Keith's Paint & Body, LLC v. Underwriters at Lloyds London

Filing 18

MEMORANDUM RULING re 10 Clerk's Entry of Default, 14 MOTION to Dismiss For Failure to State a Claim, MOTION to Dismiss for Lack of Jurisdiction filed by Underwriters at Lloyds London, 14 Motion to Set Aside Default filed by Underwriters at Lloyds London. Signed by Judge James D Cain, Jr on 6/4/2024. (crt,Stewart, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION
KEITH'S PAINT & BODY LLC

CASE NO. 2:22-CV-04542

VERSUS

JUDGE JAMES D. CAIN, JR.

UNDERWRITERS AT LLOYDS LONDON MAGISTRATE JUDGE LEBLANC
MEMORANDUM RULING

Before the Court is a “Clerk’s Entry of Default” (Doc. 10) and “The Society of
Lloyd’s Rule 12 Motions and Motion to Set Aside Default” (Doc. 14).
BACKGROUND
This lawsuit involves alleged damages to Plaintiff’s property from Hurricanes Laura
and Delta. During the relevant time period, the property was insured by Certain
Underwriters at Lloyds, whose members and/or syndicates have not been specifically
named and/or identified in the Complaint. 1
The Complaint, filed by Plaintiff, Keith’s Paint & Body, LLC on August 25, 2022,
named Underwriters at Lloyds London as the Defendant. 2 A Summons was issued by the
Deputy Clerk on that same day. 3 A Returned and Executed Summons was filed in the
record on October 13, 2022. 4 Lloyd’s America, the agent for service of process for those
certain underwriters at Lloyd’s received the suit papers and emailed Plaintiff’s counsel on
October 24, 2022, requesting information necessary to identify the policy alleged to be at

See Doc. 1.
Id.
3
Doc. 4.
4
Doc. 5.
1
2

issue and the subscribing underwriters to that policy. 5 After receiving no response, Lloyd’s
America

again emailed counsel requesting identifying policy information. 6 Lloyd’s

America received no response.
On April 12, 2024, the Deputy Clerk issued a Notice of Intent to dismiss the case
for failure to take a default 60 days after service. 7 On April 16, 2024, Plaintiff, through
counsel, filed a request for entry of default; 8 subsequently, the Clerk of Court issued a
Notice of Entry of Default. 9
On April 30, 2024, The Society of Lloyd’s (“Lloyds”) made a special appearance in
place of Defendant, Underwriters of London, filing the instant Motion to Set Aside Default
and Rule 12 Motions to Dismiss.
Lloyd’s is a society incorporated by an Act of the United Kingdom Parliament in
1871, which regulates and provides services to the Lloyd’s insurance market. 10 Lloyd’s is
not an insurer. 11 The underwriting members of Lloyds are the insurers. 12 Lloyd’s and
Lloyd’s America 13 are separate and distinct entities from its underwriting members. 14
Lloyd’s and Lloyd’s America do not maintain claims or underwriting files on the

Defendant’s exhibit A, declaration of Barbara Demosthene, and attached exhibit 2.
Defendant’s exhibit A, declaration of Barbara Demosthene, and attached exhibit 3.
7
Doc. 7.
8
Doc. 9.
9
Doc. 10.
10
Defendant’s exhibit B, Kathryn Kelly Declaration.
11
Id.
12
Id.
13
Lloyd’s America is an indirect subsidiary of Lloyd’s. Defendant’s exhibit A, Declaration of Barbara Demosthene,
¶ 4.
14
Id.
5
6

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underwriting members’ behalf. 15 Lloyd’s America acts as an agent for service of process
for those certain underwriters at Lloyd’s insuring risks in the United States. 16
The “Lloyd’s Act of 1982” provides that an “underwriting member shall be a party
to a contract of insurance underwritten at Lloyd’s only if its underwritten with several
liability, each underwriting member for his own part and not one for another, and if the
liability of each underwriting member is accepted solely for his own account.” 17
Underwriters at Lloyd’s, London is a generic description of the entire market and there is
no single insuring entity in Lloyd’s market with that name. 18
“Names underwrite insurance through administrative entities called syndicates,
which cumulatively assume the risk of a particular policy.” Chase Manhattan Bank, N.A.
v. Aldridge, 906 F.Supp. 870, 872 (S.D.N.Y. 1995). Multiple members can subscribe to a
policy through a single syndicate and multiple syndicates’ members can subscribe to a
single policy. 19 A typical policy has multiple syndicates which are collectively responsible
for 100 percent of the coverage provided by a policy, and the syndicates themselves have
no independent legal identity. Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 858 (5th Cir.
2003). A syndicate bears no liability for the risk on the policy, but all liability is held by
the individual members who belong to the various syndicates that have subscribed to the
policy. Id. Simply put, “the legal relationship between the names and the insured is a

15

Id.
Defendant’s exhibit A, Demostherne Declaration, ¶ 4.
17
Id. ¶ 8.
18
Id. ¶ 9.
19
Ardoin v. Certain Underwriters at Lloyds London, 2023 WL 2386887, at *1 (W.D. La. Mar. 6, 2023), appeal
dismissed, 2023 WL 6458645 (5 th Cir. July 18, 2023); Kelly Declaration, ¶ 11.
16

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vertical one: it is the individual Names, not the syndicate, who are directly liable in the
event of the loss, if each Name had a contract with the insured. Underwriters at lloyd’s,
London v Osting-Schwinn, 613 F.3d 1079, 1084 (11th Cir. 2010).
In the instant matter, the Policy states that it is insured by “Certain Underwriters” at
Lloyd’s London and highlights on the Policy’s Declaration Page the following:
Insurance is effective with the following:

Percentage

Contract Number/UMR

Company

AA1900279B0142AA1900279

Certain Underwriter's at Lloyd's - Lloyd's of
London

30%

BA1903600B0429BA1903600

Certain Underwriter's at Lloyd's - Lloyd's of
London

30%

AA1900282B0142AA1900282

Certain Underwriter's at Lloyd's - Lloyd's of
London

20%

B0408NAC047819 B0408NAC047819

Certain Underwriter's at Lloyd's - Lloyd's of
London

20%

20

1

Contribution %

LAW AND ANALYSIS
In response to the Clerk’s Entry of Default, Lloyds filed the instant Motion to aside
the default and to the dismiss the lawsuit on the following grounds: (1) lack of subject
matter jurisdiction; (2) failure to state a claim; and (3) lack of personal jurisdiction.
Alternatively, Lloyd’s moves to set aside the default for “good cause.”
RULE 12(b)(1) STANDARD
Rule 12(b)(1) of the Federal Rules of Civil Procedure provides:
Every defense to a claim for relief in any pleading must be
asserted in the responsive pleading if one is required. But a
party may assert the following defenses by motion: (1) lack of
subject-matter jurisdiction. . .

20

Doc. 16-1, p. 1.

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A court may base its disposition of a motion to dismiss under Rule 12(b)(1) on: (1)
the complaint alone; (2) the complaint supplemented by undisputed facts; or (3) the
complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.
Robinson v. TCI/US West Communications, Inc., 117 F.3d 900 (5th Cir. 1997), citing
Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct.
396, (1981).
Courts may consider affidavits and exhibits submitted in connection with a Rule
12(b)(1) motion to dismiss. Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (5th Cir.
1994). Once challenged with competent proof, the plaintiff must prove by a preponderance
of the evidence that the court has subject matter jurisdiction. Middle South Energy, Inc. v.
City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986). A motion to dismiss under Rule
12(b)(1) should be granted only if it appears certain that the plaintiff cannot prove any set
of facts in support of his claims that would entitle plaintiff to relief. Ramming v. United
States, 281 F.3d 158, 161 (5th Cir. 2001).
Lack of subject matter jurisdiction
Lloyd’s maintains that the proper Defendant in a suit against the underwriters at
Lloyd’s, London are the specific underwriters subscribing to a policy. 21 E.G. Tate v.
Underwriters at Lloyds London, 2023 WL 48814609, at *1 (W.D. La. Dec. 20, 2023); Conroy v.
Underwriters at Lloyds London, 2023 WL 8480069, *1 (W.D. La. Dec. 7, 2023); Montegut
Properties, LLC v. Certain Underwriters at Lloyd’s London, 2008 WL 11354968, at *4 (E.D. La.
Apr. 14, 2008) ; Certain Underwriters at Lloyd’s London v. Gibraltar Budget Plan, Inc., 9 So.3d
21

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646, 647-48 (Fla. Dist. Ct. App. 2009); Underwriters at Lloyd’s, London v. Strickland, 99 Ga.
App. 89, 90-92, 107 S.E.2d 860, 862-63 (1959).

For diversity jurisdiction under 28 U.S.C. § 1332, the plaintiff and the defendants
must be diverse and the amount in controversy must be more than $75,000. The party
seeking to invoke the Court’s jurisdiction bears the burden of proving the existence of
federal jurisdiction. James v. Underwriters at Lloyds London, 2023 WL 7393489, at *1
(E.D. La. Dec. 10, 2007); Getty Oil Corp., Div. of Texaco, Inc. v. Insurance Co. of North
Am., 841 F.2d 1254, 1258-59 (5th Cir. 188).
Lloyd’s argues that Plaintiff has failed to meet the requisite jurisdictional amount as
to each underwriter or “name” at Lloyd’s. Lloyd’s argues that this Court lacks subject
matter jurisdiction because the Complaint fails to show that the case satisfies the requisite
jurisdictional amount as to each underwriting member/name of Lloyd’s who subscribed to
the policy insuring the Plaintiff. Here, Plaintiff must show that each Lloyd’s member or
name subscribing to the policy meets the $75,000 jurisdictional amount. James, 2023 WL
7393489, at *1; Green Coast Enterprises, LLC, 2022 WL 2208206, at *5 (citing Advanced
Sleep Center, Inc. v. Certain Underwriters at Lloyd’s London, 2015 WL 4097069, at *3 n.
23 (E.D. La. July 7, 2015) (collecting cases)).
Courts in the Fifth Circuit and various other courts have recognized that diversity
jurisdiction is destroyed if a plaintiff cannot prove he has a claim against each
member/name subscribing to the subject policy that equals or exceeds $75,000.00. See,
e.g., Team One Properties LLC v. Certain Underwriters at Lloyds London, 281 Fed. Appx.
323, *1 (5th Cir. 2008); Rips, LLC v. Underwriters at Lloyd's London, No. 14-1969, 2015
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WL 2452339, at *1 (E.D. La. May 21, 2015) (holding the Court lacked subject matter
jurisdiction under 28 U.S.C. § 1332 because claims against individual members/Names
cannot be aggregated and the complaint did not plead that the $75,000.00 jurisdictional
minimum was met for each Name); G & M Holding, Inc. v. Certain Underwriters at Lloyd's
of London, No. 07-4883, 2008 WL 215842, at *2 (E.D. La. Jan. 23, 2008) (holding that
diversity jurisdiction had not been established when the amount in controversy was not met
as to all Names sued under the policy); E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins.
Co., 160 F. 3d 925, 933 (2d Cir. 1998) (noting, as severally liable defendants, that each
Name would still have to satisfy the jurisdictional minimum required by 28 U.S.C. § 1332);
BIG League Ventures, LLC v. Certain Underwriters at Lloyd's, London, 474 F. Supp. 3d
1279, 1284 (S.D. Fla. 2020) (noting that various courts have recognized diversity
jurisdiction is destroyed if the plaintiff cannot prove it has a claim against each
member/Name subscribing to the subject policy that equals or exceeds $75,000.00”).
Plaintiff argues that the jurisdictional amount is clearly satisfied because the Entry
of Default shows contractual damages, statutory penalties, and attorney’s fees total
$597,434.33. Plaintiff calculates the amount in controversy as to each Defendant based on
the lowest Contract Number of 20% to be $119,486.87.
Lloyd’s submits the Declaration of Mark Crowest who is employed by Beazley
Furlonge Limited as Focus Group Leader, Commercial Claims (“Beazley”). 22 Beazley
manages Lloyd’s Syndicates including Lloyd’s Syndicate No. 2623 and Lloyd’s Syndicate

22

Doc. 17-1, ¶ 2.

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No. 0623. 23 Crowest declares the following: under the Policy subscribing to Contract
Number B0142AA1900282 (the “Contract”), which accounts for 20% of the participation
on the Policy, Beazley Syndicate 2623 and Beazley Syndicate 0623 subscribed to 65% of
the Contract. 24 Underwriters in Syndicates No. 2623 have an 82% participation and
Underwriters in Syndicate No. 0623 have an 18% participation. 25 Consequently,
Underwriters in Syndicate No. 0623 subscribed to 18% of 65% of 20%. 26 Syndicate 0623
had approximately 1,600 underwriting members in the 2019 and 2020 years of account. 27
Lloyd’s argues that even if the underwriting members’ participation in Syndicate
0623 was pro rata, the jurisdictional amount of the entire claim would have to exceed
hundreds of millions of dollars to satisfy the $75,000 jurisdictional amount for each
underwriting member in Syndicate 0623. The Court agrees with Lloyd’s that Plaintiff has
failed to establish the jurisdictional amount as to each subscribing name and therefore
Plaintiff is unable to establish diversity jurisdiction against Lloyd’s. See BIG League
Venture, LLC v. Certain Underwriters at Lloyd’s London, 474 F.Supp.3d 1279 (June 1,
2020) citing Rips, LLC, d/b/a Seafood Haven v. Underwriters at Lloyd’s Lone, 2015 WL
2452339 (E.D. La. May 21, 2015).
Plaintiff fails to take into consideration that each member/name in each syndicate is
individually liable. “A Syndicate is a creature of administrative convenience through
which individual investors can subscribe to a Lloyd’s policy. A syndicate bears no liability

23

Id.
Id.
25
Id.
26
Id.
27
Id.
24

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for the risk on a Lloyd’s policy. Rather, all liability is born by the individual Names who
belong to the various syndicates that have subscribed to a policy.” Team One Properties,
281 Fed. Appx. 323, *1; See also McAuslin v. Grinnell Corp., 2000 WL 1059850 at *2
(August 1, 2000).
CONCLUSION
For the reasons set forth herein, the Court will grant Defendants’ Motion to Dismiss
for lack of jurisdiction. Considering the dismissal, the Court will not address Defendant’s
Motion to Set Aside the Default, or motion to dismiss for lack of personal jurisdiction.
THUS DONE AND SIGNED in Chambers on this 4th day of June, 2024.

___________________________________________

JAMES D. CAIN, JR.
UNITED STATES DISTRICT JUDGE

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