Dallas Fort Worth Insurance Lawyer Blog
Here is a unique way to stay out of Federal Court. It is applicable to suing a Lloyd’s of London insuring entity. The case is a 2021, opinion from the Northern District of Texas, Fort Worth Division. It is styled, Certain Underwriters At Lloyd’s, London Subscribing Severally To Policy No. B0595NOHW46387019 v. Block Multifamily Group, LLC D/B/A Block Multifamily Power Group.
Following an insurance dispute with Lloyd’s, Block filed a lawsuit in a State Court. Lloyd’s removed the case to Federal Court , and then Block filed a motion to remand, which is the subject of this opinion.
Defendant removed the case to this Court on the basis of diversity jurisdiction, alleging that Plaintiffs are foreign citizens of England and that Defendant is a citizen of Missouri. Defendant further alleged that the amount in controversy exceeds $75,000 because the value of the underlying dispute based on Plaintiffs’ own estimate is at least $177,023.21. Shortly thereafter, Plaintiffs filed their Motion to Remand on the ground that Defendant has improperly conflated Lloyd’s of London—a specific entity—with the Plaintiffs in this case—over 1,600 individual underwriters or “Names.” Relying on Corfield v. Dallas Glen Hills, L.P., 355 F.3d 853 (5th Cir. 2003), Plaintiffs explain the distinction as follows:
[Lloyd’s of London] is a self-regulating entity that operates and controls an insurance market for the buying and selling of insurance risk among its members. The members who finance the insurance market and ultimately insure risks are called “Names.” Each Name is exposed to personal liability for his, her, or its proportionate share of a loss on a policy to which the Name has subscribed. Typically, hundreds of Names will subscribe to a single policy through one or more syndicates. The syndicates bear no liability for the risk on a Lloyd’s policy, and they do not have any contractual relationship with the insured. Rather, each Name is “contractually bound on an individual basis to the insured,” and is severally liable for the proportion of the risk to which he, she, or it has subscribed.
Plaintiffs then quote the instant policy to demonstratethat the Names are severally and not jointly liable for the insured risk:
Each member [i.e. Name] has underwritten a proportion of the total shown for the syndicate (that total itself being the total of the proportions underwritten by all the members of the syndicate taken together). The liability of each member of the syndicate is several and not joint with other members. A member is liable only for that member’s proportion. A member is not jointly liable for any other member’s proportion. Nor is any member otherwise responsible for any liability of any other (re)insurer that may underwrite this contract.
Building on these propositions, Plaintiffs argue that the real amount in controversy is measured by the maximum liability attributable to the more than 1,600 “Names,” which based on the structure of the instant insurance policy is $142.56. Plaintiffs present evidence of the Names subscribing to the instant insurance policy as well as evidence of the subscription allocation. Thus, Plaintiffs conclude that at most a Name could be liable for is $142.56, so Defendant must but cannot establish the amount in controversy as to each Certain Underwriter.
In response, Defendant argues that the cases cited by Plaintiffs are in apposite because they arise when Lloyd’s of London was a defendant rather than plaintiff. Defendant further argues that Plaintiffs brought this case by a lead underwriter who is wholly liable, so the real party in interest is the lead underwriter and consequently, Defendant need only establish the total amount of liability as to the lead underwriter. Finally, Defendant moves to strike Plaintiffs’ evidence attached to their Motion to Remand.
In their reply, Plaintiffs reiterate that the real parties in interest are each individual Underwriter. Finally, Plaintiffs assert that the Fifth Circuit’s decision in Team One Properties, LLC v. Certain Underwriters at Lloyd’s of London, 281 F. App’x 323 (5th Cir. 2008) has definitively established that the “amount in controversy be established for each individual Name subscribing to a Lloyd’s of London policy.” And Plaintiffs contend that no case post-dating Team One Props., LLC holds otherwise.
The Court remanded the case.