811 F. Supp. 2d 1220
E.D. Va.2011Background
- Virginia plaintiff Debor ah Lott filed a state wrongful death action arising from Sara Lott's death at Lake Ridge Community Swim Club.
- Underlying suit named Lake Ridge and Palm Pools entities as defendants for negligent lifeguard services and related claims.
- Palm Pools obtained primary and excess insurance from Scottsdale; Scottsdale disclaimed defense/indemnity after suit began.
- Plaintiffs filed a declaratory judgment action in state court seeking coverage duties from Scottsdale for defense and indemnity.
- Scottsdale removed the declaratory judgment action to federal court and moved to realign Palm Pools as plaintiffs to create diversity; plaintiffs did not oppose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-removal realignment to create diversity is permissible. | Lott contends realignment is proper to achieve diversity. | Scottsdale argues realignment is appropriate to satisfy § 1332 diversity. | Yes; post-removal realignment is permissible. |
| Whether the proposed realignment is appropriate under the two-step test for alignment. | Palm Pools should align with plaintiffs due to liability interests against Scottsdale. | Palm Pools' interests align with Scottsdale against coverage duty. | Yes; Palm Pools should be realigned as plaintiffs, aligning with the other plaintiffs against Scottsdale. |
Key Cases Cited
- United States Fid. & Guar. Co. v. A & S Mfg. Co., 48 F.3d 131 (4th Cir. 1995) (two-step alignment: identify primary issue, align accordingly)
- Hildebrand v. Lewis, 281 F. Supp. 2d 837 (E.D. Va. 2003) (two-step party alignment framework)
- Gen. Tech. Applications, Inc. v. Exro Ltda., 388 F.3d 114 (4th Cir. 2004) (realigning after removal may determine diversity)
- Hidey v. Waste Sys. Int'l, Inc., 59 F. Supp. 2d 543 (D. Md. 1999) (realignment to determine jurisdictional viability)
- Heniford v. Am. Motors Sales Corp., 471 F. Supp. 328 (D.S.C. 1979) (pre-removal realignment principle for removability)
- Peters v. Standard Oil Co., 174 F.2d 162 (2d Cir. 1949) (realignment of parties can create diversity)