White v. United States Fidelity and Guaranty Company, No. 6632.

• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)
• Writing for the Court: ALDRICH, , and McENTEE and COFFIN, Circuit
• Citation: 356 F.2d 746
• Parties: Pinkey WHITE et al., Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant, Appellee.
• Docket Number: No. 6632.
• Decision Date: 25 February 1966

356 F.2d 746 (1966)

Pinkey WHITE et al., Appellants,
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant, Appellee.

No. 6632.

United States Court of Appeals First Circuit.

Heard January 4, 1966.

Decided February 25, 1966.

William G. Gilroy, Providence, R. I., for Pinkey White, appellant.

Sanford H. Gorodetsky, Providence, R. I., for William Evans, appellant.

356 F.2d 747

Bruce M. Selya, Providence, R. I., with whom John A. Baglini and Gunning & LaFazia, Providence, R. I., were on brief, for appellee.

Before ALDRICH, Chief judge, and McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

The question presented in this appeal is whether the district court correctly refused to remand this cause to a state court for alleged lack of diversity jurisdiction.

The plaintiff, a Rhode Island citizen, as the result of an automobile accident and subsequent litigation, is a judgment debtor of defendant Evans, also a Rhode Island citizen. Defendant, United States Fidelity and Guaranty Company, a Maryland corporation, had issued a liability policy to plaintiff. Seven weeks before the accident, plaintiff received from Fidelity a notice of cancellation but claims that, because Fidelity had never refunded such unearned premium as plaintiff was entitled to, the policy was in effect at the time of the accident. Plaintiff therefore brought this petition in the Superior Court of Rhode Island, seeking a declaratory judgment which would establish Fidelity's coverage of plaintiff at the time of the accident and direct Evans to seek satisfaction solely from Fidelity.

Fidelity caused the case to be removed to the federal district court. Motions to remand for lack of diversity were made by plaintiff and defendant Evans and, after hearing, were denied by the district court. The case comes before us at this time under the authority of 28 U.S.C. § 1292(b), the district court having recommended immediate appeal and we having granted leave. We affirm the order denying the motions to remand.

The major issue is whether, because of 28 U.S.C. § 1332(c)¹, Fidelity shall be deemed a citizen of Rhode Island because its alleged insured, plaintiff, is a Rhode Island citizen. Plaintiff argues that since her petition for a declaratory judgment is a "direct action", and since she, the insured, is not "joined as a party defendant", the statute must apply to this case. Fidelity, on the other hand, contends that the statute refers only to cases brought by an alleged victim of a tort under a "direct action" statute against the liability insurer of the alleged tort-feasor. The district court, correctly we think, accepted the latter contention.

Since the statute was enacted in 1964, this is apparently a case of first impression, with no precedents directly applicable. There is, however, an abundant legislative history which shows exactly what Congress intended. In the Senate report² which accompanied the statute, the legislative purpose was set forth succinctly:

"The purpose of the proposed legislation is to amend section 1332(c) of title 28, United States Code, so as to eliminate under the diversity jurisdiction of the U. S. district courts, suits on certain tort claims in which both parties are local residents, but which, under a State `direct action\' statute, may be brought directly against a foreign insurance carrier without joining the local tort-feasor as a defendant."

The report then makes clear that the words "direct action" were used to refer to statutes such as those in Louisiana and Wisconsin which allow a party injured...