Evanston Insurance Company v. Chacon-Lopez et al

Filing 61

ORDER DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION. Signed by Judge Juan M Perez-Gimenez on 10/16/2012.(VCC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

EVANSTON INSURANCE COMPANY,
Plaintiff,
v.

CIV. NO. 11-1701(PG)

DRUG ENFORCEMENT
ET AL.,

ADMINISTRATION,

Defendants.
OPINION AND ORDER
Plaintiff

Evanston

Insurance

Company

(“Evanston”)

brought

this

action of interpleader under Rule 22 of the Federal Rules of Civil
Procedure

and

for

declaratory

relief

under

the

Federal

Declaratory

Judgment Act, 28 U.S.C. § 2201 and Rule 57 of the Federal Rules of Civil
Procedure.
Moreover, Plaintiff asserts that “jurisdiction over this action is
appropriate pursuant to 28 U.S.C. § 1332 since there is diversity of
citizenship between the parties and the amount in controversy exceeds
$75,000.00, exclusive of interests, costs and attorney’s fees.” (Docket
No. 1).
In its Complaint (Docket No. 1) and subsequent Amended Complaint
(Docket

No.

49)

Plaintiff

claims,

in

essence,

that

it

issued

a

Professional Liability Insurance Policy for Specified Medical Professions
to Defendant Quality Health Services of Puerto Rico, Inc., DBA, Hospital
San Cristobal and/or Southern Hospital Services, Inc., Policy No. SM8676534. Plaintiff further argues that it has provided and continues to
provide legal defense to Hospital San Cristobal for several actions that
have been brought against Hospital San Cristobal and Evanston Insurance
Company claiming damages for alleged acts, errors and omissions in the
rendering of professional services. Plaintiff attached a list of those
actions as Exhibit B to the Complaint (Docket No. 1).
The actions in question are listed as follows:
1. Mayra Deya-Rivera, et al. v. Hospital San Cristobal, Inc., et al.,
Commonwealth

of

Puerto

Rico,

Court

of

First

Instance,

Ponce

Superior Part, Civil No. JDP2009-0504 (604).
2. Teresa Santiago de Jesus, et al. v. Hospital San Cristobal, et al.,

Civil No. 11-1701 (PG)
Commonwealth

of

Page 2
Puerto

Rico,

Court

of

First

Instance,

Ponce

Superior Part, Civil No. JDP2010-0550.
3. Nilda

Chacon-Lopez,

Commonwealth

of

et

al.

Puerto

v.

Rico,

Hospital
Court

of

San

Cristobal,

First

Instance,

et

al.,

Salinas

Superior Part, Civil No. G4CI2010-0354.1

At

the

inquired

status
sua

conference

sponte

into

held

on

September

the

question

of

19,
the

2012,

this

federal

court

court's

jurisdiction. Upon examination of the record and after affording the
parties an opportunity to be heard at the status conference, this Court
dismisses the present action for lack of subject matter jurisdiction.

Discussion
Subject matter jurisdiction is one of the few matters that federal
courts can raise on their own, without the need for a motion brought by
the parties. New Eng. Power and Marine, Inc. v. Town of Tyngsborough (In
re Middlesex Power Equip. & Marine, Inc.), 292 F.3d 61, 66 n.1 (1st Cir.
2002) (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583, 119 S.
Ct. 1563, 143 L. Ed. 2d 760 (1999))("Article III generally requires a
federal court to satisfy itself of its jurisdiction over the subject
matter before it considers the merits of a case").
When

a

case

arrives

in

federal

court,

is

the

obligation

of

both

district court and counsel to be alert to jurisdictional requirements.
Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 ,(citing Bender
v. Williamsport Area School Dist., 475 U.S. 534, 541, 89 L. Ed. 2d 501,
106 S. Ct. 1326 (1986) ("every federal appellate court has a special
obligation to satisfy itself not only of its own jurisdiction, but also
that of the lower courts in a cause under review, even though the parties
are prepared to concede it" (quoting Mitchell v. Maurer, 293 U.S. 237,
244, 79 L. Ed. 338, 55 S. Ct. 162 (1934))); United Republic Ins. Co. in
Receivership v. Chase Manhattan Bank, 315 F.3d 168, 170-171 (2nd Cir.
2003) ("We have . . . urged counsel and district courts to treat subject
1

During the status conference held on September 19, 2012, Plaintiff informed
the Court that a fourth case, Lucila Vera-Vargas, et al. v. Hospital San
Cristobal, et al., Commonwealth of Puerto Rico, Court of First Instance, Ponce
Superior Part, Civil No. JDP2010-0305, has been dismissed.

Civil No. 11-1701 (PG)

Page 3

matter jurisdiction as a threshold issue for resolution . . . ."); United
States v. Southern

California Edison Co., 300 F. Supp. 2d 964, 972

(E.D. Cal. 2004) (district courts have an "independent obligation to
address

[subject-matter

jurisdiction]

sua

sponte"

(internal

quotation

marks omitted)).
As previously mentioned, the instant case was brought pursuant to
28 U.S.C. §1332 which provides, in relevant part:

(a)
The
district
courts
shall
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—
(1)

citizens of different States;

(c) For the purposes of this section and section 1441
of this title—
(1) 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, except that in
any direct action against the insurer of a policy or
contract of liability insurance, whether incorporated
or unincorporated, to which action the insured is not
joined as a party-defendant, such insurer shall be
deemed a citizen of—
(A) every State and foreign state of which the insured
is a citizen;
(B) every State and foreign state by which the insurer
has been incorporated;
In addition to §1332, the complaint rests federal jurisdiction upon
the

provisions

action

is

diversity

of

§

premised
is

not

1335.
on

Federal

diversity

required.

Sun

jurisdiction
of

Life

over

citizenship,
Assurance

an

interpleader

although

Company

of

complete
Canada

v.

Plaisted, et al., 2009 U.S. Dist. LEXIS 96214 *5 (D.N.H. October 15,
2009) (citing State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523,
530, 87 S. Ct. 1199, 18 L. Ed. 2d 270 (1967)). The existence of diversity
in an interpleader action is determined without regard to the plaintiffstakeholder's

citizenship.

Rather,

there

is

sufficient

diversity

to

support federal jurisdiction if claims are adverse to the fund, and
adverse to each other and at least two of the claimants to the fund are
citizens of different states. Id.

Civil No. 11-1701 (PG)

Page 4

In this case, all of the named defendants are said to be citizens
of Puerto Rico. See, Docket No. 1, ¶¶ 2-34. Moreover, Plaintiff is
corporation organized under the laws of and with a principal place of
business

in

Illinois

that

issued

a

Policy to a Puerto Rico corporation.

Professional

Liability

Insurance

The First Circuit has grappled with

the question of whether the citizenship of the insured is attributed to
the insurance carrier.
In Torres v. Hartford, Ins. Co., 588 F.2d 848, 850 (1st Cir. 1978),
the Puerto Rico plaintiffs argued that there was diversity jurisdiction
because the driver of the vehicle that caused their injuries was a
citizen of North Carolina. The Court examined whether the citizenship of
the named insured, a Delaware corporation with a principal place of
business in Puerto Rico, or the Omnibus insured, a citizen and resident
of

North

Carolina,

was

attributed

to

the

insurance

carrier.

After

analyzing the Puerto Rico direct action statute codified at 26 L.P.R.A.
§2003, the Court ruled that diversity jurisdiction was defeated as the
insurer is deemed to be a citizen of the same state as the Plaintiffs if
the named insured or the tortfeasor Omnibus insured is a citizen of that
state. See also, Alvarez-Pisanelli v. Hertz Puerto Rican Cars, Inc., 786
F.Supp.150 (D.P.R. 1992).
Following the Torres rationale, Plaintiff is deemed to be a citizen
of Puerto Rico and thus, diversity of citizenship between Plaintiff and
Defendants

is

absent.

Consequently,

the

court

lacks

subject

matter

jurisdiction over the interpleader action and it must be dismissed.
As

a

matter

of

fact,

even

if

the

Court

had

subject

matter

jurisdiction in this action, principles of comity and judicial restraint
dictate the denial of the request for interpleader relief. It is a known
principle that an “interpleader is an equitable remedy. And many courts
have conditioned the grant of interpleader relief upon basic equitable
doctrines.” See, Sun Life Assurance, 2009 U.S. Dist. LEXIS 96214 *8-9
(citing Home Indem. Co. v. Moore, 499 F.2d 1201, 1205 (8th Cir. 1974)).
Federal

courts

have

declined

to

exercise

jurisdiction

over

an

interpleader action when a prior action in another court may afford
adequate protection, as is the case here. Koehring Co. v. Hyde Constr.
Co., 424 F.2d 1200 (7th Cir. 1970); see also 7 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure §1709 (3d ed. 2001). (“A

Civil No. 11-1701 (PG)

Page 5

court may also dismiss or stay an interpleader proceeding if an action
already pending before another court might obviate the need for employing
the interpleader remedy or eliminate the threat of multiple vexation.”);
Metropolitan Life Ins. Co. v. Scott, 587 F.Supp.451 (W.D. Pa. 1984)
(“When an action already is pending against the insurance carrier in one
forum where interpleader is equally available, either as an independent
action or by way of counterclaim, interpleader should not be tried in
another forum, absent exceptional circumstances.”)
The opinion in National Casualty Co. v. Insurance Co. of North
America, 230 F.Supp.617 (N.D. Ohio 1964) sums up the reasoning that
guides the equitable nature of the federal interpleader.

To sustain the prayer of plaintiff * * * would be to
drag essentially local litigation into the Federal
(District) Courts; and, litigation over which this
Federal District Court has no jurisdiction. To do so
would defeat the jurisdiction of State Courts over
such litigation, merely because one of the parties to
such litigation happens to have indemnity insurance in
a foreign insurance company. * * * If plaintiff here
prevails in the defense of such State Court actions
then it will not be subject to any liability to the
other defendants herein by reason of its issuance of
the policy of insurance in question. * * * Whether any
one or more of the plaintiffs in the State Court
actions will obtain a judgment against the defendant
Hale in excess of the total limit of coverage
contained in the policy in question, or any judgment
at all, is problematical and left to speculation and
conjecture. The question whether defendant will be
confronted with claims made against it because of any
such judgments, if obtained, can as well be determined
after the conclusion of the suits pending in the State
Courts as it can now.
National

Casualty

Co.,

230

F.Supp.

at

620-621

(citing

American

Indemnity Company v. Hale, 71 F.Supp.529 (W.D. Mo. 1947)).
Those principles apply in this case. All the underlying cases in
which Evanston would be exposed are already being tried in state court.
Furthermore, at the Status Conference, counsel for Defendants expressed a
preference

for

resolving

those

claims

in

the

pending

state

action.

Accordingly, even if this court did have subject matter jurisdiction over
this interpleader action, considerations of equity, comity and judicial

Civil No. 11-1701 (PG)

Page 6

efficiency would tip the scale in favor of declining to exercise that
jurisdiction.
As a final consideration, it is worth noting that Evanston is not
without a remedy. It may file an interpleader in state court, pursuant to
Puerto Rico’s interpleader statute.
Conclusion
Based

on

the

foregoing,

the

present

action

is

DISMISSED

PREJUDICE.
IT IS SO ORDERED
In San Juan, Puerto Rico, October 16, 2012.

s/ Juan M. Pérez-Giménez
JUAN M. PEREZ-GIMENEZ
SENIOR U.S. DISTRICT JUDGE

WITH