Schwarz et al v. Midwest Airlines Inc et al

Filing 3

ORDER signed by Judge J P Stadtmueller on 7/23/09 that plaintiffs have 20 days from the date of this order within which to file an amended complaint properly alleging the existence of diversity jurisdiction. (cc: all counsel of record)(nm)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
____________________________________________ C Y N T H I A A. SCHW A R Z and HANK SCHW A R Z , P la in t iffs , H E A L T H CARE SERVICE CORPORATION IL L IN O IS STATE PAC, NFP In vo lu n ta ry Plaintiff, v. M ID W E S T AIRLINES, INC., IL L IN O IS NATIONAL INSURANCE COMPANY, U N K N O W N , sued as "ABC" a fictitious entity, and D E F INSURANCE COMPANY D e fe n d a n ts . ____________________________________________ Case No. 09-CV-668

ORDER
O n July 8, 2009, plaintiffs filed a complaint alleging plaintiff Cynthia Schwarz s u ffe re d personal injury on a Midwest Airlines' flight during its landing in Milwaukee. H a n k Schwarz, her husband, alleged various damages stemming from his wife's in ju rie s . Plaintiffs brought suit against: 1) Midwest Airlines, Inc., the operator of the p la n e on which the injury occurred; 2) Illinois National Insurance Company, p re s u m a b ly the insurer for Midwest (though that is not stated in the pleadings); 3) A B C , a fictitious name for an unknown entity believed to be responsible for the m a i n te n a n c e of the plane on which the injury occurred; and 4) DEF Insurance C o m p a n y, a fictitious name for an unknown insurer for ABC. Plaintiffs assert that the c o u rt has jurisdiction pursuant to 28 U.S.C. § 1332, diversity jurisdiction.

P la in tiffs assert that the amount in controversy in this case exceeds the "in e xc e s s of $75,000" jurisdictional minimum required by § 1332, though plaintiffs do n o t state any actual amounts in their prayer for relief. W h a t is truly of concern to the c o u rt though is that, while plaintiffs claim that "the action is between citizens and p a rtie s of different states," complete diversity appears to be lacking. "For a case to b e within the diversity jurisdiction of the federal courts, diversity must be `complete,' m e a n in g that no plaintiff may be a citizen of the same state as any defendant." F id e lity & Deposit Co. of Md. v. City of Sheboygan Falls, 713 F.2d 1261, 1264 (7th C ir.1 9 8 3 ) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806)). H e re , it appears that Illinois National Insurance Company, which plaintiffs describe a s "an Illinois corporation," is a citizen of Illinois. See 28 U.S.C. § 1332(c)(1) ("[A] c o rp o ra tio n shall be deemed to be a citizen of any State by which it has been in c o rp o ra te d . " ) . If indeed Illinois National Insurance Company is "an Illinois

c o rp o ra tio n ," then it is a citizen of Illinois, and thus its inclusion as a defendant d e s tro y s complete diversity, as plaintiffs themselves are citizens of Illinois. F u rth e rm o re , plaintiffs have named two unknown parties, ABC and DEF, as d e fe n d a n ts . "[B]ecause the existence of diversity jurisdiction cannot be determined w ith o u t knowledge of every defendant's place of citizenship, `John Doe' defendants a re not permitted in federal diversity suits." Howell by Goerdt v. Tribune E n te rta in m e n t Co., 106 F.3d 215, 218 (7th Cir. 1997). Exception may be made if the fic tio n a l defendants are merely nominal parties, and thus can be disregarded for p u rp o s e s of federal diversity jurisdiction. -2United States Fire Ins. Co. v. Charter

F in a n c ia l Group, Inc.,851 F.2d, 957, 958 n. 3 (7th Cir. 1988). In this instance, ABC a n d DEF are not nominal parties since they are actual entities, not merely possible e n titi e s that may be discovered, see Moore v. General Motors Pension Plans, 91 F .3 d 848, 850 (7th Cir. 1996) (finding John Doe defendants to be merely nominal w h e re they were not actual entities with unknown names, but rather possible d e fe n d a n ts that may not exist, and the case was dismissed before any such a d d itio n a l defendants were added), and because plaintiffs seek relief against both p a rtie s , and they both have a legal interest in this action as they are being directly s u e d ,1 see United States Fire Ins. Co., 851 F.2d at 958 n. 3 (stating that the fictitious d e fe n d a n ts in that case were nominal parties because no relief was sought against the m , and they had no legal interest in the action). Nor is this a situation where d is m is s a l of the fictitious parties would be appropriate under Fed. R. Civ. P. 21, as th e s e parties are not mere guarantor's of a clearly financially sound defendant's a b ility to pay. See Tribune Entertainment Co., 106 F.3d at 218 (dropping fictitious in s u re r of main defendant in order to preserve diversity jurisdiction, where insurer w a s merely a guarantor of Tribune's ability to pay a judgment, and court had no d o u b t that Tribune could afford to pay an applicable judgment in the case). Rather, A B C , as the company charged with maintaining the plane, may be directly at fault; a s for DEF, the court cannot say its presence is unnecessary, since the court has n o information on the financial soundness of ABC (DEF's insured). Thus, dropping

W is c o n s in is a direct-action state, W is . Stat. § 803.04(2), wherein a claim a n t can directly sue an a lle g e d tortfeasor's insurer.

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A B C and DEF pursuant to Rule 21 in order to create diversity (ignoring the problem o f Illinois National Insurance Company's citizenship) would not be appropriate. T h u s , it appears that, at worst, plaintiffs have alleged, through their inclusion o f an Illinois corporation as a defendant, that the court does not have subject matter ju r is d ic tio n . At best, they have merely failed to allege, through their inclusion of fic titio u s entities, that the court does have subject matter jurisdiction. "Because d ive rs ity jurisdiction must be proved by plaintiff rather than assumed as a default," M o o re , 91 F.3d at 850, the court, in keeping with 28 U.S.C. § 1653, and Fed. R. Civ. P . 15(a)(1) will allow additional time for plaintiffs to cure any defective allegations of ju ris d ic tio n , and to amend their complaint so as to demonstrate that this court has s u b je c t matter jurisdiction. A c c o r d in g ly , IT IS ORDERED that plaintiffs have twenty (20) days from the date of this o rd e r within which to file an amended complaint properly alleging the existence of d ive rs ity jurisdiction under 28 U.S.C. § 1332. D a te d at Milwaukee, W is c o n s in , this 23rd day of July, 2009. BY THE COURT:

J .P . Stadtmueller U .S . District Judge

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