Suing A Lloyd’s Insurance Company

A lot of insurance policies written for commercial or business coverage are Lloyd’s insurance companies.  Suing a Lloyd’s company and keeping it out of Federal Court is a little easier than if the company were not a Lloyd’s company.  Though this did not happen in this case, it is explained in an Eastern District, Marshall Division opinion styled, North Dallas Lawn Care and Landscape Inc. et al. v. Hartford Lloyd’s Insurance Company.

Regardless of the parties’ agreement that this case should proceed before the Federal District Court, the court has an independent obligation to determine whether subject-matter jurisdiction exists.  Hartford asserts that this Court has jurisdiction pursuant to 28 U.S.C. Section 1334(b).

Out of concern that jurisdiction may not exist in this case, the Court ordered Hartford to file a declaration of citizenship and the citizenship of its underwriters.

A district court in a civil case has diversity jurisdiction under 28 U.S.C. Section 1332(a) where the amount in controversy exceeds $75,000 and the suit is between citizens of different states.

Hartford Lloyd’s Insurance Company is a particular type of business entity created by Texas Insurance Code, Section 941.001 et seq.  A Texas “Lloyd’s plan is defined by statute as “an entity engaged in the business of writing insurance on the Lloyd’s plan.”  An “underwriter” of such a plan is defined “as individual, partnership, or association of individuals that writes insurance on the Lloyd’s plan.”  The “attorney in fact” of a Lloyd’s plan may execute insurance policies for the plan.

As to the complete diversity of citizenship requirement, a Texas Lloyd’s plan is an unincorporated association, and its citizenship is defined by the citizenship of its members.  The Fifth Circuit has held that the membership of a Texas Lloyd’s group consists solely of the underwriters and does not include the attorney in fact.  As such, Hartford’s citizenship is defined solely by the citizenship of its underwriters.

In accordance with this Court’s Order, Hartford filed a declaration from its corporate representative, Lisa Levin, who serves as Hartford’s Secretary and Attorney in Fact.  As outlined in that declaration, Hartford is a Texas Lloyd’s corporation and is comprised of individual underwriters acting by and through Hartford’s Attorney in Fact.  Each underwriter is a natural person, and Hartford has identified the names and citizenship of each of those underwriters.  The citizenship of the twelve underwriters includes the State of Connecticut, the State of Washington, and the Commonwealth of Massachusetts.  Thus, Hartford is not a citizen of the State of Texas.  Given that North Dallas Lawn Care is a corporation organized under the laws of Texas with its principle place of business in Texas, complete diversity of citizenship exists among the parties.

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