Villas at Meadow Lakes Condominium v. United States Liability Insurance Company

Filing 19

ORDER denying 6 Motion to Remand to State Court. See attached ORDER for details. Signed by Judge Robert N. Scola, Jr. on 12/5/2012. (jky)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-61469-Civ-SCOLA

VILLAS AT MEADOW
LAKES CONDOMINIUM,
Plaintiff,
vs.
UNITED STATES LIABILITY
INSURANCE COMPANY,
Defendant.
_____________________________________/
ORDER OVERRULING PLAINTIFF’S OBJECTION TO PETITION OF
REMOVAL AND DENYING MOTION TO REMAND TO STATE COURT
THIS MATTER is before the Court upon [ECF No. 6] Plaintiff’s Objection to
Defendant’s Petition for Removal, which the Court has construed [ECF No. 7] as a request for
remand to state court. Plaintiff argues that this Court lacks subject matter jurisdiction because
this is a “direct action” against an insurer, pursuant to 28 U.S.C. § 1332(c).

This Court

disagrees.
Section 1332(c)(1) provides that, for purposes of diversity jurisdiction, a corporation is
considered a citizen of the state where it is incorporated and the state where it keeps its principal
place of business, “except that in any direct action against the insurer of a policy or contract of
liability insurance . . . to which action the insured is not joined as a party-defendant, such
insurer shall [also] be deemed a citizen of the State of which the insured is a citizen[.]” See 28
U.S.C. § 1332(c)(1) (emphasis supplied).
In this case, Plaintiff, the insured, has sued Defendant, the insurer, for breach of contract
and declaratory relief stemming from Defendant’s refusal to pay a liability insurance claim.
“Such a case is not a ‘direct action against the insurer of a policy or contract of liability
insurance,’ within the meaning of § 1332(c)(1).”

See Castilla v. Nat’l Union Fire Ins. Co. of

Pittsburgh, Pa., 2011 WL 4916307, at *2 (S.D.Fla. Oct. 17, 2011) (Cohn, J.); see also Bowers
v. Cont’l Ins. Co., 753 F.2d 1574, 1576-77 (11th Cir. 1985) (“The general rule has always been
that the direct action proviso does not affect suits brought by an insured against his own
insurer.”).
“If the cause of action is based on the insurer’s duty and not the insured’s duty, the action
is not a direct action.” Jennings Constr. Servs. Corp. v. Ace Am. Ins. Co., 2011 WL 1357689, at
*2 (M.D. Fla. Mar. 16, 2011) (Spaulding, J.). That is the situation here because Plaintiff has
sued Defendant for failing to pay under the policy of insurance – a breach of contract. The
allegedly negligent directors (who, like Plaintiff, are also insureds under the policy) could not be
sued for failing to provide coverage under the policy. Therefore, the “direct action” provision
does not apply and diversity jurisdiction is not defeated. See id. (“[Plaintiff] could not bring his
claims of breach of the Policy against [the two insureds]. His cause of action is based on [the
insurer’s] duty, not any duty of [the insureds], and is therefore not a direct action[.]”).
Accordingly, for the reasons explained herein, it is hereby ORDERED and
ADJUDGED that [ECF No. 6] Plaintiff’s Objection to Defendant’s Petition for Removal is
OVERRULED and its request for remand is DENIED.

DONE and ORDERED in chambers, at Miami, Florida on December 5, 2012.

________________________________
ROBERT N. SCOLA, JR.
UNITED STATES DISTRICT JUDGE
Copies to:
U.S. Magistrate Judge
Counsel of record