Insurance And Subrogation Issues

The United States Southern District of Texas, Houston Division, issued an opinion on July 3, 2018, that is not usually relevant to most claims but in case a situation arises where it is relevant, it is good to know.  The opinion is styled, Zurich American Insurance Company a/s/o Precision Castparts Corp. v. Rajwant Kaur d/b/a Lifetime Cargo, et al.

This case is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction.  The motion was denied.

Precision Castparts (PCC) manufactures structural castings and forged components and owned a Behringer HBM-540A automatic horizontal bandsaw machine used in its business.

PCC had the saw moved by Lifetime on a flatbed trailer.  During the trip, the saw struck an overpass, destroying the saw.

Zurich was the insurer of the saw and paid for its loss.  Having received full payment for its loss, PCC assigned to Zurich and subrogated all its rights and claims against the defendants.

Zurich sued and this motion was filed under Rule 12(b)(1), arguing that complete diversity is lacking.

A case is properly dismissed for subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.  A motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove a plausible set of facts that establish subject matter jurisdiction.

It is undisputed that all Defendants are citizens of Texas.  It is similarly undisputed that Plaintiff Zurich is a New York corporation with its principal place of business in Illinois.  As a result, Zurich has demonstrated that there exists complete diversity of citizenship between it and Defendants.
Citing 28 U.S.C. Section 1332(c)(1), the defendants argue that an “insurance company is considered to be a citizen of every state where the insured is a citizen.”  Under the clear language of the statute, 28 U.S.C. Section 1332(c)(1) applies only to a direct action against the insurer.  In this case, Zurich is suing as PCC’s subrogee and, therefore Section 1332(c)(1) does not apply.