Tatar v. Liberty Mut. Fire Ins. Co., No. C2-01-1211.

CourtU.S. District Court — Southern District of Ohio
Writing for the CourtHolschuh
Citation214 F.Supp.2d 834
PartiesDonald Lee TATAR, Administrator of the Estate of Michele Lynn Tatar, et. al., Plaintiffs, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, et. al., Defendants.
Decision Date15 April 2002
Docket NumberNo. C2-01-1211.
214 F.Supp.2d 834
Donald Lee TATAR, Administrator of the Estate of Michele Lynn Tatar, et. al., Plaintiffs,
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY, et. al., Defendants.
No. C2-01-1211.
United States District Court, S.D. Ohio, Eastern Division.
April 15, 2002.

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COPYRIGHT MATERIAL OMITTED

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David Nicholas Dittmar, Weirton, WV, Claudia R. Eklund, Lowe, Eklund, Wakefield & Mulvihill Co., LPA, Cleveland, OH, for Plaintiffs.

Keith A. Savidge, Seeley, Savidge & Aussem Co., Cleveland, OH, for Defendants.

OPINION AND ORDER

HOLSCHUH, District Judge.


Plaintiffs, Donald Lee Tatar, administrator of the estate of Michele Lynn Tatar, and Donald L. Tatar and Susan A. Tatar individually, filed this case seeking insurance proceeds based on the Supreme Court of Ohio's decision in Scott-Pontzer v. Liberty Mutual Fire Ins. Co., 85 Ohio St.3d 660, 710 N.E.2d 1116 (1999). Defendant, Liberty Mutual Fire Insurance Company, removed this action from the Court of Common Pleas of Jefferson County, Ohio pursuant to 28 U.S.C. § 1441, asserting diversity jurisdiction under 28 U.S.C. § 1332. The matter is before this Court on plaintiffs' motion to remand. Plaintiffs claim that the proviso to 28 U.S.C. § 1332(c)(1) works to destroy diversity in this case. The motion is fully briefed and is ripe for decision. For the following reasons, the Court concludes that the proviso to 28 U.S.C. § 1332(c)(1) is inapplicable here. Thus, plaintiffs' motion to remand will be denied.

I.

The following statement of facts is taken from the complaint, the removal petition and the plaintiffs' motion to remand. Plaintiffs bring this action in an attempt to recover losses experienced as a result of an automobile accident on December 28, 2000, in which their daughter Michele Lynn Tatar was killed. Michele was a passenger in an automobile operated by Michael Taylor, whose alleged negligence caused the fatal collision. Plaintiffs' complaint alleges that the damages sustained by the plaintiffs, "exceed or may exceed the insurance coverage applicable to the collision." Thus, the plaintiffs attempt to recover excess damages under an underinsured motorists policy which defendant issued to Sears, Roebuck & Co., plaintiff Donald Tatar's employer. Plaintiffs contend this policy covers Sears employees under the theory of recovery set forth by the Ohio Supreme Court in Scott-Pontzer.

As a preliminary matter, the Court notes that the de facto citizenship of the parties is not in serious dispute. The plaintiffs reside in Ohio and are thus, citizens of Ohio. Defendant contends, in the notice of removal, and plaintiffs do not dispute, that defendant is incorporated in Massachusetts and that its principal place of business is in Massachusetts. However, plaintiffs argue in their motion to remand that the proviso to 28 U.S.C. § 1332(c)(1) destroys diversity of citizenship.

II.

28 U.S.C. § 1332(c)(1) states, in pertinent part, that "[f]or the purposes of this section and section 1441 of this title — (1) a corporation shall be deemed to be a citizen of any State in which it has been incorporated and of the state where it has its principal place of business..." However, § 1332(c)(1) includes a proviso which

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provides an exception to diversity jurisdiction. Thus, if a plaintiff brings a "direct action" against "the insurer of a policy or contract of liability insurance, such insurer shall be deemed a citizen of the State of which the insured is a citizen." In order for a particular case to come within this proviso, such action must be (1) a direct action, and (2) brought against the insurer of a policy or contract of liability insurance. Failure to satisfy both elements renders the proviso inapplicable. For the following reasons, the Court concludes that this action is neither a direct action, nor brought against the insurer of a policy or contract of liability insurance.

The phrase "direct action" is not defined in the statute and does not have a generally accepted meaning. It is therefore necessary to look at secondary sources to determine the intent of the statute's drafters. Those sources clearly indicate that an action to recover uninsured/under-insured motorist benefits does not constitute a "direct action," as evidenced by the legislative purpose behind the proviso as well as by the statute's interpretation by federal courts.

Congress added the provision in question in 1964. The report of the Senate Committee stated that the purpose in enacting the § 1332(c)(1) proviso was to eliminate from federal diversity jurisdiction suits on certain tort claims brought under state "direct action" statutes. Specifically, Louisiana had enacted a "direct action" statute which allowed a suit in tort where both the plaintiff and the tortfeasor were citizens of the same state to be brought directly against a foreign insurance carrier without joining the tortfeasor as a defendant. Although there was some debate over whether the tortfeasor's citizenship could be disregarded in determining if diversity of citizenship existed in such a case, the United States Supreme Court held in Lumbermen's Mutual Casualty Company v. Elbert, 348 U.S. 48, 75 S.Ct. 151, 99 L.Ed. 59 (1954) that such an action could properly be brought in federal court where the plaintiff and the insurer were of diverse citizenship.

After the Elbert decision, suits brought under such "direct action" statutes (including a similar Wisconsin statute) flooded the federal courts. To relieve this burden on the federal courts, Congress added the proviso to eliminate from federal jurisdiction, "suits on certain tort claims in which both parties are local residents, but which,...

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2 practice notes
  • 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)
    • 18 Agosto 2005
    ...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); Johnson v. Fireman's Fund Ins. Co., 2002 WL 32121839 (N.D.Ohio Jan. 15, 2002) (distinguished). Indeed, th......
  • Starcher v. State Farm Ins. Cos., CASE NO. 15-CV-01741
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • 25 Septiembre 2015
    ...same state." Lee-Lipstreu v. Chubb Group of Ins. Cos., 329 F.3d 898, 899-900 (6th Cir.2003). 14. Tatar v. Liberty Mut. Fire Ins. Co., 214 F. Supp. 2d 834, 839 (S.D. Ohio 2002). 15. Plaintiffs' motion to remand states, "it is undisputed that the present case is an underinsured claim arising ......
2 cases
  • 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)
    • 18 Agosto 2005
    ...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); Johnson v. Fireman's Fund Ins. Co., 2002 WL 32121839 (N.D.Ohio Jan. 15, 2002) (distinguished). Indeed, th......
  • Starcher v. State Farm Ins. Cos., CASE NO. 15-CV-01741
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • 25 Septiembre 2015
    ...same state." Lee-Lipstreu v. Chubb Group of Ins. Cos., 329 F.3d 898, 899-900 (6th Cir.2003). 14. Tatar v. Liberty Mut. Fire Ins. Co., 214 F. Supp. 2d 834, 839 (S.D. Ohio 2002). 15. Plaintiffs' motion to remand states, "it is undisputed that the present case is an underinsured claim arising ......

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