29 F. Supp. 3d 938
E.D. Ky.2014Background
- Plaintiff injured in an automobile collision with uninsured motorist defendant Cazun; Plaintiff sues Cazun in Kentucky state court.
- Defendant insured ( Plaintiff's insurer) files an intervening complaint against Cazun for potential payment under underinsured motorist coverage.
- A default judgment was entered against Cazun in the amount of $644,984.67.
- Defendant refused to pay the judgment; Plaintiff filed suit in Madison Circuit Court to recover under uninsured motorist coverage.
- Defendant removed the action to federal court on diversity grounds on April 25, 2014; Plaintiff then moved to remand and for leave to amend the complaint.
- Plaintiff contends §1332(c)(1) (direct action) defeats diversity; Defendant contends it does not apply to this insured-vs-insurer dispute; court has to assess jurisdiction and, if jurisdiction exists, whether to allow amendment to add non-diverse parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is removal proper under diversity rules given §1332(c)(1)? | Plaintiff asserts §1332(c)(1) divests jurisdiction. | Defendant argues no direct-action bar; action is not a direct action. | Removal proper; not a direct-action scenario; complete diversity exists. |
| Does the court have subject-matter jurisdiction after removal? | Plaintiff concedes amount in controversy >$75,000 but disputes diversity. | Defendant and Plaintiff are diverse; amount exceeds $75,000; jurisdiction exists under §1332. | Jurisdiction exists under 28 U.S.C. §1332. |
| Should the court permit amendment under §1447(e) to add Cazun and Shaver? | Amendment necessary for complete relief. | Joinder would destroy diversity; amendment improper. | Motion to amend denied; joinder would destroy jurisdiction; amendment would be futile. |
Key Cases Cited
- Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) (well-pleaded complaint rule governs removal)
- Daugherty v. Chubb Grp. of Ins. Cos., 823 F.Supp.2d 656 (W.D.Ky.2011) (insurer-vs-insured disputes not direct actions under §1332(c)(1))
- Lee-Lipstreu v. Chubb Grp. of Ins. Cos., 329 F.3d 898 (6th Cir.2003) (direct-action concept rejected for uninsured motorist context)
- Kaiser v. Loomis, 391 F.2d 1007 (6th Cir.1968) (determines citizenship for diversity by domicile and corporate status)