Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Weinhold v. The Travelers Indemnity Co.

United States District Court, D. New Hampshire

December 13, 2018

Karen M. Weinhold, et al.
v.
The Phoenix Insurance Company, et al.

          MEMORANDUM AND ORDER

          PAUL BARBADORO UNITED STATES DISTRICT JUDGE

         The Weinholds and the State of New Hampshire (“State”) jointly filed this insurance declaratory judgment case in New Hampshire Superior Court pursuant to Section 491:22 of the New Hampshire Revised Statutes. The defendants removed the action to federal court, invoking this court's jurisdiction pursuant to 28 U.S.C. § 1332 and § 1441(a) on the basis that there is complete diversity of citizenship between the parties and the amount of controversy exceeds $75, 000. The issue before me is whether there is diversity jurisdiction over the case given that the State is a party to the action.

         I. BACKGROUND[1]

         The Weinholds obtained a jury verdict against the State and two other defendants in the underlying state tort action. The State's share of the verdict totaled $3.6 million, exclusive of interest. Its liability, however, is subject to a statutory cap that limits the State's tort liability to the greater of $475, 000 or the amount of available insurance coverage. See N.H. Rev. Stat. Ann. § 541-B:14, I. The State maintains that its share of the verdict is covered in full under three policies that its contractor, Audley Construction, Inc., obtained from Travelers for the benefit of the State.

         The State's contract with Audley required Audley to secure owner's protective liability coverage for the benefit of the State, a commercial general liability policy that names the State as an additional insured, and a commercial umbrella policy. Audley procured three different policies from Travelers: an owner's protective liability policy with $2 million in coverage per occurrence and $3 million in aggregate (“Owner's Policy”), a commercial general liability policy with $1 million in coverage per occurrence and $2 million in aggregate (“CGL Policy”), and a commercial excess liability policy with $10 million in coverage (“Umbrella Policy”).

         After the jury verdict in the underlying action, Travelers agreed that the State is covered under the Owner's Policy, which has $1.85 million in coverage remaining.[2] Travelers, however, took the position that the CGL Policy and the Umbrella Policy do not cover the State's liability.

         The Weinholds and the State jointly sued Travelers in New Hampshire Superior Court, seeking a declaratory judgment that the State is covered as an additional insured under the CGL Policy and the Umbrella Policy. Travelers removed the case to federal court based on diversity of citizenship, alleging that the State and the Weinholds are citizens of New Hampshire and that the Travelers entities sued are citizens of Connecticut. See Doc. No. 2.

         I subsequently raised the question whether removal was improper because it appeared that the State's presence as a real party in interest destroyed complete diversity of citizenship. See Doc. No. 26. During a telephone conference held on October 9, 2018, the Weinholds and Travelers argued that the State is a nominal party whose presence can be disregarded for the purpose of diversity jurisdiction. The State disagreed and argued that it is a real party to the action. I directed the parties to file briefs presenting their respective positions on this issue.

         II. STANDARD OF REVIEW

         As courts of limited jurisdiction, federal courts have a duty to inquire sua sponte into the existence of their own subject-matter jurisdiction. McCulloch v. Velez, 364 F.3d 1, 5 (1st Cir. 2004). When jurisdiction is questioned, “the party invoking the jurisdiction of a federal court carries the burden of proving its existence.” Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995) (internal quotation marks omitted). Thus, if a plaintiff sues in federal court, the burden to establish jurisdiction is on the plaintiff. See Id. When the plaintiff instead files suit in state court and the defendant removes the action to federal court, the onus shifts to the defendant to demonstrate that federal jurisdiction exists. Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999). If federal jurisdiction is challenged after removal is accomplished, however, the burden is assigned to the party asserting jurisdiction at that time. See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006); Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 289 (1st Cir. 2013).

         When Travelers removed this case to federal court, neither the State nor the Weinholds challenged the propriety of removal. Once I inquired into the existence of complete diversity of citizenship, the State challenged subject-matter jurisdiction, and the Weinholds and Travelers asserted that it exists. Accordingly, it is incumbent on the Weinholds and Travelers to demonstrate that the court has jurisdiction over the case.

         Because the relevant facts are undisputed, the existence of subject-matter jurisdiction is a question of law. See Skwira v. United States, 344 F.3d 64, 72 (1st Cir. 2003)

         III. ANALYSIS

         Diversity jurisdiction requires complete diversity of citizenship between all plaintiffs on one side and all defendants on the other side. Caterpillar Inc. v. Lewis,519 U.S. 61, 68 (1996). A state is not a citizen of a state for jurisdictional purposes; it is instead considered a stateless entity. Moor v. Alameda Cty.,411 U.S. 693, 717 (1973); Petroleum Expl. v. Pub. Serv. Comm'n of Ky.,304 U.S. 209, 217 (1938); U.S.I. Props. Corp. v. M.D. Constr. Co.,230 F.3d 489, 499 (1st Cir. 2000). As a result, when it is a real party in interest, a “[s]tate's presence as a party will destroy complete diversity.” Miss. ex rel. Hood v. AU Optronics Corp.,571 U.S. 161, 174 (2014). A state's presence as a real party to the controversy spoils diversity jurisdiction even if there are otherwise diverse parties on the same side of the lawsuit as the State. See Newman-Green, Inc. v. Alfonzo-Larrain,490 U.S. 826, 829 (1989) (presence of “stateless” party destroyed complete diversity even though remaining parties were completely diverse); D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra,661 F.3d 124, 126 (1st Cir. 2011) (no diversity jurisdiction if any member of plaintiff LLC was “a stateless person, or an entity treated like a stateless person”; noting by analogy that “states are not ‘citizens' ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.