FISCHER et al v. NATIONAL SURETY CORPORATION et al

Filing 12

OPINION. Signed by Judge Kevin McNulty on 12/9/16. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No.16-8220 (KM) (MAR)

Annette FISCHER and Randi FISCHER,
Plaintiffs,

OPINION
CHUBB INSURANCE, FIREMAN’S FUND
INSURANCE and NATIONAL-SURETY
CORPORATION,
Defendants.

Kevin McNulty, U.S.D.J.
This matter comes before the Court on a motion to remand the case to
the Superior Court of New Jersey, Law Division, Essex County (the “Superior
Court”) by pro se plaintiffs Annette Fischer and Randi Fischer (the “Fischers”).
(ECF no. 5) The defendants opposed the motion to remand (ECF no. 10), and
the Fischers submitted a reply in the form of a certification (ECF no. 11). For
the reasons set forth below, I will deny the motion to remand.
Background
The Fischers commenced this action for breach of contract and bad faith
denial of insurance coverage in New Jersey Superior Court (the “State Court
Action”) on October 4, 2016. (Complaint, ECF no. 1-2) The Fischers seek
damages in the amount of $490,854.44, as well as other relief. (Id. at 36-37)
On November 3, 2016, the defendants timely filed a notice of removal,
invoking this Court’s diversity subject matter jurisdiction under 28 U.S.C. §
1332. On November 10, 2016, the Fischers filed a timely motion to remand,
arguing that complete diversity of citizenship is lacking. Essentially, they
contend that one or more of the defendants is, like the Fischers, a citizen of
New Jersey.
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Discussion
Under 28 U.S.C.

§

144 1(a), a “civil action brought in a State court of

which the district courts of the United States have original jurisdiction, may be
removed by the defendant or the defendants, to the district court of the United
States.” “The party seeking removal carries the burden of proving that removal
is proper.” Carlyle mv. Mgmt. LLC v. Moonmouth Co. SA, 779 F.3d 214, 218 (3d
Cir. 2015).
The federal district courts “have 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). “For over two hundred years, the statute has been understood as

requiring ‘complete diversity between all plaintiffs and all defendants.”’ Lincoln
Ben. Life Co.

V.

AEILfe, LLC, 800 F.3d 99, 104 (3d Cir. 2015). “Complete

diversity requires that, in cases with multiple plaintiffs or multiple defendants,
no plaintiff be a citizen of the same state as any defendant.” Zambelli Fireworks
Mfg. Co., Inc. v. Wood, 592 F.3d 412, 419 (3d Cir. 2010). An individual is a
citizen of the State of his or her domicile. Viandis v. Kline, 412 U.S. 441, 454,
93 S. Ct. 2230 (1973). “[A] corporation shall be deemed to be a citizen of every
State and foreign state by which it has been incorporated and of the State or
foreign state where it has its principal place of business.” 28 U.S.C.

§

1332(c)(1).
No party disputes that the Fischers are citizens of New Jersey. The sole
question before this Court is whether any of the defendants—Chubb Insurance,
Fireman’s Fund Insurance, and National Surety Corporation—is a citizen of
New Jersey, a circumstance that would destroy complete diversity.
One matter that is in dispute, however, is the precise identity and
citizenship of the legal entity that serviced the Fischers’ claim under the Policy.
Here, some corporate background is required.
National Surety Corporation (“NSC”) issued to the Fischers a Prestige
Home Premier insurance policy, bearing Policy No. NZA03872975, for the
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policy period November 3, 2014 to November 3, 2015 (the “Policy”). (Complaint

¶

7) In support of removal, Defendants submitted an affidavit of Daniel 1.

Jaeger, Assistant Vice President, Property SIU Claim Manager of Chubb North
America. (Jaeger Aff., ECF no. 10-1) The Jaeger affidavit states that NSC, which
wrote the Fischers’ insurance policy, is incorporated and has its principal place
of business in Illinois. (Id. ¶j 3, 6).
According to the Jaeger affidavit, NSC is wholly owned by Fireman’s
Fund Insurance Company (“FFIC”). (Id.

¶

7) FFIC is incorporated in California

and has its principal place of business in Illinois. (Id.

¶

4) The complaint names

as a defendant “Fireman’s Fund Insurance,” but that shortened version of the
FFIC name does not designate a legal entity; presumably FFIC was intended.
FFIC sold its “personal lines business” to ACE American Insurance
Company (“ACEAIC”) in April 2015. Thereafter, ACEAIC serviced the Fischers’
claim under the Policy. ACEAIC is incorporated and has its principal place of
business in Pennsylvania. (Id.

¶J

3, 8-9)

NSC, FFIC, and ACEAIC, then, are not citizens of New Jersey. The
citizenship of these three entities is diverse from that of the Fischers.
The Fischers allege that “Chubb Insurance,” which they have named as a
defendant, is a citizen of New Jersey, and that this circumstance destroys
complete diversity. That contention, however, is not supported by facts. I
therefore have little choice but to accept the facts as contained in the Jaeger
affidavit.’
The germ of truth in the Fischers’ contentions, or perhaps the basis for a
misunderstanding, is as follows. In January 2016, ACEAIC’s indirect parent
company, ACE INA Holdings, Inc., acquired The Chubb Corporation. Before the
acquisition, The Chubb Corporation was headquartered in Warren, New Jersey.
(Id.

¶

10-11, 13) After the acquisition, however, The Chubb Corporation ceased

of course subject matter jurisdiction is a prerequisite to the Court’s hearing the
case, and may be raised at any time. Should discovery reveal that the Jaeger affidavit
is incorrect, it may be necessary to revisit the issue.
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to exist as a legal entity. The Chubb Corporation was merged into ACE INA
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Holdings, Inc., which then changed its name to Chubb INA Holdings, Inc. (Id.
¶j 11-13) Chubb INA Holdings, Inc., (formerly ACE INA Holdings, Inc.) is a
Delaware corporation with its principal place of business in Philadelphia. It is
not a citizen of New Jersey. (Id.

¶

10)

ACEAIC has at all times continued to service the Fischers’ claim under
the Policy. ACEAIC now operates under the umbrella of the Chubb brand
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name. (Id.

¶

16) It remains, however, a Pennsylvania corporation,

headquartered in Pennsylvania.
The Fischers have sued “Chubb Insurance,” which is not a legal entity at
all. (Id.

¶

3) But the Fischers contend that the entity that emerged from ACE

INA Holdings, Inc.’s acquisition of The Chubb Corporation is headquartered in
New Jersey (thus defeating complete diversity), because it adopted the Chubb
brand name. (E.g., P1. Reply, ECF no. 11, ¶j 30, 37) That is not the case; the
entity that survived the merger, as stated above, is not a citizen of New Jersey.
(Jaeger Aff.

¶

10)

When the Fischers refer to “Chubb,” they do not distinguish among the
many distinct legal entities bearing the Chubb name. They note that at least
two Chubb entities continue to be headquartered in Warren, New Jersey: the
Chubb Group of Insurance Companies and Chubb Services Corporation. (P1.
Reply at 6-8:

¶

16). However, the Fischers do not relate those particular entities

to anything alleged in their complaint.
Concededly, the defendants have not arranged their corporate affairs in a
manner that is easy to understand. The Fischers assume that a company using

These changes all occurred before the complaint in this action was filed.
Diversity is measured as of the time of filing of the complaint. Grupo Dataflux v. Atlas
Glob. Gip., L.P., 541 U.S. 567, 570—71, 124 S. Ct. 1920, 1924 (2004). At any rate, The
Chubb Corporation was never connected to the Fischers’ claims or this litigation. (Id. ¶
14)
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This would perhaps explain the references to “Chubb Insurance” as the servicer
in the correspondence attached by the Fischers. (See P1. Reply Exhibits 1-4)

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the Chubb brand name is the same legal entity as, or shares state citizenship
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with, other companies using the Chubb brand name. That assumption,
however, is incorrect.
The Fischers argue that the defendants, anticipating a lawsuit, acted in
bad faith, using the name “Chubb Insurance” in correspondence to mislead
them into naming a defendant that is not a legal entity. (E.g., P1. Mot., ECF no.
5, at 4:

¶J 11-13) An entity’s use of an umbrella trade or business name that

differs from its legal name does not in itself demonstrate bad faith. Nor does
that fact establish that the corporate veil should be pierced for jurisdictional

purposes. See Pearson v. Component Tech. Corp., 247 F.3d 471, 485 (3d Cir.
2001) (“[Clourts have refused to pierce the veil even when subsidiary
corporations use the trade name of the parent, accept administrative support
from the parent, and have a significant economic relationship with the
parent.”); see generally id. at 484-85 (under the Third Circuit’s alter ego test,
the court is required to consider the following factors: “gross
undercapitalization, failure to observe corporate formalities, nonpayment of
dividends, insolvency of debtor corporation, siphoning of funds from the debtor
corporation by the dominant stockholder, nonfunctioning of officers and
directors, absence of corporate records, and whether the corporation is merely
a facade for the operations of the dominant stockholder.”). Nor are there any
indicia of bad faith, e.g., misuse of corporate forms to evade personal

All of this is likely beside the point anyway, because the entity that fits the
description of servicer, ACEAIC, is a citizen of Pennsylvania. ACEAIC is perhaps an
entity that the Fischers could sue as servicer. But there is no legal reason that
ACETAC must be deemed to have the same citizenship as its parent or affiliates.
The Fischers assert that, because ACEAIC purchased FFIC’s “personal lines
business” in April 2015, FFIC and NSC are now owned by “Chubb.” (P1. Reply at 1317: ¶j 33-44) That assertion is disputed by the defendants. (Jaeger Aff. ¶ 17) The
Fischers may be conflating the purchase of certain assets and obligations with
purchase of the entity itself. Again, however, the citizenship of a corporation is not
necessarily that of its parent or affiliate, and the holding company, Chubb INA
Holdings, Inc. is not a New Jersey citizen. (See Jaeger Aff. ¶ 10)
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jurisdiction or liability in a particular state. At issue is only whether a New
Jersey state court or a New Jersey federal court will hear this action.
Conclusion
The State Court Action was properly removed under 28 U.S.C.
and 28 U.S.C.

§ 1441

§ 1332 because it is a civil action which meets the amount in

controversy requirement and the requirement that complete diversity exist
between the Fischers and all defendants. Accordingly, the Fischers’ motion to
remand is DENIED. To the extent that defendants are not properly named, the
plaintiffs may wish to amend their complaint under Federal Rule of Civil
Procedure Rule 1 5(a)(2) to name the proper parties.
A separate order will issue.
Dated: December 9, 2016

/
Kevin McNulty C)
United States District Judge

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