Montgomery v. Markel International Insurance Company Limited, 1:16-cv-07889

Background

Violent October 30, 2011 incident at Carolyn’s Lounge (Chicago) produced injuries and a wrongful-death claim; underlying Illinois state action resulted in a ~$3 million default judgment against Carolyn’s and its president Burton.
Carolyn’s held two policies: a Markel general-liability policy and a Lloyd’s insurer liquor-liability policy (identifying “Certain Underwriters at Lloyd’s… Syndicate 958”).
Carolyn’s tendered defense to Markel and to the Lloyd’s underwriter; both denied coverage and refused to defend or indemnify.
Plaintiffs (special administrator Montgomery, Dangerfield, Carolyn’s, and Burton) sued Markel and Certain Underwriters at Lloyd’s, Syndicate 958 in federal court alleging breach of the policies and invoking diversity jurisdiction under 28 U.S.C. § 1332.
Defendants moved to dismiss under Rule 12(b)(1) arguing Plaintiffs failed to plead complete diversity; dispute centered on how to treat Lloyd’s syndicate for citizenship purposes and whether Plaintiffs adequately alleged the citizenship of all syndicate "Names."
Court granted defendants’ motion to dismiss for lack of subject-matter jurisdiction but gave Plaintiffs leave to amend to properly plead the citizenship of every Name in Syndicate 958.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
How to treat a Lloyd’s underwriting syndicate for diversity	Syndicate 958 should be treated as a corporation (so § 1332(c)(1) corporate citizenship applies)	Under Indiana Gas, Lloyd’s syndicates are like limited partnerships/unincorporated associations and take the citizenship of each participating Name	Syndicates must be treated as unincorporated (like limited partnerships); Indiana Gas controls — syndicate inherits citizenship of all Names
Sufficiency of pleading syndicate citizenship	General allegation that "no Names are citizens of Illinois" is adequate to show diversity	Plaintiffs must affirmatively plead identity and citizenship of each Name in syndicate to establish complete diversity	Generalized assertion is insufficient; plaintiffs must specifically identify each Name and its citizenship
Whether the Corporation (Society) of Lloyd’s is the defendant	Plaintiffs suggested they sued the Corporation of Lloyd’s rather than the syndicate	Defendants pointed to the policy language and practice showing the syndicate (not the Corporation) underwrites the policy	Complaint names "Underwriters at Lloyd’s… Syndicate 958" and the policy confirms underwriting by syndicate; court rejects Plaintiffs’ attempt to treat the Corporation as defendant
Award of fees for filing the motion to dismiss	Plaintiffs sought fees under 28 U.S.C. § 1927 claiming defendants prolonged litigation and relied on extrinsic evidence	Defendants argued their motion raised a meritorious jurisdictional issue and confidentiality for Names justified their conduct	Court denied fee request; defendants’ motion was proper and not vexatious

Key Cases Cited

Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314 (7th Cir. 1998) (Lloyd’s underwriting syndicates are treated like limited partnerships for diversity purposes)
Carden v. Arkoma Assocs., 494 U.S. 185 (U.S. 1990) (associations other than corporations take the citizenship of their members)
Guaranty Nat’l Title Co. v. J.E.G. Assocs., 101 F.3d 57 (7th Cir. 1996) (limited partnership citizenship requires identifying each partner)
America’s Best Inns, Inc. v. Best Inns of Abilene, L.P., 980 F.2d 1072 (7th Cir. 1992) (must show citizenship of every partner as of filing date)
Dexia Crédit Local v. Rogan, 629 F.3d 612 (7th Cir. 2010) (confirming Indiana Gas treatment of Lloyd’s syndicates)
Hart v. Terminex Int’l, 336 F.3d 541 (7th Cir. 2003) (trace citizenship through layers of unincorporated associations)
Ashenden v. Lloyd’s of London, 934 F. Supp. 992 (N.D. Ill. 1996) (explaining Lloyd’s structure and distinguishing the Corporation of Lloyd’s from underwriting syndicates)