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Dresser Industries, Inc. v. Underwriters at Lloyd's of London

February 6, 1997

DRESSER INDUSTRIES, INC.; DRESSER CANADA, INC., APPELLANTS,

v.

UNDERWRITERS AT LLOYD'S OF LONDON, AND CERTAIN LONDON MARKET COMPANIES; BISHOPGATE INSURANCE COMPANY, LTD.; BISHOPGATE INSURANCE P.L.C.; BRITISH LAW INSURANCE COMPANY, LTD.; CORNHILL INSURANCE, P.L.C.; DAI-TOKYO INSURANCE COMPANY (U.K.) LIMITED; ENGLISH & SCOTTISH MARITIME & GENERAL INSURANCE COMPANY LTD.; EXCESS INSURANCE COMPANY, LIMITED; HANSA MARINE INSURANCE COMPANY (U.K.) LTD.; THE INDEMNITY MARINE ASSURANCE COMPANY, LTD.; INSURANCE COMPANY OF NORTH AMERICA (U.K.) LIMITED; ICAROM P.L.C. (FORMERLY KNOWN AS THE INSURANCE CORPORATION OF IRELAND LTD.); IRON TRADES MUTUAL INSURANCE COMPANY, LTD.; LONDON & HULL MARITIME INSURANCE COMPANY, LTD.; MINSTER INSURANCE COMPANY, LTD.; THE NATIONAL INSURANCE COMPANY OF NEW ZEALAND, LIMITED; NEW HAMPSHIRE INSURANCE COMPANY; THE NIPPON FIRE & MARINE INSURANCE COMPANY (UK) LIMITED; OCEAN MARINE INSURANCE COMPANY, LTD.; PEARL ASSURANCE PUBLIC LIMITED COMPANY; PHOENIX ASSURANCE PUBLIC LIMITED COMPANY; POLARIS ASSURANCE; PROVINCIAL INSURANCE PUBLIC LIMITED COMPANY; PRUDENTIAL ASSURANCE COMPANY LIMITED; SKANDIA U.K. INSURANCE P.L.C.; SPHERE DRAKE INSURANCE PUBLIC LIMITED COMPANY (FOR ITSELF AND AS SUCCESSOR TO SPHERE INSURANCE COMPANY, LIMITED AND THE DRAKE INSURANCE COMPANY, LIMITED); SUMITOMO MARINE & FIRE INSURANCE COMPANY, LIMITED; SWITZERLAND GENERAL INSURANCE COMPANY (LONDON), LTD.; TAISHO MARINE AND FIRE INSURANCE COMPANY, LTD.; THE THREADNEEDLE INSURANCE COMPANY LIMITED; THE TOKIO MARINE & FIRE INSURANCE COMPANY, LIMITED; VESTA (UK) INSURANCE COMPANY, LTD.; THE YASUDA FIRE & MARINE INSURANCE COMPANY (UK), LTD.; YASUDA FIRE & MARINE INSURANCE COMPANY, LTD.; THE YORKSHIRE INSURANCE COMPANY LIMITED



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA D.C. No. 95-cv-04578

BEFORE: NYGAARD, LEWIS and McKEE, Circuit Judges.

LEWIS, Circuit Judge.

ARGUED AUGUST 6, 1996

Filed February 6, 1997

OPINION OF THE COURT

The principal question we are asked to decide in this appeal is whether federal courts have jurisdiction to entertain a suit between diverse citizens when, in addition to those citizens, aliens appear as both plaintiffs and defendants. We conclude they do, pursuant to 28 U.S.C. Section(s) 1332(a)(3), and will reverse the district court's decision to the contrary.

I.

Dresser Industries, Inc. ("Dresser"), a publicly held company incorporated in the State of Delaware with its principal place of business in Texas, and its subsidiary, Dresser Canada, Inc. ("Dresser Canada"), a corporation organized under Canadian law with its principal place of business in Ontario, Canada brought this action in the United States District Court for the Eastern District of Pennsylvania against the London Market Insurers for insurance coverage. Dresser alleged that the district court had subject matter jurisdiction under 28 U.S.C. Section(s) 1332(a)(3). The London Market Insurers are comprised of underwriting syndicates at Lloyd's of London and companies participating in the London insurance market. One of the Insurers, New Hampshire Insurance Company, is a corporation organized under the laws of the Commonwealth of Pennsylvania with its principal place of business in the State of New York. The remaining London Market Insurers are aliens.

The underlying dispute involves seven insurance policies that provide for $150,000,000 in excess liability coverage. The policies in question were not issued by a single insurer. Each policy was "subscribed to" by a number of entities with each assuming a set percentage of the risk (and receiving a set percentage of the premium). The percentages ranged from approximately 0.03% to 5.5%. In addition, under the terms of the policies each of the insuring entities was to be severally liable for the particular percentage of the risk that it assumed. New Hampshire Insurance had a 0.564% share of one of the policies at issue, which represented $282,000 in potential liability.

The London Market Insurers moved to dismiss the action for lack of subject matter jurisdiction, arguing that the presence of an alien as one of the plaintiffs and aliens as several of the defendants destroyed complete diversity. The district court agreed and granted the motion to dismiss. Relying upon dicta in two opinions of this Circuit interpreting 28 U.S.C. Section(s) 1332(a)(2), the court concluded:

Under the rule of complete diversity, there is no federal subject matter jurisdiction over claims between the alien plaintiff and the alien defendants. Moreover, the reference in Section(s) 1332(a)(3) to aliens as "additional parties" does not apply to the instant action. The dispute is between Dresser and Dresser Canada and a lengthy list of insurers only one of which is a citizen, and whose exposure is limited to 0.564% of one of the three policies at issue. The alien insurers in this case cannot be considered additional parties.

Dresser Industries, Inc. & Dresser Canada, Inc. v. Underwriters at Lloyd's, London, No. 95-4578, slip op. at 4 (E.D. Pa. Dec. 22, 1995) (interpreting Field v. Volkswagenwerk AG, 626 F.2d 293 (3d Cir. 1980) and Singh v. Daimler-Benz AG, 9 F.3d 303 (3d Cir. 1993) as requiring complete diversity among all parties). This appeal followed.

II.

The district court's jurisdiction was predicated upon 28 U.S.C. Section(s) 1332(a)(3). We have jurisdiction over the appeal from the final order of the district court pursuant to 28 U.S.C. Section(s) 1291. Our review of the district court's decision to dismiss for lack of subject matter ...


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