Duzer Realty Corp. v. U.S. Underwriters Insurance Company

Filing 14

ORDER: Because the court has subject matter jurisdiction over the case, Duzer's 5 Motion to Remand to State Court is DENIED. Ordered by Judge Nicholas G. Garaufis on 7/06/2012. (Lee, Tiffeny)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

IN

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D/srMf:~K'S OFFICE
COURT E.ON Y

JUL 12 2012
BROOKL

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DUZERREALTYCORP.,

YNOFF/CE

ORDER
Plaintiff,
12-CV-926 (NGG) (JMA)

-againstU.S. UNDERWRITERS INSURANCE COMPANY,
Defendant,
U.S. UNDERWRITERS INSURANCE COMPANY,
Third-Party Plaintiff,
-againstJUAN CARLOS BAEZ,
Third-Party Defendant.

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NICHOLAS G. GARAUFIS, United States District Judge.
Before the court is Duzer Realty Corporation's motion to remand the case to state court.
(See Docket Entry # 5.) Because the court has subject matter jurisdiction over the case, the
motion is DENIED.
On January 12,2012, Duzer Realty sued its insurer, U.S. Underwriters Insurance
Company, in New York Supreme Court, Kings County. (See Ex. A to Notice of Removal
(Docket Entry # 1).) In essence, Duzer sought a declaratory judgment that its insurance policy
with U.S. Underwriters would cover the liability it might incur as a result of another, separate,
action in which Duzer is a defendant. (See i4J That action, also pending in state court, was
brought by Juan Carlos Baez for injuries sustained while working at one of Duzer' s real
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properties. (See id.; Third-Party Compl. (Docket Entry # 9).)
Alleging diversity of citizenship, U.S. Underwriters removed the case to this court on
February 27, 2012. (See Notice of Removal.) U.S. Underwriters alleged that its principal place
of business is in Pennsylvania (see id.), and later demonstrated that it is a North Dakota
corporation (~Ex. A to Aff. of Carol Ann Myrtetus (Docket Entry # 7-1)). Duzer is a New
York corporation. (See Ex. A. to Notice of Removal

~

I.)

On April 2, 2012, the court granted Duzer leave, nunc pro tunc, to file a motion for
remand. (See Minute Entry dated Apr. 2, 2012.) On June 26, 2012, Duzer filed a supplemental
affirmation in further support of its motion, which addressed the third-party complaint filed in
this case by U.S. Underwriters against Baez. (See Docket Entry # 10.)
The court has reviewed the papers and concludes that Duzer's arguments for remand are
without merit.
Once a defendant files a notice of removal in federal district court, the court obtains
jurisdiction over "any civil action brought in State court of which the district courts of the United
States have original jurisdiction." 28 U.S.C. § 1441(a). One font offederal subject matter
jurisdiction is, of course, diversity jurisdiction. See id. § 1332(a). For the purposes of
determining whether diversity exists between parties, a corporation "shall be deemed to be a
citizen of any State by which it has been incorporated and of the State by which it has its
principal place of business." Id. § 1332(c)(I). "The phrase 'principal place of business' refers
to the place where the corporation's high level officers direct, control, and coordinate the
corporation's activities." Hertz Corp. v. Friend, 130 S. Ct. 1181,1186 (2010). In terms of
timing, the district court has jurisdiction over cases in which there is diversity both when the
complaint is filed in state court and at the time of removal. See Jackson v. Allen, 132 U.S. 27,
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1889 U.S. LEXIS 1837, at *13 (1889). Thus, if jurisdiction exists at the time of removal, later
motion practice cannot destroy or divest it. See Saint Paul Mercurv Indem. Co. v. Red Cab Co.,
303 U.S. 283, 292-93 (1938) (holding that the district court retained jurisdiction over a removed
case even after the plaintiff amended its complaint so that it no longer complied with the amountin-controversy requirement).
Duzer offers seven reasons why the case should be remanded to state court, all of which
are deficient. First, it argues that its dealings with U.S. Underwriters were through an agent who
is located in New York. (Affirmation. in Supp. of Notice of Mot. (Docket Entry # 5-1) 1l5(a).)
This is irrelevant, however, because U.S. Underwriters' citizenship turns on the location of its
principal place of business and inCorporation, not the location of its agents. Second, Duzer
points out that the insurance policy at issue provides that U.S. Underwriters will accept service of
process through what is now the New York State Department of Financial Services. (M, 1l5(b).)
This is irrelevant. Where and by what means a party accepts service of process has no bearing on
its citizenship. Third, Duzer identifies another provision of the insurance policy wherein U.S.
Underwriters agrees to abide by the final decision of any court where it may be sued. (See id.
1l5(b) (quoting Ex. C to Notice of Mot. (Docket Entry # 5-4».) The court cannot fathom how
this fact could possibly relate to the issue of its jurisdiction. Fourth, Duzer claims that the action
does not meet the seventy-five-thousand-dollar amount-in-controversy requirement set out in

§ 1332. (M, 1l5(c).) But the complaint seeks a declaratory judgment that U.S. Underwriters is
liable to make payments pursuant to an insurance policy that covers up to a million dollars in
damages per claim. (See Notice of Removal 11 6.) In cases for declaratory relief, "the amount in
controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple
Adver. Comm'n, 432 u.S. 333, 347 (1977). Here, the object of Duzer's suit is a judicially
3

enforceable right to full indemnification for any damages it may owe Baez up to one million
dollars. I Fifth, Duzer asserts that because this action relates to another action pending in state
court-namely Baez's personal injury lawsuit-"both actions should properly be before the same
Court, to wit: New York State Supreme Court, County of Kings." (Affirmation. in Supp. of
Notice of Mot. '\I5(d).) Duzer does not cite any authority to support this novel theory of
supplemental divestiture;2 and the court is not aware that any exists. Sixth, Duzer argues that the
case should be remanded because "all of the insured locations listed in the policy of insurance are
within the City and State of New York."

ilih '\I5(e).)

The issue here is one of subject matter

jurisdiction, not choice oflaw, and so this point is irrelevant. Finally, by way of supplemental
affirmation, Duzer argues that U.S. Underwriters' decision to file a third-party complaint against
Baez somehow divests the court of jurisdiction. (Supplemental Affirmation in Supp. of Notice
of Mot. '\14.) As explained above, the court's jurisdiction depends on the existence of diversity at
two specific points in time: when the complaint was filed in state court and when the action was
removed to federal court. Subsequent events are irrelevant.

Additionally, the general rule regarding § \332'5 amount-in-controversy requirement is
that jurisdiction will lie unless there is a "legal certainty" that the plaintiff cannot obtain $75,000 or more
of value from the lawsuit. See Saint Paul Mercury Indem., 303 U.S. at 288. Here, U.S. Underwriters has
alleged on the face of its notice of removal that there is more than $75,000 in controversy. (See Notice
of Removal ~ 6.) Duzer provides no evidence to contrary, let alone shows to a legal certainty that the
allegation is untrue.
2
The court notes that, having failed to submit a memorandum of law in support of its
motion, Duzer does not support any of its arguments with legal authority.
4

The court has subject matter jurisdiction over this case. Duzer's motion to remand is
accordingly DENIED.
SO ORDERED.

s/Nicholas G. Garaufis
NitHOLAS G. GARAUFIS
United States District Judge

Dated: Brooklyn, New York
July
2012

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