Opinion
01-CV-00770A(Sr).
July 2, 2004
DECISION AND ORDER
In accordance with 28 U.S.C. § 636(c), the parties have consented to have the undersigned conduct all further proceedings in this case, including entry of final judgment. Dkt. #9. Currently before the Court are the following motions:
(1) plaintiff's motion to remand this matter to the New York State Supreme Court, County of Erie (Dkt.#7);
(2) defendant's motion to dismiss for failure to allege a justiciable controversy and, alternatively, for summary judgment based on plaintiff's breach of certain terms and conditions for obtaining supplementary uninsured/underinsured motorist ("SUM") insurance coverage (Dkt. #14); and
(3) defendant's motion for summary judgment dismissing this action based upon plaintiff's failure to exhaust the liability coverage of the underlying tortfeasor, which is a condition precedent to recovery under plaintiff's SUM insurance coverage.
Dkt. ##36, 37. For the following reasons, the plaintiff's motion to remand is denied; the defendant's motion to dismiss is denied as moot; and the defendant's motion for summary judgment is granted.
BACKGROUND
The plaintiff commenced this action in New York State Supreme Court, County of Erie, by summons and complaint filed October 3, 2001, seeking judgment declaring that the plaintiff afforded the defendant
proper and timely notice and has the right to supplementary uninsurance coverage ("SUM Coverage") should her damages for injuries in the action of Webb v. Zogaria exceed $100,000.00, the Zogaria policy limit.
Dkt. #1, Exh. A, ¶ 1.
The defendant removed the action to this Court on the basis of diversity jurisdiction as afforded pursuant to 28 U.S.C. §§ 1332 1441. Dkt. #1. Specifically, the defendant removed on the grounds that the plaintiff is a resident of New York and the defendant is "a foreign corporation, with its principal place of business at One Kemper Drive, Long Grove, Illinois." Dkt. #1, ¶¶ 3-4. The plaintiff moved to remand the matter to New York State Supreme Court on the grounds that the defendant was a citizen of New York State. Dkt. #7, ¶¶ 14-15.
The defendant moved to dismiss the action for failure to present a justiciable controversy in view of the fact that the defendant's obligation to provide SUM coverage was contingent on the outcome of the personal injury action pending in New York State Supreme Court. Dkt. ##14 16, p. 2. The Court stayed the motions pending resolution of the underlying personal injury action. Dkt. #23.
By Memorandum Decision dated June 14, 2002, the New York State Supreme Court, Appellate Division, Fourth Department, dismissed plaintiff's personal injury complaint for failure to demonstrate a "good and meritorious cause of action" so as to excuse her failure to serve and file a note of issue. Webb v. Zogaria, 295 A.D.2d 924 (4th Dep't), lv. denied, 99 N.Y.2d 504 (2002). Specifically, the Appellate Division stated that "[a]lthough defendants have conceded that defendant Cindy E. Zogaria was negligent, the record contains no evidence to support the contention of plaintiff that there was a causal connection between the spinal surgery that she underwent and the rear-end collision at issue in this case." Id. Thereafter, the Appellate Division affirmed the Supreme Court's denial of plaintiff's motion to vacate the Appellate Division's Order of Dismissal. Webb v. Zogaria, 4 A.D.3d 757 (4th Dep't 2004). Accordingly, the defendant moved for summary judgment dismissing the action for failure to exhaust the tortfeasor's insurance coverage. Dkt. ##36, 37.
DISCUSSION AND ANALYSIS
Diversity Jurisdiction
The plaintiff moved to remand the matter to New York State Supreme Court on the grounds that the defendant was a citizen of New York State as defined by 28 U.S.C. § 1332(c)(1). Dkt. #7, ¶¶ 14-15.
28 U.S.C. § 1332(c)(1) states that
a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business, except that in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.
The Court of Appeals for the Second Circuit has recognized that the legislative purpose of the "direct action" proviso was to eliminate diversity jurisdiction "on certain tort claims in which both parties are local residents, but which, under a State `direct action' statute, may be brought directly against a foreign insurance carrier without joining the local tortfeasor as a defendant." Rosa v. Allstate Ins. Co., 981 F.2d 669, 674 (2d Cir. 1992), quoting S. Rep. No. 1308, 88th Cong., 2d Sess. 1 (1964), reprinted in 1964 U.S.C.C.A.N. 2778, 2778-79. In accordance with this goal,
Court have uniformly defined the term "direct action" as used in [ 28 U.S.C. § 1332(c)(1)] as those cases in which a party suffering injuries or damage for which another is legally responsible is entitled to bring suit against the other's liability insurer without joining the insured or first obtaining a judgment against him . . . Thus, "unless the cause of action urged against the insurance company is of such a nature that the liability sought to be imposed could be imposed against the insured, the action is not a direct action."Id. at 675, quoting Beckham v. Safeco Ins. Co. of Am., 691 F.2d 898, 901-02 (9th Cir. 1982) (citations omitted). Since plaintiff commenced this action against her own insurer claiming entitlement to benefits which could not be recovered from the tortfeasor, it is not a direct action and diversity is not destroyed. See Peck v. Public Serv. Mut. Ins. Co., 2004 WL 1055680, at *1 (D. Conn. May 6, 2004); Steuben Contracting. Inc. v. Employers Ins. of Wausau, 975 F. Supp. 479, 480, n. 1 (W.D.N.Y. 1997); Woodstock Resort Corp. v. Scottsdale Ins. Co., 921 F. Supp. 1202, 1203-04 (D. Vt. 1995).
The plaintiff also claims that the defendant maintains its principal place of business in New York and is, therefore, a citizen of New York. Dkt. #8, p. 3. In support of this assertion, the plaintiff states that the defendant is licensed to do business in New York, issued the insurance policy in New York, maintains an office in Orchard Park, New York, issued the letter denying plaintiff's SUM claim from Orchard Park, New York, and has local counsel. Dkt. #7, ¶ 12. In response, the defendant submitted an affidavit from defendant's Senior Corporate Counsel, John M. McGregor, affirming that the defendant's headquarters are located in Long Grove, Illinois and that it
makes its corporate policy, and keeps its corporate books and records at its Long Grove headquarters. It also handles its regulatory functions from its Long Grove headquarters. Further, from its headquarters in Long Grove, Illinois, the officers of American Manufacturers direct, control, and coordinate the activities of the company in the other states.
Dkt. #15, ¶ 2. Mr. McGregor also affirms that the Board of Directors meets six times per year in Illinois and that the defendant's annual meeting of policyholders is also held in Illinois. Dkt. #15, ¶ 3.
For diversity purposes, "a corporation may only have one principal place of business." Bailey v. Grand Trunk Lines New England, 805 F.2d 1097, 1100 (2d Cir. 1986), cert. denied, 484 U.S. 826 (1987). Allegations that the corporation does business in a state or is licensed to do business in a state are insufficient to defeat diversity jurisdiction. See Burns v. Bank of Am., 2003 WL 22717827 (S.D.N.Y. Nov. 18, 2003), RR adopted by 2203 WL 22990065 (S.D.N.Y.Dec.18, 2003); American Nat'l Fire Ins. Co. v. Mirasco, Inc., 2000 WL 1368009 (S.D.N.Y. Sept. 20, 2000); Royal Ins. Co. v. Caleb V. Smith Sons, Inc., 929 F. Supp. 606, 608 (D. Ct. 1996). Thus, plaintiff's allegations are insufficient to defeat the defendant's demonstration of diversity and the plaintiff's motion to remand this matter is denied.
Summary Judgment
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "In reaching this determination, the court must assess whether there are any material factual issues to be tried while resolving ambiguities and drawing reasonable inferences against the moving party, and must give extra latitude to a pro se plaintiff." Thomas v. Irvin, 981 F. Sup 794, 799 (W.D.N.Y. 1997) (internal citations omitted).
A fact is "material" only if it has some effect on the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see Catanzaro v. Weiden, 140 F.3d 91, 93 (2d Cir. 1998). A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248; see Bryant v. Maffucci, 923 F.2d 979 (2d Cir.), cert. denied, 502 U.S. 849 (1991).
Once the moving party has met its burden of ?demonstrating the absence of a genuine issue of material fact, the nonmoving party must come forward with enough evidence to support a jury verdict in its favor, and the motion will not be defeated merely upon a metaphysical doubt' concerning the facts, or on the basis of conjecture or surmise." Bryant, 923 F.2d at 982. A party seeking to defeat a motion for summary judgment
must do more than make broad factual allegations and invoke the appropriate statute. The [party] must also show, by affidavits or as otherwise provided in Rule 56 of the Federal Rules of Civil Procedure, that there are specific factual issues that can only be resolved at trial.Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995).
SUM Coverage
"As a condition precedent to the obligation of the insurer to pay under the supplementary uninsured/underinsured motorists insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements." New York Insurance Law § 3420(f)(2)(A). This statutory requirement was included as a condition within plaintiff's policy of insurance, which provided that the defendant "will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies or bonds applicable at the time of the accident in regard to any one person who may be legally liable for the bodily injury sustained by the insured." Dkt. #17, Exh. A., SUM Endorsement, ¶ 9.
The New York State Court of Appeals has determined that this "statutory scheme requires primary insurers to pay every last dollar, and requires plaintiffs to accept no less, prior to the initiation of an underinsurance claim." Federal Ins. Co. v. Watnick, 80 N.Y.2d 539, 546 (1992). In the instant case, however, the dismissal of the underlying personal injury action by the New York State Supreme Court, Appellate Division, Fourth Department precludes such exhaustion. Since the defendant has demonstrated as a matter of law that plaintiff is not entitled to SUM benefits, plaintiff cannot maintain this action seeking a declaration that she is entitled to SUM benefits.
CONCLUSION
For the foregoing reasons, the plaintiff's motion to remand (Dkt. #7), is DENIED; the defendant's motion to dismiss (Dkt. #7), is DENIED AS MOOT; and the defendant's motion for summary judgment dismissing this action (Dkt. ##36 37), is GRANTED. SO ORDERED.