North Dallas Lawn Care and Landscape Inc et al v. Hartford Lloyds Insurance Company
MEMORANDUM OPINION AND ORDER -Without deciding whether "related to" jurisdiction exists in this case, the Court finds that it nonetheless has jurisdiction over this case based at least on diversity jurisdiction. As such, Defendant's Motion to Withdraw the Reference (Dkt. No. 1 ) is GRANTED. Signed by Judge Rodney Gilstrap on 6/15/2017. (baf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
NORTH DALLAS LAWN CARE AND
LANDSCAPE INC. et al.,
HARTFORD LLOYDS INSURANCE
Civil Action No. 4:16-cv-891-JRG
MEMORANDUM OPINION AND ORDER
Before the Court is the Motion to Withdraw the Reference (Dkt. No. 1) filed by Defendant
Hartford Lloyds Insurance Company (“Hartford”). Having considered the Motion and the Report
and Recommendation (Dkt. No. 5) of Chief Bankruptcy Judge Brenda Rhoades, the Court is of the
opinion that the Motion to Withdraw the Reference should be GRANTED.
As outlined in the Report and Recommendation, North Dallas Lawn Care & Landscape,
Inc. (“North Dallas Lawn Care”) filed a voluntary petition for reorganization under Chapter 11 of
Title 11 of the United States Code (the “Bankruptcy Code”) on July 15, 2015. The Bankruptcy
Court confirmed North Dallas Lawn Care’s Plan of Reorganization on June 1, 2016. On July 20,
2016, after plan confirmation, North Dallas Lawn Care, acting through the Receiver appointed by
the Bankruptcy Court, filed suit against Hartford, alleging a claim for breach of contract under
Texas state law and a claim for turnover of property to the estate pursuant to § 542 of the
Bankruptcy Code. The Court refers to such suit as the “Adversary Proceeding.” 1 On September
15, 2016, Hartford filed in the Bankruptcy Court a Motion to Withdraw the Reference, seeking to
have the Adversary Proceeding heard by the District Court rather than the Bankruptcy Court.
On October 10, 2016, North Dallas Lawn Care filed an Amended Complaint, which no
longer includes a claim under § 542 of the Bankruptcy Code. (Dkt. No. 14 in 4:16-ap-4078.) Soon
after, the Bankruptcy Court entered an Agreed Order, signed by both parties, confirming that
North Dallas Lawn Care had indeed abandoned its claim under § 542. (Dkt. No. 20 in
4:16-ap-4078.) On the same day, the Bankruptcy Judge issued her Report and Recommendation,
recommending that the reference to the Bankruptcy Court be withdrawn in all respects as to the
Adversary Proceeding and that such proceeding be tried by jury before the District Court. (Dkt.
No. 5; Dkt. No. 21 in 4:16-ap-4078.) The Report also notes that at the hearing before the
Bankruptcy Court, North Dallas Lawn Care represented that it no longer opposes withdrawal of
the Adversary Proceeding to the District Court. (Dkt. No. 5 at 3.) As such, the Court will treat
Defendant Hartford’s Motion as unopposed.
Regardless of the parties’ agreement that this Adversary Proceeding should proceed before
the District Court, federal courts have “an independent obligation to determine whether
subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v. Friend, 559
U.S. 77, 94 (2010). Defendant Hartford first asserts that this Court has jurisdiction under 28 U.S.C.
§ 1334(b). Section 1334(b) provides district courts with “original but not exclusive jurisdiction of
all civil proceedings arising under title 11, or arising in or related to cases under title 11.” In the
alternative, Hartford argues that the District Court and, in turn, the Bankruptcy Court, lack
The docket for the Adversary Proceeding may be found at 4:16-ap-4078 within the Eastern District of Texas
Bankruptcy Court filing system.
post-confirmation “related to” jurisdiction over this matter, but that the District Court may
nonetheless adjudicate the case based on diversity jurisdiction. (Dkt. No. 1 at 12–13.)
Out of a concern that “related to” jurisdiction may not exist in this case, the Court ordered
Defendant to file a declaration regarding its citizenship and the citizenship of its underwriters.
(Dkt. No. 6.) The Court further ordered both parties to submit briefing addressing the presence or
absence of the Court’s jurisdiction in light of the submitted declaration. (Dkt. No. 6.)
In their respective briefs filed pursuant to the Court’s Order, both parties argue that
diversity jurisdiction exists in this suit. (Dkt. Nos. 8 and 9.) The Court agrees. As such, the Court
need not address the scope of “related to” jurisdiction as it applies to this case.
A district court in a civil case has diversity jurisdiction under 28 U.S.C. § 1332(a) where
the amount in controversy exceeds $75,000 and the suit is between citizens of different states.
Defendant Hartford Lloyd’s Insurance Company is a particular type of business entity
created by Texas statute and referred to as a “Lloyd’s plan.” Tex. Ins. Code Ann. §§ 941.001–.702
(West 2009). A Texas “Lloyd’s plan” is defined by statute as “an entity engaged in the business of
writing insurance on the Lloyd’s plan.” Tex. Ins. Code Ann. § 941.001 (West 2009). An
“underwriter” of such a plan is defined as “an individual, partnership, or association of individuals
that writes insurance on the Lloyd’s plan.” Tex. Ins. Code Ann. § 941.001 (West 2009). The
“attorney in fact” of a Lloyd’s plan may execute insurance policies for the plan. Tex. Ins. Code
Ann. § 941.052 (West 2009).
As to the complete diversity of citizenship requirement, a Texas Lloyd’s plan is an
unincorporated association, and its citizenship is defined by the citizenship of its members. Royal
Ins. Co. of Am. v. Quinn-L Capital Corp., 3 F.3d 877, 882 (5th Cir. 1993) (looking to the
citizenship of the members of a Lloyd’s plan insurance association to evaluate diversity
jurisdiction). See also Weston Plaza, LTD v. Hartford Lloyd’s Ins. Co., No. 3:11-cv-1034, 2011
WL 4712239, at *2 (N.D. Tex. Sept. 1, 2011), report and recommendation adopted sub nom.
Weston Plaza, Ltd. v. Hartford Lloyd’s Ins. Co., No. 3:11-cv-1034, 2011 WL 4731087 (N.D. Tex.
Oct. 7, 2011) (discussing the citizenship of Defendant Hartford Lloyd’s Insurance Company). The
Fifth Circuit has held that the membership of a Texas Lloyd’s group consists solely of the
underwriters and does not include the attorney in fact. Royal Ins. Co. of Am., 3 F.3d at 882. As
such, Defendant’s citizenship is defined solely by the citizenship of its underwriters.
In accordance with this Court’s Order, Defendant filed a declaration from its corporate
representative, Lisa Levin, who serves as Defendant’s Secretary and Attorney in Fact. (Decl. of
Lisa Levin, Dkt. No. 7-1 (“Levin Decl.”).) As outlined in that declaration, Defendant is a Texas
Lloyd’s corporation and is comprised of individual underwriters acting by and through
Defendant’s Attorney in Fact. (Levin Decl. ¶ 2.) Each underwriter is a natural person, and
Defendant has identified the names and citizenship of each of those underwriters. (Levin Decl.
¶ 3–4.) The citizenship of the twelve underwriters includes the State of Connecticut, the State of
Washington, and the Commonwealth of Massachusetts. (Levin Decl. ¶ 4.) Thus, Defendant is not a
citizen of the State of Texas. See Royal Ins. Co. of Am, 3 F.3d at 882. Given that North Dallas
Lawn Care is a corporation organized under the laws of Texas with its principal place of business
in Texas (see Dkt. No. 9 at 1), complete diversity of citizenship exists among the parties.
As to the amount in controversy, Defendant notes that Plaintiff’s Complaint seeks at least
$769,000, which clearly exceeds the amount in controversy necessary to establish diversity
jurisdiction. (Dkt. No. 8 at 3.) As another court has explained:
“[F]or unincorporated associations such as partnerships, limited partnerships, labor
unions, and limited liability companies, courts have consistently looked to the
individual members of the association for complete diversity purposes, but at the
association itself as an entity for amount in controversy purposes. . . . Courts have
consistently followed the same pattern for Texas Lloyd’s plans.”
Cronin v. State Farm Lloyds, No. Civ.A.H-08-1983, 2008 WL 4649653, at *6 (S.D. Tex. Oct. 10,
2008). See also Weston Plaza, 2011 WL 4712239, at *3–4 (same). As such, the Court finds that the
parties have satisfied the amount in controversy requirement in this case.
Without deciding whether “related to” jurisdiction exists in this case, the Court finds that it
nonetheless has jurisdiction over this case based at least on diversity jurisdiction. As such,
Defendant’s Motion to Withdraw the Reference (Dkt. No. 1) is GRANTED.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 15th day of June, 2017.
UNITED STATES DISTRICT JUDGE
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