Insurance Companies Want To Be In Federal Court

Tarrant county insurance attorneys need to read this opinion from the United States, Northern District Court, Amarillo Division. It is styled, Johnnie Shannon v. Underwriters at Lloyd’s London, et al. There are many reasons an insurance company would prefer to have a legal fight in Federal Court rather than State Court. This opinion helps insurance law attorneys keep those cases that qualify in State Court.
Shannon filed a lawsuit in State Court against Underwriters for violations of the Texas Insurance Code among other reasons. Underwriters timely filed a motion for removal to Federal Court. Shannon filed a motion to remand which was granted by the Court.
Title 28, U.S. Code, Section 1441 states that a civil action is not removable 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.” A case must be remanded if at any time before final judgment it appears that the district court lacks subject matter federal jurisdiction. A conclusion that the suit was improvidently removed requires remand.
It is well established that for a case to come within the diversity statute there must be complete diversity among all parties; that is, no plaintiff and no defendant may be citizens of the same state. The removing party must affirmatively allege the citizenship of the plaintiff and the defendants. An allegation of residency, rather than citizenship, is inadequate to invoke a federal courts diversity jurisdiction.
Courts treat corporations as entities having the status of citizens.
Until the removing party properly alleges the citizenship of all parties, a Federal Court is not shown to have diversity jurisdiction. If the removing party does not cure its deficient pleading by an amended notice of removal or other pleading, the case can be dismissed for want of jurisdiction.
Here, Shannon correctly pointed out Underwriters did not properly plead all of the citizenships – as opposed to residencies – of their individual members and partnerships. In addition to properly pled citizenship and the requisite full diversity jurisdiction, Underwriters is required to properly plead both the principle places of business as well as the States of incorporation of all corporate syndicates that are real parties in interest in the case. This Court knows of no reason excusing these strict pleading requirements because of the number of insurance and reinsurance syndicates or the requisite Lloyd’s records are either not kept or are not easily and readily available to defense counsel.