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Alfa Mutual Insurance Co. v. Jones Stephens Corp.

United States District Court, M.D. Pennsylvania

August 1, 2019

ALFA MUTUAL INSURANCE CO. as subrogee of Noel and Sandra Forsythe Plaintiff,
v.
JONES STEPHENS CORP. Defendant/Third-Party Plaintiff,
v.
COASTAL NINGBO HARDWARE MANUFACTURING CO., LTD, ; and NINGBO BEST METAL & PLASTIC MANUFACTURING CO., LTD., Third-Party Defendants.

          MEMORANDUM OPINION

          Martin C. Carlson, United States Magistrate Judge.

         I. INTRODUCTION

         In its current form the instant case, which has been filed in federal court in Pennsylvania, involves a dispute between two Alabama corporations involving a property damage claim that arose in the state of Alabama. Given these facts, it is hardly surprising that we are now being asked to determine whether federal subject matter jurisdiction exists in this case. For the reasons set forth below, we conclude that diversity jurisdiction does not lie here.

         Alfa Mutual Insurance Company (“Alfa Mutual”) brought this action as the subrogee of Noel and Sandra Forsythe against the defendant Jones Stephens Corporation (“Jones Stephens”). This action concerns water loss and property damage to Noel and Sandra Forsythe's property located at 536 Hamilton Hills Court in Auburn, Alabama. (Doc. 1, ¶¶ 3, 22). The damage allegedly resulted from a “water supply line and/or its component parts, ” which were “designed, manufactured, marketed, sold, and/or distributed” by Defendants Jones Stephens, Coastal Ningbo Hardware Manufacturing Co., Ltd. (“Coastal Ningbo”), Watts Regulator Co. (“Watts Regulator”), and Ningbo Best Metal & Plastic Manufacturing Co. (“Ningbo Best Metal”). (Id., ¶ 21). Alfa Mutual made a $312, 620.00 payment to its insured policy holders, Noel and Sandra Forsythe, for property and personal damage. (Id., ¶¶ 22-23) Alfa Mutual sought judgment against Jones Stephen for the amount Alfa Mutual paid to the insureds, plus any additional costs resulting from this litigation. (Id., ¶ 6).

         Jones Stephens filed a motion to dismiss the complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, alleging a lack of subject matter jurisdiction on the grounds that there is not complete diversity between the parties. (Doc. 49) After review of the record, we find that the defendants have demonstrated that complete diversity does not exist between Alfa Mutual and Jones Stephens, and thus, this Court does not have jurisdiction over the instant action. Accordingly, for the reasons set forth below, we will grant Jones Stephens' motion to dismiss.

         II. FACTUAL BACKGROUND

         The complaint alleges that Defendants Jones Stephens, Coastal Ningbo, Watts Regulator, and Ningbo Best Metal “designed, manufactured, marketed, sold, labeled and/or distributed the toilet water supply line and/or its component parts which were connected to a bathroom toilet” in Noel and Sandra Forsythe's residence. (Doc. 1, ¶ 16). On approximately May 10, 2015, there was a water leak in the residence resulting from a fractured polymeric coupling nut which secures the water supply line to the toilet tank. (Id., ¶¶ 19, 21) This caused substantial damage to the property. (Id., ¶ 22). Alfa Mutual ultimately paid an amount in excess of $312, 620.00 to its insureds, Noel and Sandra Forsythe, pursuant to the terms of the policy agreement (Id., ¶ 23).

         On May 9, 2017, Alfa Mutual filed this action against Jones Stephens, Coastal Ningbo, Watts Regulator, and Ningbo Best Metal, in federal court, seeking compensation for the money it paid to its insureds. (Id., ¶¶ 6-9, 11, 20-21). The complaint asserts claims of negligence, strict products liability, failure to warn, and breach of warranty against all defendants. (See generally Doc. 1). Alfa Mutual alleges that this Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because the defendants are from different states and the amount in controversy exceeds $75.000. (Id., ¶ 13).

         Jones Stephens filed a motion to dismiss on June 26, 2017 pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, arguing that the Court lacked subject matter jurisdiction over the case. (Doc. 11). However, the motion was deemed premature because an answer had not yet been filed by the defense and thus, the motion was dismissed without prejudice to allowing Jones Stephens to re-file the motion in the proper procedural manner. (Id., at 4-5). Thereafter, the plaintiff moved to voluntarily dismiss Defendants Coastal Ningbo and Ningbo Best from the action as a result of difficulties that arose from being able to provide these international defendants with proper service. (Doc. 23, ¶ 6). This motion was granted, and the defendants were dismissed from the case. (Doc. 24). Additionally, a third defendant-Watts Regulator-was dismissed from the case on the stipulation of all parties. (Doc. 28).

         This case was later referred to the undersigned and on June 3, 2019, Jones Stephens filed the instant motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure due to lack of subject matter jurisdiction. (Doc. 49). The defendant asserts that there is not complete diversity, as is required under 28 U.S.C. § 1332, because “Alfa Mutual and its subrogors, Noel and Sandra Forsythe, are citizens of Alabama, which is the same as the citizenship” of Jones Stephens. (Id., ¶ 11). Alfa Mutual filed a timely response on June 24, 2019, contending that Pottsville, Pennsylvania should be considered Jones Stephen's principal place of business in this case, and thus Jones Stephens should be considered a citizen of Pennsylvania for purposes of the instant litigation. (Doc. 51 at 5-6). The motion has been fully briefed and is, therefore, ripe for resolution.

         After review of the record, we conclude there is, in fact, a lack of subject matter jurisdiction, as both the plaintiff and the defendant are citizens of Alabama, and complete diversity does not exist. Accordingly, we will grant the defendant's motion to dismiss.

         III. STANDARD OF REVIEW

         The defendant has moved to dismiss this state-law products liability claim pursuit to Rule 12(b)(1) of the Federal Rules of Civil Procedure due to a lack of subject matter jurisdiction. Rule 12(b)(1) permits the dismissal of an action for “lack of subject matter jurisdiction.” A motion to dismiss under Rule 12(b)(1) thus challenges the power of the court to hear a case or consider a claim. Petruska v. Gannon Univ., 462 F.3d 294, 302 (3d Cir. 2006). When faced with a 12(b)(1) motion, the plaintiff has the burden to “convince the court it has jurisdiction. Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000); see also Kehr Packages v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991) (“when subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff must bear the burden of persuasion”).

         A Rule 12(b)(1) motion may be treated as either a facial or factual challenge to the court's subject matter jurisdiction. See Morten v. First Fed. Sav. And Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1997). First, a facial attack “contests the sufficiency of the pleadings.” Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 187-88 (3d Cir. 2006). Such a facial challenge “attacks the complaint on its face without contesting its alleged facts, [and] is like a 12(b)(6) motion in requiring the court ‘to consider the allegations of the complaint as true.'” Hartig Drug Company, Inc. v. Senju pharmaceutical Co. Ltd., 836 F.3d 261, 268 (3d Cir. 2006). Thus, in ruling on such a motion, the court assumes the truth of the allegations in the complaint but must analyze the pleadings to determine whether they state an action that comes within the court's jurisdiction. United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2016). A facial 12(b)(1) motion should be granted ...


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