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PIERCE v. JOHNSON

April 5, 1994

Regina L. Pierce, etc., Plaintiff,
v.
William T. Johnson, Defendant.


Sifton


The opinion of the court was delivered by: CHARLES P. SIFTON

SIFTON, District Judge.

 This action involves a tort claim by plaintiff Regina Pierce, as administratrix of the estates of the two individuals killed in the crash, for damages arising out of a car accident in North Carolina two years ago in which plaintiff settled with the named defendant William Johnson before bringing the action and executed a general release. Defendant has moved to dismiss the action on the ground that he is not the real party in interest, since the purpose of plaintiff's suit is only to recover underinsured motorist benefits from the decedents' insurer under a North Carolina statute requiring that such litigation name the insured rather than the insurance company as the defendant. Plaintiff has conceded that the action is only being brought to recover from the decedents' insurance company and has indicated her willingness to drop defendant from the suit and proceed against the insurance company.

 Upon receipt of plaintiff's motion, and taking notice that North Carolina is the residence of both plaintiff and the insurance company, this Court issued an order directing the plaintiff to show cause why the action should not be dismissed for lack of subject matter jurisdiction due to incomplete diversity. For the reasons set forth below, plaintiff's complaint is dismissed for lack of subject matter jurisdiction.

 This action arose out of a fatal automobile accident two years ago in North Carolina involving two residents of that state and a New York citizen. On August 31, 1991, defendant William Johnson's car is alleged to have crossed a highway dividing line and struck the vehicle carrying Robert and Rose Pierce. *fn1" On December 22, 1992, plaintiff settled with defendant and fully released him from any further liability. The release states:

 
The undersigned Administratrix . . . hereby releases and forever discharges William T. Johnson of and from all claims, demands, damages, actions, or causes of action on account of injuries to and the death of [Rose June Pierce and Robert H. Pierce] resulting from an accident which occurred on or about the 31st day of August, 1991 by reason of William T. Johnson's operation of a motor vehicle in Gates County, North Carolina.

 At the time of the accident, the Pierces maintained underinsurance coverage in the amount of more than $ 200,000. During settlement negotiations with the tortfeasor, plaintiff was also negotiating with decedents' carrier, North Carolina Farm Bureau Mutual Insurance Company ("Farm Bureau"), in an effort to settle the underinsurance claim. When this claim could not be settled, plaintiff instituted the present action.

 Defendant filed its motion to dismiss *fn2" on November 16, 1993. Defendant alleges that, given the above release, plaintiff is not entitled to maintain an action against him. Plaintiff responded "largely in support of" defendant's motion the following December 6. Plaintiff conceded that she is not seeking any damages from defendant but simply using him to reach underinsurance benefits owed by decedents' own insurer. Plaintiff agreed with defendant's motion to the extent of requesting that this Court issue an order releasing defendant from further participation in the defense but permitting plaintiff to proceed without limitation against decedents' insurer.

 Although Farm Bureau is not named in this action, it was served with process and is appearing in this action pursuant to N.C. Gen. Stat. ยง 20-279.21(b)(4). This statute allows a plaintiff to pursue an action for underinsurance benefits by naming the tortfeasor alone, yet serving the insurer. The statute provides that

 
the insurer shall be bound by a final judgment taken by the insured against an uninsured motorist if the insurer has been served with copy of summons, complaint or other process. . . . The insurer, upon being served as herein provided, shall be a party to the action between the insured and the uninsured motorist though not named in the caption of the pleadings and may defend the suit in the name of the uninsured motorist or in its own name.

 DISCUSSION

 As a matter of federal law, plaintiff must base her claim of diversity jurisdiction upon "citizens" who are real and substantial parties to the controversy. See Navarro Savings Association v. Lee, 446 U.S. 458, 461, 64 L. Ed. 2d 425, 100 S. Ct. 1779 (1980). Whether the residence of an uninsured motorist carrier under a statute such as the one involved in this case can destroy diversity jurisdiction has been answered in the negative by other federal courts considering the question, and plaintiff urges that we follow these cases' lead.

 
The Tennessee uninsured motorist statute attempts to protect the anonymity of the insurance company as in any other insurance liability case. . . . It makes little sense to allow the company to proceed 'in cognito' and yet consider its phantom presence in determining diversity. Although an uninsured motorist carrier is given the option to defend in its own name, rarely will such an event occur if there is a jury trial. Unless this rarity occurs and is coupled with substantial participation during trial, an insurance company's citizenship should not be considered for diversity purposes. ...

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