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Spitzer v. Lincoln National Life Insurance Co.

United States District Court, Third Circuit

July 29, 2013

JACK SPITZER, as Trustee of the Max Jones Family Trust u/a/d July Plaintiff,
v.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION

MITCHELL S. GOLDBERG, District Judge.

This action arises out of Defendant's alleged failure to pay $20, 000, 000 in proceeds from two life insurance policies purchased by Plaintiff. Presently before the Court is Plaintiff's motion to remand and request for attorneys' fees and costs.[1] For the reasons set forth below, the motion to remand and request for attorneys' fees and costs will be granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 27, 2012, Plaintiff Jack Spitzer, as Trustee of the Max Jones Family Trust, filed a complaint in the Philadelphia County Court of Common Pleas against Defendant Lincoln National Life Insurance Company ("Lincoln Life"). Plaintiff's three-count complaint alleges breach of contract, fraud and bad faith arising out of Lincoln Life's failure to pay the proceeds of two $10, 000, 000 "Flexible Premium Adjustable Life Insurance Policies." On October 17, 2012, Lincoln Life removed the matter to this Court, invoking diversity jurisdiction.

On November 1, 2012, Plaintiff filed a motion to remand contending that the forum defendant rule requires that this case be remanded to the Philadelphia County Court of Common Pleas. More specifically, Plaintiff argues that because Lincoln Life's principal place of business is located in Radnor, Pennsylvania, Lincoln Life is a citizen of Pennsylvania and was therefore precluded from removing to this Court on the basis of diversity jurisdiction. Plaintiff also seeks attorneys' fees and costs associated with the removal.

On November 15, 2012, Lincoln Life filed its response in opposition to Plaintiff's motion. On December 20, 2012, after a telephone conference, the Court granted Plaintiff's request for limited discovery on the motion. The parties thereafter submitted supplemental briefs on February 15, 2013. The matter is now ripe for disposition.

II. LEGAL STANDARD

A case may be remanded to state court where there was a defect in the removal procedure. See 28 U.S.C. § 1447(c). A removal is procedurally defective if, among other things, it violates the forum defendant rule. Swindell-Filiaggi v. CSX Corp., 2013 WL 489015, at *1 (E.D. Pa. Feb. 8, 2013). Under the forum defendant rule, "[a] civil action otherwise removable solely on the basis of [diversity jurisdiction] may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b)(2). Where the defendant is a corporation, it is deemed a citizen of any State in which it has been incorporated and of the State where it has its principal place of business. 28 U.S.C. § 1332(c)(1).

In considering a motion to remand, a court should strictly construe the removal statute and resolve all doubts in favor of remand. Boyer v. Snap-on Tools Corp. , 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth. v. Union Switch & Signal Div. , 809 F.2d 1006, 1010 (3d Cir. 1987)). The removing party bears the burden of showing that it has complied with all substantive and procedural removal requirements. Lewis v. Lycoming, 2012 WL 2422451, at *4 (E.D. Pa. June 27, 2012) (citing Steel Valley Auth. v. Union Switch & Signal Div. , 809 F.2d 1006, 1010 (3d Cir. 1987)).

III. DISCUSSION

A. Remand

The central issue before us is whether Lincoln Life has met its burden of showing that its principal place of business is in a state other than Pennsylvania.[2] A corporation's principal place of business is determined by locating the corporation's "nerve center"-that is, "the place where a corporation's officers direct, control, and coordinate the corporation's activities." Hertz Corp. v. Friend , 130 S.Ct. 1181, 1192 (2010). The nerve center "is not the state where the corporation conducts most of its business activities, but rather the place within the state from which it directs, controls and coordinates those activities, usually its headquarters." Brewer v. SmithKline Beacham Corp. , 774 F.Supp.2d 720, 725 (E.D. Pa. 2011) (citing Hertz Corp. , 130 S.Ct. at 1193). As "place" is used in the singular, a corporation can only have one principal place of business. Id. at 1193. Where, as here, the corporation at issue is a subsidiary of another company, the principal place of business inquiry is evaluated without regard to the citizenship of the parent corporation. Quaker State Dyeing & Finishing Co. v. ITT Terryphone Corp. , 461 F.2d 1140, 1142 (3d Cir. 1972); Lewis v. Lycoming, 2012 WL 2422451, at *5 (E.D. Pa. June 27, 2012).

In support of their respective positions, the parties point to the following relevant facts.[3] Lincoln Life is a subsidiary of the Lincoln National Corporation ("Lincoln National"). It is a separate entity from Lincoln National and is incorporated in the state of Indiana. The company's corporate records are located and maintained in Fort Wayne, Indiana. (Smith Dep. 19:3-6, Jan. 28, 2013.)

Lincoln Life's operations are conducted at four primary office locations, each administering different insurance products: individual life insurance is handled by the Greensboro, North Carolina office; individual annuities are handled by the Fort Wayne, Indiana and Hartford, Connecticut offices; retirement plan services are handled by the Fort Wayne, Indiana and Greensboro, North Carolina offices; and the group life, disability, dental and vision insurance is handled by the Omaha, Nebraska and Hartford, Connecticut offices. These divisions are business units, rather than separate corporate units, of Lincoln Life. The divisions function through four "business owners" based outside of Pennsylvania who are principally responsible for the direct oversight and control of their respective division. However, none of the above individuals has authority to direct, control or coordinate the activities of the other business ...


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