RIDER INSURANCE v. MID-CENTURY INSURANCE CO. et al
Filing
11
MEMORANDUM OPINION filed. Signed by Judge Michael A. Shipp on 7/29/2016. (eaj)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
RE c E 'v ED
JUL 2 9 2016
AT a·30
M
WILLIAM T WALSH CLERK
RIDER INSURANCE,
Plaintiff,
Civil Action No. 15-8289 (MAS) (LHG)
v.
MEMORANDUM OPINION
MID-CENTURY INSURANCE CO., et al.,
Defendants.
SHIPP, District Judge
This matter comes before the Court on Plaintiff Rider Insurance's ("Rider") motion to
remand. (ECF No. 4.) On October 26, 2015, Rider commenced a declaratory judgment action
against Mid-Century Insurance Company ("Mid-Century") and James Lawroski ("Lawroski") in
the New Jersey Superior Court, seeking a declaration that Mid-Century make contributions
towards Lawroski's insurance benefits. (Notice of Removal
if 1,
ECF No. 1.) After service of
process was effectuated on Mid-Century, but before it was effectuated on Lawroski, counsel
appearing on behalf of Mid-Century filed a Notice of Removal. (Id.) Thereafter, Rider filed a
motion to remand (ECF No. 4), Mid-Century filed opposition (ECF No. 8), and Rider replied (ECF
No. 9). The Court has carefully considered the parties' submissions and decides the matter without
oral argument pursuant to Local Civil Rule 78.1. For the reasons stated below, the Court denies
Rider's motion to remand.
I.
Background
Rider is an insurance company incorporated, and with its principal place of business, in
New Jersey.
(Def.'s Opp'n Br. 3, ECF No. 8.) 1
Mid-Century is an insurance company
incorporated, and with its principal place of business, in California. (Id.) Lawroski is a citizen of
New Jersey. (PL 's Moving Br. 1, ir 5, ECF No. 5.)2 In its Complaint, Plaintiff alleges that on June
7, 2015, Lawroski was involved in an automobile accident while operating his motorcycle (the
"Accident"). (Notice of Removal, Ex. A ("Compl.")
if 5, ECF No.
1.) When the Accident
occurred, Rider insured the motorcycle that Lawroski was operating and Mid-Century insured an
automobile that Lawroski owned, which was not involved in the Accident. (Pl.'s Moving Br. 1,
ifif 3-4, Ex. D.) Lawroski's insurance policies with both Rider and Mid-Century included
Underinsured Motorist Coverage ("UIM Coverage") with policy limits of $250,000 per person.
(Pl.'s Moving Br. Exs. A, B, ECF No. 5.) After the Accident, Lawroski filed claims against both
Rider and Mid-Century for UIM Coverage because the insurance policy for the owner/operator of
the other vehicle involved in the Accident provided only $50,000 for bodily injury, and Lawroski
alleged that his injuries exceeded this limit. (Com.pl.
ifif 6, 13.) Rider accepted coverage for
Lawroski' s injuries and acknowledged that if damages sustained in an accident are greater than
the Motor Vehicle Liability Limit extending coverage to the owner/operator of the other vehicle
1
The Court may review jurisdictional facts even though they are not in the pleadings because
Rider's motion to remand presents a challenge to the Court's jurisdiction, and under Rule 12(b)(1)
of the Federal Rules of Civil Procedure, "the [c]ourt may look to documents outside the pleadings
in order to assess jurisdictional facts sufficient to assure the [c]ourt of the propriety of its
adjudication of a particular claim." Christie v. Pub. Serv. Elec. & Gas Co., No. 04-5978, 2006
WL 462588, at *6 n.2 (D.N.J. Feb. 24, 2006) (citing Biase v. Kaplan, 852 F. Supp. 268, 277 (D.N.J.
May 9, 1994)).
2
As multiple paragraphs in Plaintiffs moving brief have the same number, the Court shall cite
both the page number and paragraph number when referencing Plaintiff's moving brief.
2
and no other exclusions are applicable, Lawroski is entitled to pursue an Underinsured Motorist
Claim ("UIM Claim") for the amount which allegedly exceeds the other driver's policy limit.
(Pl.'s Moving Br. 1, 16; Compl. 18.) Rider's policy also states that, "in the event other ... [UIM]
Coverage is available to an insured who is making a[]. . . UIM Claim, coverage shall be
apportioned between ... Rider ... and each other such policy providing coverage." (Compl. if 9.)
Pursuant to this provision of its policy, Rider requested that Mid-Century make a contribution
toward Lawroski's UIM Claim. (Id.
if 14.)
Mid-Century had, however, previously denied UIM
Coverage to Lawroski pursuant to a disclaimer in its policy. (Id.
if 12.)
Likewise, Mid-Century
denied Rider's request for contribution for Lawroski' s UIM Claim pursuant to the disclaimer in
its policy. (Id. 115.) On August 17, 2015, a representative for Rider asked Mid-Century to revisit
its denial. (Id. 117.) On August 18, 2015, a Mid-Century representative sent an e-mail message
to Rider's representative requesting that a "legal opinion" decide the dispute regarding the
disclaimer in its policy. (Id.
il 18.)
On September 16, 2015, Mid-Century informed Rider that the
coverage dispute is to date still being reviewed by management. (Id. 120.) Accordingly, Rider
filed a claim in the New Jersey Superior Court for declaratory judgment seeking contribution from
Mid-Century. (Id.
if 25.)
Thereafter, Mid-Century filed a Notice of Removal to this Court based
on diversity jurisdiction. (Notice of Removal, 7). Rider now moves to remand. (ECF No. 4.)
II.
Legal Standard
Under§ 1447(c), "[i]f at any time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). Thus, where
a federal court lacks subject matter jurisdiction over a case removed from state court, the case must
be remanded. The law is clear in this Circuit that "the party asserting federal jurisdiction in a
removal case bears the burden of showing, at all stages of the litigation, that the case is properly
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before the federal court." Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing
Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004)). The removal statute
"is to be strictly construed against removal ... so that the Congressional intent to restrict federal
diversity jurisdiction is honored." Samuel-Bassett, 357 F .3d at 396 (citing Boyer v. Snap-On Tools
Corp., 913 F.2d 108, 111 (3d Cir. 1990)). "This policy 'has always been rigorously enforced by
the courts."' Id. (quoting St. Paul Mercury lndem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)).
III.
Analysis
In its motion, Rider argues that this action should be remanded because: ( 1) Mid-Century
failed to adequately establish the citizenship of the parties; and (2) there is a lack of complete
diversity because Lawroski is a defendant and Rider and Lawroski are both citizens of New Jersey.
(Pl. 's Moving Br. 6-8, -,r,-r 1-6, 1-11.) The Court considers these arguments in tum.
A.
Allegations of Failure to Properly Establish Citizenship
Rider argues that Mid-Century's petition for removal is fatally deficient because neither
the Notice of Removal nor the Complaint indicates the states in which the parties are incorporated
or have their principal places of business-facts necessary to determine the citizenship of each
party. 3 (Pl. 's Moving Br. 6,
ifif 1-6.) Thus, the Notice of Removal fails to establish diversity
3
In its reply brief, Plaintiff argues that Mid-Century has failed to submit sworn affidavits or
documents attesting to the facts asserted in Mid-Century's opposition brief-specifically, the
parties' state of incorporation and principal place of business. (Pl.'s Reply Br. 1, ECF No. 9.)
Plaintiff cites cases where personal jurisdiction was challenged to argue that "[ w]hen the
jurisdiction of this court is challenged . . . it is necessary for the party opposing the Motion to
proffer evidence of jurisdiction through sworn [a]ffidavits ... ."(Id.) The cases on which Plaintiff
relies are inapposite. Sworn affidavits are not required to establish diversity jurisdiction. See
Christie, 2006 WL 462588, at *6 n.2 (noting that consideration of a motion challenging subject
matter jurisdiction need not be limited to the pleadings," but not requiring adherence to 28 U.S.C.
§ 1746) (citing Biase, 852 F. Supp. at 277); cf Time Share Vacation Club v. At/. Resorts, Ltd., 73 5
F.2d 61, 66 n.9 (3d Cir. 1984) (reasoning that sworn affidavits are necessary to establish personal
jurisdiction because an in personam jurisdictional question "is inherently a matter which requires
4
jurisdiction. While Mid-Century did not explicitly address this argument, in its opposition brief,
it provides the exact location of incorporation and the principal place of business of each party.
(Def.'s Opp'n Br. 3.) A court may permit a defendant to amend a notice of removal to correct
defects in allegations of jurisdiction. 28 U.S.C. § 1653. In addition, a court may consider
jurisdictional facts contained in other items in the record as amendments to the removal notice
where those facts correct technical deficiencies in the original notice. USX Corp. v. Adriatic Ins.
Co., 345 F .3d 190, 205 n.12 (3d Cir. 2003 ). Since the Court may consider other items in the record,
including allegations in Mid-Century's opposition brief, the Court finds that Mid-Century has
· sufficiei;itly identified the citizenship of the parties.
B.
Allegations of Lack of Complete Diversity
In its motion, Plaintiff argues that Mid-Century has not established complete diversity
because Lawroski is a defendant and he is a citizen of New Jersey-the same state as Plaintiff.
(Pl.'s Moving Br. 7-8,
,-r~
1-7.) In its opposition, Mid-Century argues that Lawroski does not
destroy complete diversity because, pursuant to Rule 19 of the Federal Rules of Civil Procedure,
Lawroski is not a necessary or indispensable party, and so, pursuant to Rule 21 of the Federal
Rules of Civil Procedure, the court may dismiss him from this action. (De£'s Opp'n Br. 4, 6.) In
its reply, Rider argues that Lawroski is an indispensable party because he has an interest in the
subject matter of the litigation, and pursuant to N.J.S.A. 2A:16-56, "when Declaratory relief is
sought, all persons having or claiming any interest which would be affected by the declaration
shall be made parties to the proceeding." (Pl. 's Reply Br. 5) (emphasis omitted). Specifically,
resolution of factual issues outside the pleadings, i.e. whether in personam jurisdiction actually
lies.").
5
Rider argues that Lawroski would like this matter resolved expeditiously, and his interests are
therefore not passive or secondary. (Id.)
A party is "necessary" under Federal Rule of Civil Procedure 19(a)(l) if:
(A) in that person's absence, the court cannot accord complete relief
among existing parties; or (B) that person claims an interest relating
to the subject of the action and is so situated that disposing of the
action in the person's absence may: (i) as a practical matter impair
or impede the person's ability to protect the interest; or (ii) leave an
existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the
interest.
Fed. R. Civ. P. 19(a)(l).
Applying Rule 19 to declaratory actions between insurers, courts in other districts have
held that "[t]he insured need not be joined in a declaratory-judgment action between two insurers
to determine their respective liability." Clarendon Nat'l Ins. Co. v. United Fire & Cas. Co., No.
08-00023, 2008 WL 1819915, at *2 (E.D. Ark. Apr. 22, 2008) (citing 7 Charles Alan Wright,
Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure§ 1619, n.9 (3d ed. 2001));
see St. Paul Fire & Marine Ins. Co. v. Aetna Cas. & Sur. Co., 357 F.2d 315, 316 (10th Cir. 1966)
(insured party was not a necessary party in an action to determine rights and duties of two insurers
because insured was protected regardless of the outcome of litigation); Wyoming Cty., N. Y. v. Ins.
Co. of N. Am., 518 F.2d 23, 27 n.6 (2d Cir. 1975) (finding that in an action between multiple
insurers, insured parties were dispensable in order to preserve complete diversity); see also Fed.
Ins. Co. v. Mich. Mut. Liab. Co., 172 F. Supp. 858, 859 (E.D. Pa. 1959), aff'd, 277 F.2d 442 (3d
Cir. 1960) (the insured was not joined as a party in a dispute between two insurers to determine
primary and excess liability).
In Clarendon, the plaintiff insurance company brought a declaratory judgment action to
determine the liability of two insurance companies who both insured a car that was involved in an
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accident. Clarendon, 2008 WL 1819915, at *2. Neither company denied liability; the declaratory
judgment sought only to determine which policy was primary and which was excess. Id. The
court found that the insured was not a necessary party, reasoning that the insured does not have an
interest when the dispute is only to determine primary and excess liability. Id. Similarly, other
courts have found that where a party will be fully covered "regardless of the outcome of the
intercarrier controversy," joinder of the insured party is not necessary. St. Paul Fire & Marine
Ins. Co., 357 F.2d at 316; Bituminous Ins. Cos. v. Pa. Mfrs.' Ass 'n Ins. Co., 427 F. Supp. 539, 547
(E.D. Pa. 1976) (finding that the insured need not be joined since whatever interest it had in the
suit was fully protected by the presence of its direct insurer).
Likewise, here, Rider asserts that no relief is being sought from Lawroski; it is only seeking
contribution from Mid-Century. (Compl.
ilif 23, 25.) Thus, pursuant to Rule 19(a)(l)(A) of the
Federal Rules of Civil Procedure, the Court can afford complete
Century' s contribution-in Lawroski' s absence.
relief~etermination
of Mid-
Lawroski' s absence also will not impair or
impede his ability to protect his interests, because regardless of whether Mid.-Century is required
to contribute to Lawroski's claim, Lawroski will be covered by Rider. (Compl. ~ 8.) Furthermore,
since both of Lawroski's UIM policies have $250,000 per person policy limits, even if MidCentury does not contribute, Rider can cover the maximum amount to which Lawroski is entitled.
(See Compl.
if 13; PL 's Moving Br., Exs. A, B.} Thus, irrespective of whether Mid-Century is
required to contribute, Lawroski's interests will be fully protected.
Finally, pursuant to Rule 19(a)(l)(B)(ii) of the Federal Rules of Civil Procedure, Rider will
not be subject to substantial risk of incurring double, multiple, or inconsistent obligations because
no relief is being sought from Lawroski. (Compl. , 23.) Thus, Lawroski is not a necessary party
pursuant to Rule 19(a) of the Federal Rules of Civil Procedure.
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Finally, pursuant to Rule 21 of the Federal Rules of Civil Procedure, "[o]n motion or on its
own, the court may at any time, on just terms, add or drop a party." Fed. R. Civ. P. 21. "A
misjoinder of parties ... frequently is declared because no relief is demanded from one or more of
the parties joined as defendants." Letherer v. Alger Grp., L.L.C., 328 F.3d 262, 267 (6th Cir.
2003), overruled on other grounds by Blackburn v. Oaktree Capital Mgmt., LLC, 511 F.3d 633,
635 (6th Cir. 2008) (quoting 7 Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane, Federal
Practice and Procedure § 1683, at 475-76 (3d ed. 2001)); see also Glendora v. Malone, 917 F.
Supp. 224, 227 n.3 (S.D.N.Y. 1996) ("[c]learly, the court may rely on Rule 21 to delete parties
that have no connection to the Claims asserted.").
Here, no relief is being demanded from
Lawroski, and he has no practical connection to the claims asserted. Accordingly, the Court finds
it appropriate to dismiss Lawroski from this action.
IV.
Conclusion
For the reasons set forth above Plaintiffs motion to remand this action to the Superior
Court of New Jersey, Law Division, Ocean County is denied. An order consistent with this
Memorandum Opinion will be entered.
s/ Michael A. Shipp
MICHAEL A. SHIPP
UNITED STATES DISTRICT JUDGE
Dated: July 29, 2016
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