United States District Court, E.D. Pennsylvania
MEMORANDUM RE: MOTION TO REMAND
INTRODUCTION AND BACKGROUND
action, Caroleanne Hensley and John R. Greisiger
(“Plaintiffs”) claim that CNA
(“Defendant”) is liable for attorneys' fees
and costs under the professional liability insurance policy
(the “Policy”) that it issued to Fox & Roach
(the “insured”). (ECF 1, Notice of Removal, Ex.
3.) Plaintiffs' claims arise out of a separate litigation
that is currently pending in the Court of Common Pleas of
Bucks County between Plaintiffs, the insured, and various
defendants concerning liability under an agency contract (the
“State Court Litigation”). Plaintiffs
originally filed this action against Defendant seeking
attorneys' fees in the Court of Common Pleas of Bucks
County, and Defendant filed a Notice of Removal with this
Court (the “CNA Litigation”).
pending is Plaintiffs' Motion to Remand the CNA
Litigation to the Court of Common Pleas of Bucks County
pursuant to 28 U.S.C. 1447(c). The issue is whether
Plaintiffs' claims constitute a direct action within the
meaning of 28 U.S.C. § 1332(c)(1), thereby destroying
complete diversity between the parties and requiring remand.
For the reasons discussed below, Plaintiffs' Motion to
Remand is denied.
following procedural history recites the events in the CNA
Litigation-the action that was the subject of Defendant's
Notice of Removal and is the subject of Plaintiffs'
Motion to Remand.
April 15, 2019, Plaintiffs filed a Praecipe for Summons in
the Court of Common Pleas of Bucks County. (Notice of
Removal, Ex. 1.) On May 24, 2019, Defendant filed a
Praecipe and Rule to File, requiring Plaintiffs to file a
complaint. (Notice of Removal, Ex. 2.) Plaintiffs timely
filed their complaint on June 13, 2019. (Notice of Removal,
Ex. 3.) Thereafter, on June 27, 2019, Defendant filed a
Notice of Removal, alleging diversity jurisdiction pursuant
to 28 U.S.C. § 1332. (ECF 1.) Plaintiffs timely filed a
Motion to Remand on July 24, 2019. (ECF 6.) Defendant filed a
response in opposition to Plaintiffs' Motion on August 6,
2019. (ECF 7.)
to limited exceptions, a plaintiff is entitled to choose
between filing her suit in either federal or state court, as
federal and state courts generally enjoy concurrent
jurisdiction. See Claflin v. Houseman, 930 U.S. 130,
136 (1876) (“[I]f exclusive [federal court]
jurisdiction [is] neither express nor implied, the State
courts have concurrent jurisdiction.”). However, a
defendant may, at its option, remove an action originally
filed in state court to federal court if the federal court
would have had original jurisdiction over the litigation. 28
U.S.C. § 1441(a). There are two types of subject matter
jurisdiction that may confer original jurisdiction:
jurisdiction based on diversity of citizenship; and
jurisdiction based on a federal question raised in the
case. Diversity jurisdiction exists where
“the matter in controversy exceeds … $75, 000,
exclusive of interest and costs, and is between citizens of
different States.” 28 U.S.C. 1332(a)(1). Removal
statutes should be “strictly construed against removal
and all doubts should be resolved in favor of remand.”
In re Briscoe, 448 F.3d 201, 217 (3d Cir. 2006). The
party who “urges jurisdiction on a federal
court”-in the case of removal, the removing
defendant-“bears the burden of proving that
jurisdiction exists.” Boyer v. Snap-on Tools
Corp., 913 F.2d 108, 111 (3d Cir. 1990).
Diversity of Citizenship
purposes of diversity, an individual is a citizen of the
state where she is domiciled. GBForefront, L.P. v.
Forefront Mgmt. Grp., LLC, 888 F.3d 29, 34 (3d Cir.
2018). A corporation maintains citizenship in (a) all states
where it has been incorporated and (b) the one state where it
has its principal place of business. Id. The Supreme
Court has defined principal place of business as the place
where the corporation has its “nerve center;”
that is, where the “corporation's officers direct,
control, and coordinate the corporation's
activities.” Hertz Corp. v. Friend, 559 U.S.
77, 92-93 (2010).
caveat to the general rule on corporate citizenship applies
if the complaint is a “direct action” within the
scope of 28 U.S.C. § 1332(c)(1). If a complaint involves
a “direct action against the insurer of a policy or
contract of liability insurance … to which action the
insured is not joined as a party-defendant, ” then the
insurer is deemed a citizen of “every State and foreign
state of which the insured is a citizen.”
Id. § 1332(c)(1)(A) (emphasis added). Said
differently, § 1332(c)(1) provides that if a third-party
plaintiff pursues a direct action against the insurer of his
tortfeasor, then the insurer is considered a citizen of the
state of the insured for diversity purposes.
§ 1332 does not provide a definition for “direct
action, ” the legislative history of the direct action
amendment is especially helpful in illuminating the narrow
situation that Congress intended this proviso to apply to.
The Supreme Court explained that Congress enacted §
1332(c) “in 1964 in response to a sharp increase in the
caseload of [f]ederal [d]istrict [c]ourts in Louisiana
resulting largely from that State's adoption of a direct
action statute [which] permitted an injured party to sue the
tortfeasor's insurer directly without joining the
tortfeasor as a defendant.” Northbrook Nat'l
Ins. Co. v. Boyer, 493 U.S. 6, 9-10 (1989). With the
amendment, Congress intended to “eliminate under the
diversity jurisdiction of the U.S. district courts, suits on
certain tort claims in which both parties are local
residents, but which, under a State ‘direct action'
statute, may be brought directly against a foreign
insurance carrier without joining the local tortfeasor as a
defendant.” Id. at 9 (internal quotations
omitted); see also Myers v. State Farm Ins. Co., 842
F.2d 705, 707 n.3 (3d Cir. 1988) (noting that “Congress
enacted [§ 1332(c)] specifically to ...