North Dallas Lawn Care and Landscape Inc v. Hartford Lloyds Insurance Company
4:16-cv-00891
E.D. Tex.Jun 15, 2017Background
- North Dallas Lawn Care & Landscape, Inc. filed Chapter 11 on July 15, 2015; its Plan of Reorganization was confirmed June 1, 2016.
- After confirmation, the Receiver (for North Dallas Lawn Care) sued Hartford Lloyds Insurance Co. in an adversary proceeding alleging breach of contract (originally included a §542 turnover claim, later abandoned).
- Hartford moved to withdraw the reference from the Bankruptcy Court to the District Court; the Bankruptcy Judge recommended withdrawal and a jury trial in District Court.
- At the Bankruptcy Court hearing North Dallas Lawn Care represented it no longer opposed withdrawal; the District Court treated Hartford’s motion as unopposed.
- The District Court sua sponte examined subject-matter jurisdiction; parties briefed whether the Court had §1334(b) "related to" jurisdiction and/or diversity jurisdiction under 28 U.S.C. §1332.
- The District Court found diversity jurisdiction satisfied (complete diversity and amount in controversy) and granted the Motion to Withdraw the Reference.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Bankruptcy Court reference should be withdrawn | No opposition to withdrawal after amendment | Move to withdraw reference to have District Court hear the adversary | Granted — reference withdrawn to District Court |
| Whether the District Court has §1334(b) "related to" jurisdiction | Proceeding arose from post-confirmation matters (originally included §542) | Argued "related to" jurisdiction may not exist post-confirmation; alternatively diversity exists | Court did not decide "related to" scope; analyzed diversity instead |
| Whether complete diversity exists | Plaintiff is a Texas corporation (citizen of Texas) | Hartford (a Texas Lloyd’s plan) is an unincorporated association whose citizenship is that of its underwriters (identified as citizens of CT, WA, MA) | Complete diversity exists; Hartford is not a Texas citizen |
| Whether amount in controversy meets §1332 requirement | Complaint seeks at least $769,000 | Same — amount exceeds $75,000 threshold | Amount in controversy satisfied |
Key Cases Cited
- Hertz Corp. v. Friend, 559 U.S. 77 (federal courts must independently assess subject-matter jurisdiction)
- Royal Ins. Co. of Am. v. Quinn-L Capital Corp., 3 F.3d 877 (5th Cir.) (citizenship of a Texas Lloyd’s plan is determined by the citizenship of its underwriters)