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Borough of Catasauqua v. Darwin National Assurance

March 30, 2012

BOROUGH OF CATASAUQUA, PLAINTIFF
v.
DARWIN NATIONAL ASSURANCE COMPANY, ALSO KNOWN AS ALLIED WORLD ASSURANCE COMPANY (U.S.) INC.; AND ALLIED WORLD NATIONAL ASSURANCE COMPANY, DEFENDANTS



The opinion of the court was delivered by: James Knoll Gardner United States District Judge

OPINION

This matter is before the court on Plaintiff Borough of Catasauqua's Motion to Remand the Removed Action Pursuant to 28 U.S.C. § 1477(c), which motion was filed July 13, 2011 together with Plaintiff Borough of Catasauqua's Memorandum of Law in Support of Motion to Remand the Removed Action Pursuant to 28 U.S.C. § 1477(c). On July 27, 2011, Defendant Darwin National Assurance Company and Allied World National Assuracne Company's Response in Opposition to Plaintiff's Motion to Remand was filed.

For the reasons articulated below, I deny plaintiff's motion to remand this action to the Court of Common Pleas of Lehigh County, Pennsylvania. First, I deny plaintiff's motion to remand because Burford abstention is not appropriate in this action. Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). Second, I deny plaintiff's motion to remand because plaintiff's Amended Action for Declaratory Judgment & Statutory Bad Faith filed January 25, 2012 seeks damages for defendant's alleged breach of an insurance contract, and remand of an action for damages is not permitted even when a district court finds that Burford abstention is appropriate.

JURISDICTION

This court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1332. Plaintiff Borough of Catasauqua is a municipal corporation established pursuant to the laws of the Commonwealth of Pennsylvania and, thus, a citizen of Pennsylvania for purposes of diversity jurisdiction.

Defendant Darwin National Assurance Company ("Darwin National") is a corporate citizen of both Delaware and Connecticut for jurisdictional purposes. *fn1 Defendant Allied World National Assurance Company ("Allied World") is a corporate citizen of both New Hampshire and New York for jurisdictional purposes. *fn2 Thus, complete diversity of citizenship exists.

Plaintiff seeks declaratory judgment concerning a Public Officials Professional Liability Insurance Policy, Policy Number 0202-1588 (the "Policy"), which has a policy limit of $1,000,000. Plaintiff also alleges statutory bad faith against defendants and seeks both compensatory and punitive damages. Thus, the amount in controversy exceeds $75,000.

VENUE Venue is proper because defendant removed this action from the Court of Common Pleas of Lehigh County, Pennsylvania, which is located within this judicial district. 28 U.S.C. § 1441(a).

FACTUAL AND PROCEDURAL BACKGROUND

The Blue Action Plaintiff Borough's claim for declaratory judgment and bad faith against defendants Darwin National and Allied World arises from a 2010 lawsuit *fn3 in which Robert E. Blue Consulting Engineers, P.C. ("Blue Consulting Engineers") asserted

(1) copyright infringement against defendants Polaris Engineering, Inc., James W. Green, Corrado Builders, and the Borough of Catasauqua; (2) breach of contract against defendant Corrado Builders; and (3) unjust enrichment against Corrado Builders. *fn4

The Blue Action concerned subdivision plans created by Blue Consulting Engineers for a parcel of real property owned by James W. Green. Blue Consulting Engineers alleged, among other things, that Polaris Engineering had infringed Blue's copyrights in the subdivision plans created for Mr. Green's property by copying the plans and submitting the infringing plans to the Borough of Catasauqua for review and approval.

Count I of the Blue Complaint alleged that Polaris Engineering, Mr. Green, and Corrado Builders had infringed Blue Consulting Engineers' copyrights. *fn5 Although Count I of the Blue Complaint was labeled "Copyright Infringement" against "All Defendants", the Blue Complaint did not allege that the Borough infringed Blue's copyrights in the subdivision plans. *fn6

The Blue Complaint named the Borough as a party "in the event that the Court determines that the Borough is a necessary or indispensable party with respect to the relief sought" and specifically stated that Blue Consulting Engineers "does not allege any wrongdoing" by the Borough related to the subdivision plans or in concert with the other named defendants in the Blue action. *fn7 In addition to monetary damages, Blue Consulting Engineers sought to enjoin "any construction, excavation, and/or planning based on Plaintiff's plans or the infringing plans" and an order requiring the defendants to return all copies of plans in their possession. *fn8

Blue Consulting Engineers filed its Complaint on August 13, 2010. The Borough filed its motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on September 30, 2010.

In its motion to dismiss, the Borough sought dismissal of the Blue Complaint because Blue Consulting Engineers did not state a claim against, or seek any relief from, the Borough; and because the Borough was neither a necessary nor indispensable party, and thus not required to be joined under Rule 19.

For the reasons expressed in my Order dated June 14, 2011, and filed June 15, 2011, I concluded that Blue Consulting Engineers did not state a claim against the Borough and that the Borough was not a necessary party under Rule 19. Accordingly, I granted the Borough's motion and dismissed the Blue Complaint against the Borough with prejudice.

The Instant Action On May 19, 2011, while the Blue Action was proceeding and the Borough's motion to dismiss was pending, the Borough filed an Action for Declaratory Judgment & Statutory Bad Faith in the Court of Common Pleas of Lehigh County, Pennsylvania.

On June 13, 2011, the day before the Borough was dismissed from the Blue Action, defendants Darwin National and Allied World removed this action to this federal court.

Plaintiff Borough of Catasauqua's Motion to Remand the Removed Action Pursuant to 28 U.S.C. § 1447(c) was filed on July 13, 2011, together with Plaintiff Borough of Catasauqua's Memorandum of Law in Support of Motion to Remand the Removed Action Pursuant to 28 U.S.C. § 1447(c).

While the Borough's motion to remand was pending, the Borough moved for leave of court to file an Amended Action for Declaratory Judgment & Statutory Bad Faith. *fn9 Defendants did not respond to the Borough's motion for leave. Accordingly, I granted the Borough's motion as unopposed and the Amended ...


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