Hart v. Automobile Club Inter-Insurance Exchange

Filing 13

ORDER: IT IS HEREBY ORDERED that Defendant's 5 Motion to Dismiss for Lack ofJurisdiction is GRANTED. IT IS FURTHER ORDERED that the above-captioned matter is DISMISSED WITHOUT PREJUDICE. Signed by Judge Nannette Jolivette Brown on 6/1/2017. (mmv)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MICHEL CATHRYN HART

CIVIL ACTION

VERSUS

NO. 16-14702

AUTOMOBILE CLUB INTER-INSURANCE
EXCHANGE

SECTION: “G”(3)

ORDER
This litigation arises out of Plaintiff Michel Cathryn Hart’s (“Plaintiff”) claim for damages
following a motor vehicle accident.1 Pending before the Court is Defendant Automobile Club
Inter-Insurance Exchange’s (“Defendant”) “Motion to Dismiss for Lack of Jurisdiction.”2 Having
considered the motion, the memoranda in support and in opposition, and the applicable law, the
Court will grant the motion and dismiss Plaintiff’s action without prejudice.
I. Background
In her Complaint, Plaintiff alleges that she sustained “severe permanent injuries” while a
passenger in a motor vehicle accident on September 20, 2014.3 Plaintiff claims that the accident
was caused by the negligence of the driver of the automobile that struck the vehicle in which she
was a passenger, Anthony Rosenbohm (“Rosenbohm”).4 According to Plaintiff, Rosenbohm was
covered under an insurance policy issued by State Farm Fire and Casualty (“State Farm”) and State
Farm paid out its policy limits in exchange for a release of all claims against itself and

1

Rec. Doc. 1.

2

Rec. Doc. 5.

3

Rec. Doc. 1 at 3.

4

Id.

1

Rosenbohm.5 However, because Rosenbohm was underinsured at the time of the accident, Plaintiff
alleges that she now seeks compensatory damages from Defendant for all uninsured covered losses
arising out of the subject accident.6 According to Plaintiff, Defendant entered into a contractual
agreement with Plaintiff to provide underinsured motorist coverage for covered losses resulting
from Plaintiff’s involvement in the accident.7
Plaintiff filed this action on September 14, 2016, alleging diversity jurisdiction pursuant to
28 U.S.C. § 1332.8 Defendant filed the instant motion to dismiss for lack of jurisdiction pursuant
to Federal Rule of Civil Procedure 12(b)(1).9 Plaintiff filed a response to the motion on December
13, 2016, in which she asserts that she does not object to dismissal pursuant to Rule 12(b)(1) but
requests that dismissal be without prejudice.10
II. Parties’ Arguments
A.

Defendant’s Arguments in Support of the Motion
In its motion, Defendant argues that the Court lacks subject matter jurisdiction because

Plaintiff and Defendant are both citizens of Louisiana for the purpose of diversity jurisdiction.11
Because the requirement of complete diversity of citizenship is not satisfied, Defendant contends
that Plaintiff’s complaint must be dismissed.12 Defendant represents that Plaintiff is alleged to be

5

Id.

6

Id. at 4.

7

Id.

8

Id.

9

Rec. Doc. 5.

10

Rec. Doc. 9.

11

Rec. Doc. 5-1 at 1.

12

Id.

2

a citizen of Louisiana.13 Defendant further notes that Plaintiff alleges that Defendant is a foreign
insurance company incorporated in and with its principal place of business in Missouri.14 Thus,
Defendant avers, it appears that Plaintiff considers Defendant to be a corporation with citizenship
diverse from that of Plaintiff.15
However, Defendant asserts that it is not a corporation but is instead a “reciprocal interinsurance exchange.”16 Defendant argues that a reciprocal inter-insurance exchange is to be treated
as an unincorporated association for the purposes of determining diversity jurisdiction and thus, is
considered to have the citizenship of its members.17 Defendant notes that other recent decisions of
the Eastern District of Louisiana have cited to this rule in concluding that there was a lack of
subject matter jurisdiction due to a lack of complete diversity between the defendant reciprocal
inter-insurance exchange and the plaintiff.18
In support of its argument that there is a lack of complete diversity in this case, Defendant
points to the affidavit of Carl Kraft, its Assistant Secretary and Legal Department Manager, in
which Kraft asserts that Defendant has members in Louisiana.19 Because, Defendant argues, it is
considered to be an unincorporated association for diversity purposes and it has members in

13

Id. at 2.

14

Id. (citing Rec. Doc. 1).

15

Id.

16

Id.

17

Id. at 2–3 (citing Royal Ins. Co. of Am. v. Quinn-L Cap. Corp., 3 F.3d 877, 882 (5th Cir. 1993); Hummel
v. Townsend, 883 F.2d 367, 369 (5th Cir. 1989)).
18

Id. at 3–4 (citing Cimino v. Sirois, 14-1925, 2014 WL 5393512 (E.D. La. Oct. 22, 2014) (Berrigan, J.);
Ourso v. United Servs. Auto. Ass’n, 06-4354, 2007 WL 275902 (E.D. La. 2007) (Vance, J.); Musso v. Progressive
N.W. Ins. Co., 06-4114, 2007 WL 325364 (E.D. La. 2007) (Barbier, J.)).
19

Id. at 4 (citing Rec. Doc. 5-2 at 2).

3

Louisiana, it is a citizen of Louisiana for diversity purposes.20 As Plaintiff is also a citizen of
Louisiana, Defendant contends that there is a lack of the complete diversity required for
jurisdiction pursuant to 28 U.S.C. § 1332.21 Thus, Defendant argues that the Court should dismiss
this action for lack of subject matter jurisdiction.22
B.

Plaintiff’s Response to the Motion
In response, Plaintiff states that she “does not oppose the motion under Rule 12(b)(1),

which does not implicate the merits of a plaintiff’s cause of action, however; Defendant did not
specify that the dismissal it seeks is one without prejudice.”23 Thus, Plaintiff requests that if the
Court grants the motion, it should be granted without prejudice to allow Plaintiff to pursue her
claims in another forum.24 Plaintiff argues that it is clear from Fifth Circuit precedent that a court’s
dismissal of an action for lack of subject matter jurisdiction is not a decision on the merits and
does not prevent a plaintiff from pursuing the claim in another forum.25 Plaintiff further represents
that the Fifth Circuit has held that “to dismiss with prejudice under Rule 12(b)(1) is to disclaim
jurisdiction and then exercise it—our precedent does not sanction this practice.”26 Thus, Plaintiff
requests that any dismissal for lack of subject matter jurisdiction be without prejudice.27

20

Id.

21

Id.

22

Id.

23

Rec. Doc. 9 at 1.

24

Id.

25

Id. at 2–3 (citing Ourso v. USAA, 2007 WL 275902, at * 1 (E.D. La. 2007) (Vance, J.)).

26

Id. at 3 (quoting Cox, Cox, Filo, Camel & Wilson, LLC v. Sasol N. Am., Inc., 544 F. App’x 455 (5th Cir.

27

Id.

2013)).

4

III. Law and Analysis
A.

Legal Standard
“Federal courts are courts of limited jurisdiction,” and “possess only that power authorized

by the Constitution and statute.”28 Thus, under Rule 12(b)(1), “[a] case is properly dismissed for
lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to
adjudicate the case.”29 In ruling on a Rule 12(b)(1) motion to dismiss, the Court may rely on: (1)
the complaint alone, presuming the allegations to be true; (2) the complaint supplemented by
undisputed facts; or (3) the complaint supplemented by undisputed facts and the court’s resolution
of disputed facts.30 The plaintiff, as the party asserting jurisdiction, has the burden of proving
subject matter jurisdiction by a preponderance of the evidence.31
B.

Analysis
Here, Plaintiff does not contradict the evidence presented by Defendant in its motion and

in fact, “does not oppose the motion under Rule 12(b)(1).”32 Rather, Plaintiff requests that if the
Court grants Defendant’s motion, it be granted without prejudice.33 Undisputed facts in the record
indicate that Defendant is a reciprocal inter-insurance exchange with members in Louisiana.34 A
reciprocal inter-insurance exchange “is essentially an insurance company cooperatively owned by

28

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted).

29

Home Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1000 (5th Cir. 1998) (internal
citation omitted).
30

Den Norske Stats Ojeselskap As v. HeereMac Vof, 241 F.3d 420, 424 (5th Cir. 2001). See also Williamson
v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981).
31

See Vantage Trailers, Inc. v. Beall Corp., 567 F.3d 745, 748 (5th Cir. 2009) (internal citations omitted).

32

See Rec. Doc. 9 at 1.

33

Id.

34

See Rec. Doc. 5-2 at 2.

5

those it insures.”35 Thus, such an entity “in its pure form . . . is a web of contractual relationships
between subscribers who agree to insure one another . . . .”36 Courts in the Eastern District of
Louisiana have held that a reciprocal inter-insurance exchange is to be treated as an unincorporated
association for the purpose of determining diversity jurisdiction.37 The Fifth Circuit has held that
for purposes of determining diversity jurisdiction, an unincorporated association is a citizen of
every state in which it has members.38
Here, it is undisputed that Plaintiff is a citizen of Louisiana39 and that Defendant has
members in Louisiana.40 Thus, both parties are citizens of Louisiana for diversity purposes, and
complete diversity does not exist. Accordingly, the Court finds that it lacks subject matter
jurisdiction under 28 U.S.C. § 1332. If it appears at any time that the Court does not possess subject
matter jurisdiction over a matter, the action must be dismissed.41 The Court notes that Defendant
does not specify whether it is requesting dismissal with prejudice or without prejudice. A court’s
dismissal of a case for lack of subject matter jurisdiction is not a ruling on the merits and “permits

35

True v. Robles, 571 F.3d 412, 414 (5th Cir. 2009).

36

Id.

37

See, e.g., Cimino v. Sirois, No. 14-1925, 2014 WL 5393512 (E.D. La. Oct. 22, 2014) (Berrigan, J.); Bilger
v. Pereira, No. 99-3359, 2000 WL 1182526 (E.D. La. Aug. 21, 2000) (Vance, J.); Ourso v. United Servs. Auto. Ass’n,
No. 06-4354, 2007 WL 275902, at * 1 (E.D. La. Jan. 25, 2007) (Vance, J.); Isidore v. USAA Ins. Co., No. 09-1333;
2009 WL 1564807, at *1 (E.D. La. June 2, 2009) (Engelhardt, J.); Musso v. Progressive N.W. Ins. Co., et al., No. 064114, 2007 WL 325364, at *1 (E.D. La. Jan. 31, 2007) (Barbier, J.); Gilbert v. United Servs. Auto. Ass’n, No. 075278, 2008 WL 696208, at *1 (E.D. La. Mar. 13, 2008) (Lemelle, J.). See also Tuck v. United States Auto. Ass’n, 859
F.2d 842, 844 (10th Cir. 1989) (finding lack of complete diversity where some members of defendant reciprocal interinsurance exchange had same citizenship as plaintiff).
38

See Aetna Cas. & Sur. Co. v. Hillman, 796 F.2d 770, 775 (5th Cir. 1986) (“If the group is an unincorporated
association, then the citizenship of each member must be considered in determining diversity jurisdiction.”) (citing
Navarro Savings Ass’n v. Lee, 446 U.S. 458 (1980)).
39

Rec. Doc. 1 at 1.

40

See Rec. Doc. 9 at 1; Rec. Doc. 5-2 at 2.

41
See Leban v. Dept. of Veterans Affairs, No. 13-5181, 2014 WL 3778830 (E.D. La. July 29, 2014) (citing
Fed. R. Civ. P. 12(h)).

6

the plaintiff to pursue his claim in the same or in another forum.”42 Thus, the Court finds that
dismissal of Plaintiff’s action without prejudice for lack of subject matter jurisdiction is
appropriate.
IV. Conclusion
The Court finds that Plaintiff and Defendant are both citizens of Louisiana and thus there
is a lack of complete diversity as required under 28 U.S.C. § 1332. Therefore, the Court finds that
it lacks subject matter jurisdiction over this action and Plaintiff’s action is dismissed without
prejudice.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s “Motion to Dismiss for Lack of
Jurisdiction”43 is GRANTED.
IT IS FURTHER ORDERED that the above-captioned matter is DISMISSED
WITHOUT PREJUDICE.
NEW ORLEANS, LOUISIANA, this ____ day of June, 2017.
1st

_________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

42

Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977).

43

Rec. Doc. 5.

7