Certain Underwriters at Lloyd's, London Subscribing to Policy No. LL024CO0300942 v. Woody et al

Filing 40

ORDER TO SHOW CAUSE by Judge Philip A. Brimmer on 2/12/2019. ORDERED that, on or before 5:00 p.m. on February 22, 2019, plaintiff shall show cause why this case should not be dismissed due to the Court's lack of subject matter jurisdiction. (sphil, ) Modified on 2/12/2019 to correct text.(sphil, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 17-cv-03069-PAB-STV
CERTAIN UNDERWRITERS AT LLOYD’S, LONDON SUBSCRIBING TO POLICY NO.
LL024CO0300942,
Plaintiff,
v.
PATRICIA WOODY,
SCOTT WOODY,
ZACHARY WOODY,
JEROME HOWARD, JUNIOR, and
TAMIKA HOWARD,
Defendants.

ORDER TO SHOW CAUSE

The Court takes up this matter sua sponte on the Complaint for Declaratory
Judgment [Docket No. 1]. Plaintiff states that the Court has subject matter jurisdiction
over this lawsuit pursuant to 28 U.S.C. § 1332(a). Docket No. 1 at 1-2, ¶ 1.
In every case and at every stage of the proceeding, a federal court must satisfy
itself as to its own jurisdiction, even if doing so requires sua sponte action. See
Citizens Concerned for Separation of Church & State v. City & County of Denver , 628
F.2d 1289, 1297 (10th Cir. 1980). Absent an assurance that jurisdiction ex ists, a court
may not proceed in a case. See Cunningham v. BHP Petroleum Great Britain PLC, 427
F.3d 1238, 1245 (10th Cir. 2005). Courts are well-advised to raise the issue of
jurisdiction on their own, regardless of parties’ apparent acquiescence. First, it is the
Court’s duty to do so. Tuck v. United Servs. Auto. Ass’n, 859 F.2d 842, 844 (10th Cir.

1988). Second, regarding subject matter jurisdiction, “the consent of the parties is
irrelevant, principles of estoppel do not apply, and a party does not waive the
requirement by failing to challenge jurisdiction.” Ins. Corp. of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702 (1982) (internal citations omitted). Finally,
delay in addressing the issue only compounds the problem if, despite much time and
expense having been dedicated to the case, a lack of jurisdiction causes it to be
dismissed. See U.S. Fire Ins. Co. v. Pinkard Constr. Co., No. 09-cv-00491-PAB-MJW,
2009 WL 2338116, at *3 (D. Colo. July 28, 2009).
“The party invoking federal jurisdiction bears the burden of establishing such
jurisdiction as a threshold matter.” Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220,
1224 (10th Cir. 2004). Plaintiff asserts that this Court has diversity jurisdiction under 28
U.S.C. § 1332(a). Pursuant to that section, “district courts shall hav e original
jurisdiction of all civil actions where the matter in controversy exceeds the sum or value
of $75,000, exclusive of interest and costs, and is between . . . citizens of different
States.” 28 U.S.C. § 1332(a). The facts presently alleged are insufficient to establish
plaintiff’s citizenship.
The complaint states that “Plaintiff Underwriters is domiciled in London, England
and maintains its principal place of business at 1 Lime Street, London, England EC3M
7HA.” Docket No. 1 at 2, ¶ 3. The assertion that plaintiff is a distinct entity is almost
certainly incorrect. As the Eleventh Circuit has explained
[t]he Society of Lloyd’s, London, is not an insurance company, but rather
a British organization that provides infrastructure for the international
insurance market. . . . Lloyd’s itself does not insure any risk. Individual
underwriters, known as “Names” or “members,” assume the risk of the
insurance loss. Names can be people or corporations; they sign up for
2

certain percentages of various risks across several policies. . . . Critical
to the diversity jurisdiction question, Names are not only British citizens,
but may be of many nationalities. Lloyd’s Act, 1982, c.14, pmbl. (5).
Underwriters at Lloyd’s, London v. Osting-Schwinn, 613 F.3d 1079, 1083 (11th Cir.
2010). The fact that the Names, not some entity known as “Lloyd’s,” underwrite the risk
for a given insurance policy is reflected in the caption: “Certain Underwriters at Lloyd’s,
London Subscribing to Policy No. LL024CO0300942.” The complaint does not identify
what syndicates act as underwriters for the policy at issue in this case, but as noted in
Osting-Schwinn
Names underwrite insurance through administrative entities called
syndicates, which cumulatively assume the risk of a particular policy. . . .
The syndicates are not incorporated . . . . As mere administrative
structures, the syndicates themselves bear no risk on the policies that
they underwrite; the constituent Names assume individual percentages of
underwriting risk.
Id. However, assuming that the Names did underwrite the policy through syndicates,
each syndicate would at most be considered an unincorporated association that “m ust
prove the citizenship of each of [its] members.”1 Id. at 1086; see also Indiana Gas Co.,
Inc. v. Home Ins. Co., 141 F.3d 314, 317 (7th Cir. 1998); E.R. Squibb & Sons, Inc. v.
Accident & Cas. Ins. Co., 160 F.3d 925, 931 (2d Cir. 1998). But see Certain Interested
Underwriters at Lloyd’s, London, England v. Layne, 26 F.3d 39, 43-44 (6th Cir. 1994)
(concluding that only lead underwriters suing in a representative capacity need to plead

1

A limited liability company is treated similarly; its citizenship is determined not
by its state of organization or principal place of business, but by the citizenship of all of
its members. See Siloam Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233,
1237-38 (10th Cir. 2015).
3

their citizenship for diversity purposes).2 Because the named plaintiff is not a
recognizable entity with its own citizenship and because the complaint does not list the
identity or the citizenship of the Names who underwrote the policy at issue in this case,
the Court is unable to determine the citizenship of plaintiff and, as a result, is unable to
determine whether the Court has jurisdiction.3 Therefore, it is
ORDERED that, on or before 5:00 p.m. on February 22, 201 , plaintiff shall
show cause why this case should not be dismissed due to the Court’s lack of subject
matter jurisdiction.

DATED February 12, 2019.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

2

In Society of Lloyd’s v. Reinhart, 402 F.3d 982, 1002 (10th Cir. 2005), the
Tenth Circuit concluded that the Society of Lloyd’s is a corporation under the laws of
England. However, the party in that case was the incorporated entity that oversees the
Lloyd’s insurance marketplace, not the individual underwriters. See Montgomery v.
Markel Int’l Ins. Co. Ltd., 259 F. Supp. 3d 857, 870-71 (N.D. Ill. 2017).
3

Moreover, a statement that none of the Names is a citizen of Colorado would
be insufficient, as Carden v. Arkoma Assocs., 494 U.S. 185 (1990), “unambiguously
requires that [syndicates] plead the citizenship of each of their member Names.” See
Osting-Schwinn, 613 F.3d at 1089 (applying Carden); see also United States Fire Ins.
Co. v. Pinkard Constr. Co., No. 09-cv-491-PAB-MJW, 2009 WL 2338116, at *3 (D.
Colo. Jul 28, 2009); Affordable Cmty. of Mo. v. EF & A Capital Corp., 2008 WL
4966731, at *2-3 (E.D. Mo. Nov. 19, 2008) (statement that none of the unidentified
members of an LLC was a citizen of a particular state was insufficient to establish
diversity of citizenship).
4