Opinion
CASE NO. 20-62522-CIV
2021-02-02
Annette DAVIS, Plaintiff, v. GREAT NORTHERN INSURANCE COMPANY, Federal Insurance Company, the Tides at Bridgeside Square Condominium Association, Inc., and Akam On-Site, Inc., Defendant.
Jordan Russell Chusid, Mitchel Chusid, Ritter Chusid Bivona & Cohen LLP, Coral Springs, FL, for Plaintiff. Junaid Savani, Sina Bahadoran, Miami, FL, for Defendant Great Northern Insurance Company, Federal Insurance Company. Mark Andrew Boyle, Michael Wade Leonard, Molly Ann Chafe Brockmeyer, Boyle, Leonard & Anderson, P.A., Fort Myers, FL, for Defendant The Tides at Bridgeside Square Condominium Association, Inc. Stephen A. Marino, Jr., Ver Ploeg & Marino, P.A., Miami, FL, for Defendant Akam-On-Site, Inc.
Jordan Russell Chusid, Mitchel Chusid, Ritter Chusid Bivona & Cohen LLP, Coral Springs, FL, for Plaintiff.
Junaid Savani, Sina Bahadoran, Miami, FL, for Defendant Great Northern Insurance Company, Federal Insurance Company.
Mark Andrew Boyle, Michael Wade Leonard, Molly Ann Chafe Brockmeyer, Boyle, Leonard & Anderson, P.A., Fort Myers, FL, for Defendant The Tides at Bridgeside Square Condominium Association, Inc.
Stephen A. Marino, Jr., Ver Ploeg & Marino, P.A., Miami, FL, for Defendant Akam-On-Site, Inc.
ORDER
RAAG SINGHAL, UNITED STATES DISTRICT JUDGE
THIS CAUSE is before the Court upon Plaintiff's Motion to Remand (DE [3]). Defendant The Tides at Bridgeside Square Condominium Association, Inc. ("Association") filed a Notice of Joinder (DE [16]) in the Motion to Remand. The matter is fully briefed and ripe for review. For the reasons discussed below, the Motion to Remand is denied.
I. BACKGROUND
Plaintiff Annette Davis ("Davis") filed a complaint against Great Northern Insurance Company ("Great Northern"), Federal Insurance Company ("Federal") (collectively "Chubb"), the Association, and Akam On-Site, Inc. ("Akam") in the Circuit Court for the 17th Judicial Circuit in and for Broward County, Florida. The complaint seeks declaratory judgment and damages for breach of contract and statutory bad faith. Davis alleges that Chubb has a duty to indemnify Akam and the Association with respect to a negligence action filed against them by Davis in a separate lawsuit ("the underlying litigation"). The underlying litigation seeks damages for injuries allegedly sustained by Davis as a result of a water leak in her condominium and remains pending.
Chubb removed this case based on diversity of citizenship pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1441(b). (DE [1]). Davis is a citizen of Florida. The Chubb entities are citizens of Indiana and New Jersey, but the Association and Akam are Florida corporations. Chubb alleges that the Association and Akam are "nominal" defendants who were joined and served to defeat diversity and, therefore, their citizenship should be disregarded. Alternatively, Chubb alleges that the interests of Davis, the Association, and Akam are aligned because they have a common interest in obtaining indemnification from Chubb and, therefore, the Association and Akam should be realigned as plaintiffs.
Davis moves to remand (DE [3]). She argues that the Association and Akam are indispensable parties, not nominal parties, and there are significant differences in their interests warranting denial of realignment. She contends the Court lacks jurisdiction under the forum-defendant rule, 28 U.S.C. § 1441(b)(2), and that the parties are not diverse.
The forum-defendant rule provides that an action that is otherwise removable to federal court may not be removed if any party in interest, properly joined and served as a defendant, is a citizen of the State where the action is brought. Arnauts v. Arnauts, 2017 WL 4869017, at *1 (M.D. Fla. Oct. 26, 2017) ; 28 U.S.C. § 1441(b)(2).
II. LEGAL STANDARDS
"Federal courts are courts of limited jurisdiction. They possess only that power authorized by the Constitution and statute." Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). "Only state court actions that originally could have been filed in federal court may be removed by the defendant." Caterpillar Inc. v. Williams , 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Nevertheless, only the citizenship of those parties who are "real and substantial parties to the controversy" are considered in determining whether the court has diversity jurisdiction. Wheeler's Moving & Storage, Inc. v. Markel Ins. Co. , 2011 WL 3419633, at *2 (S.D. Fla. Aug. 4, 2011). Furthermore, "[d]iversity jurisdiction is not dependent on the way the plaintiff aligns the parties in the complaint." Id. at *2. "The parties themselves cannot confer diversity jurisdiction upon the federal courts by their own designations of plaintiffs and Defendants." City of Vestavia Hills v. General Fidelity Ins. Co., 676 F.3d 1310, 1314 (11th Cir. 2012). Likewise, "the parties cannot avoid diversity by the designation of the parties. Id.
For purposes of removal, there is "a strong federal preference to align the parties in line with their interests in the litigation." Id. at 1313. And "federal law determines who is plaintiff and who is defendant." Id. (quoting Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574, 580, 74 S.Ct. 290, 98 L.Ed. 317 (1954) ). The court is obligated "to look beyond the pleadings and arrange the parties according to their sides in the dispute." Id. at 1314 (quoting City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69, 62 S.Ct. 15, 86 L.Ed. 47 (1941) ). "Where the parties’ interests are the same" it is reversible error to refuse to realign them "even where the parties’ interests were in opposition outside of the issues raised in the subject action." Id. (citing Weller v. Navigator Marine, Inc., 737 F.2d 1547, 1548 (11th Cir. 1984) ).
III. DISCUSSION
The Court agrees with Davis that the Association and Akam are indispensable parties. "The test for whether a defendant is an indispensable party, and thus a party whose citizenship must be considered, is whether, in the absence of the defendant, the court can enter a final judgment consistent with equity and good conscience that would not be in any way fair or inequitable." Wheeler's, 2011 WL 3419633, at *1. This determination depends on the facts of each case. Id. In this case, Davis seeks a declaration that Chubb is obligated to indemnify the Association and Akam for the damages she seeks in the underlying litigation. The Association and Akam have a clearly defined interest in the outcome of this case. Indeed, the insured, the insurer, and the claimants are necessary and interested parties to coverage litigation. Mt. Hawley Ins. Co. v. The Galleon Condo Apts., Inc., 2019 WL 8164395 (S.D. Fla. Oct. 15, 2019). The Association and Akam are, therefore, indispensable parties to this action.
Being properly named in this suit, whether the case should be remanded depends on whether the Association and Akam are properly aligned as defendants. "In determining whether the parties are properly aligned, the Court must determine the principal purpose of the case." Wheeler's Moving & Storage, 2011 WL 3419633, at *2. Davis seeks a declaration that Chubb is obligated to indemnify the Association and Akam for her claims and she seeks damages from Chubb for its failure to do so. The Complaint seeks nothing from the Association or Akam. The principal purpose of the case is to obtain coverage for Davis’ claims by establishing a duty to indemnify the Association and Akam.
The Court agrees with Chubb that the Association and Akam should be realigned as plaintiffs. "[T]he normal alignment of parties in a suit seeking a declaratory judgment [regarding coverage] is Insurer versus Insured and Injured Party." Vestavia Hills, 676 F.3d at 1314 (quoting Home Ins. Co. of Illinois v. Adco Oil Co., 154 F.3d 739, 741 (7th Cir. 1998) ); see Earnest v. State Farm Fire and Cas. Co., 475 F. Supp. 2d 1113 (N.D. Ala. 2007) (denying motion for remand after realigning tort claimant and insured on same side against insurer); Wheeler's Moving & Storage, 2011 WL 3419633, at *3 (motion for remand denied after tort claimant and tortfeasor realigned as plaintiffs in suit against insurer).
Davis argues that the Association and Akam cannot be realigned as Plaintiffs because their interests are adverse to hers in the underlying litigation. She notes that in both Wheeler's Moving & Storage and Vestavia Hills the underlying tort case had been reduced to judgment, thus the interests of the tortfeasor and the tort claimant were not adverse and they were subject to realignment. By contrast, she argues that the pending underlying litigation against the Association and Akam precludes realignment. But Eleventh Circuit law does not support that conclusion. In Vestavia Hills, the Eleventh Circuit stated that realignment is necessary "even where the parties’ interests were in opposition outside of the issues raised in the subject action ." 676 F.3d at 1314 (emphasis added). Thus, the adversarial relationship that exists in the underlying litigation does not bar realignment in this case. In this litigation, all three parties share the same interest: obtaining indemnification for Davis’ claims. Their interests are not in opposition.
Davis cites several decisions that refused realignment and remanded for lack of diversity where the underlying litigation had not yet been reduced to judgment. See Gulf Hauling & Constr., Inc. v. QBE Ins. Corp. , 2013 WL 2179278 (S.D. Ala. 2013) ; Andalusia Enterprises, Inc. v. Evanston Ins. Co. , 487 F. Supp. 2d 1290 (N.D. Ala. 2007) ; Preferred Chiropractic, LLC v. Hartford Cas. Ins. Co., 2011 WL 2149091 (S.D. Ill. May 31, 2011) ; Agrella v. Great Am. Ins. Co. , 1999 WL 1101319 (N.D. Ill. Nov. 29, 1999). Each of these cases included a claim that the insurer had a duty to defend the tortfeasors in the underlying litigation. Thus, the courts found the interests between the tort claimants and the tortfeasors were adverse. As one court explained:
While this alignment is generally true for declaratory judgments seeking indemnity,
a duty to defend is different.... In the actions underlying declaratory judgment actions regarding duties to defend, the insured and injured often have adverse interests – an adversity which does not end until after judgment.
Preferred Chiropractic , 2011 WL 2149091, *3 (S.D. Ill. May 31, 2011).
Unlike the cases cited by Davis, the present case only seeks to establish a duty to indemnify. A duty to defend is not at issue. In fact, Chubb's counsel represented to the Court that the Association's insurer, AmTrust International Underwriters Limited, is defending Akam against Davis’ underlying lawsuit. (DE [18]), n.2. Davis, the Association, and Akam have identical interests in this litigation: securing indemnification for Davis’ claims. Accordingly, the Court concludes that the Association and Akam should be realigned as plaintiffs. With realignment, the forum-defendant rule does not apply and the parties are entirely diverse. The Court, therefore, has jurisdiction over this matter. Accordingly, it is hereby
ORDERED AND ADJUDGED that Plaintiff's Motion to Remand (DE [3]) is DENIED. Defendants The Tides at Bridgeside Square Condominium Association, Inc., and Akam On-Site, Inc. are re-aligned as plaintiffs in this action.
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 2nd day of February 2021.