem by narrowing the diversity jurisdiction of federal district courts. Id. Most courts interpreting the provision have therefore ignored its seemingly broad language in favor of a narrow interpretation based on legislative intent.

The Sixth Circuit, however, has given the insurance provision of section 1332(c)(1) an unusually expansive reading.

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See Ford Motor Co. v. Ins. Co. of N. America, 669 F.2d 421, 424 (6th Cir.1982) (adopting the broad reading of section 1332(c)(1) applied by some Sixth Circuit and Fifth Circuit courts). More specifically, the Sixth Circuit has held that the provision should not be limited only to the tort context, but should be extended to encompass some contract actions as well. Aetna Cas. & Sur. Ins. Co. v. Greene, 606 F.2d 123, 126 (6th Cir.1979). Thus, in Ford and Greene, the Sixth Circuit held that an insurer should be deemed a citizen of the state of its insured in no-fault insurance and workers compensation cases. In Greene, the plaintiff sued his employer's workers compensation insurer directly for failure to pay a claim, and the Sixth...

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9 practice notes
  • Dolly v. Old Republic Ins. Co., No. 5:00CV1685.
    • United States
    • U.S. District Court — Northern District of Ohio
    • May 8, 2002
    ...(Economus, J.) (dismissing for lack of subject matter jurisdiction).5 But see, Redmon v. Sumitomo Marine Management (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (Aldrich, J.) (denying motion to remand, reaching opposite conclusion from the above-cited remanded cases);6 Fidelity & Guara......
  • 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
    ...does not apply and therefore have retained jurisdiction of Scott-Pontzer cases. In Redmon v. Sumitomo Marine Management (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001), Judge Aldrich found that the traditional interpretation of "direct action," based on the proviso's legislative history, ......
  • Estate of Taylor v. St. Paul Fire and Marine Inc., No. 1-00-02397-AA.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • September 19, 2002
    ...insurance, and that diversity is therefore not destroyed under section 1332(c)(1). Redmon v. Sumitomo Marine Mgmt. (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (Aldrich, J.). At last count, seven courts have disagreed, and have held that jurisdiction is lacking. Butler v. Zurich Am. In......
  • Davis v. State Farm Auto. Ins. Co., No. 05-72354.
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • August 18, 2005
    ...follow); Spooner v. Paul Revere Life Ins. Co., 578 F.Supp. 369 (E.D.Mich.1984) (disagreed with); Redmon v. Sumitomo Marine Mgmt., Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (disagreement recognized); Tatar v. Liberty Mut. Fire Ins. Co., 214 F.Supp.2d 834 (S.D.Ohio 2002) (declined to extend); J......
  • Request a trial to view additional results
9 cases
  • Dolly v. Old Republic Ins. Co., No. 5:00CV1685.
    • United States
    • U.S. District Court — Northern District of Ohio
    • May 8, 2002
    ...(Economus, J.) (dismissing for lack of subject matter jurisdiction).5 But see, Redmon v. Sumitomo Marine Management (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (Aldrich, J.) (denying motion to remand, reaching opposite conclusion from the above-cited remanded cases);6 Fidelity & Guara......
  • 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
    ...does not apply and therefore have retained jurisdiction of Scott-Pontzer cases. In Redmon v. Sumitomo Marine Management (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001), Judge Aldrich found that the traditional interpretation of "direct action," based on the proviso's legislative history, ......
  • Estate of Taylor v. St. Paul Fire and Marine Inc., No. 1-00-02397-AA.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • September 19, 2002
    ...insurance, and that diversity is therefore not destroyed under section 1332(c)(1). Redmon v. Sumitomo Marine Mgmt. (U.S.A.), Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (Aldrich, J.). At last count, seven courts have disagreed, and have held that jurisdiction is lacking. Butler v. Zurich Am. In......
  • Davis v. State Farm Auto. Ins. Co., No. 05-72354.
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • August 18, 2005
    ...follow); Spooner v. Paul Revere Life Ins. Co., 578 F.Supp. 369 (E.D.Mich.1984) (disagreed with); Redmon v. Sumitomo Marine Mgmt., Inc., 179 F.Supp.2d 787 (N.D.Ohio 2001) (disagreement recognized); Tatar v. Liberty Mut. Fire Ins. Co., 214 F.Supp.2d 834 (S.D.Ohio 2002) (declined to extend); J......
  • Request a trial to view additional results

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