The opinion of the court was delivered by: SEYBERT
Plaintiffs Arkwright-Boston Manufacturers Mutual Insurance Company, American Home Assurance Company, Employers Insurance of Wausau, Continental Insurance Company and West Coast Marine Managers, Inc. (the "Excess Carriers") instituted this action on November 3, 1993 in Supreme Court, Queens County, claiming that the defendants, Truck Insurance Exchange and Farmers Insurance Group (the "Primary Carriers"), failed to settle an underlying personal injury lawsuit in good faith. The defendants then removed the case to federal court on May 25, 1994 on the basis of diversity of citizenship among the real parties in interest. The instant action was tried before a jury, which rendered a verdict on May 8, 1997 in favor of defendants. Pending before the Court is plaintiffs' motion to vacate the judgment and remand the action to state court for lack of subject matter jurisdiction.
The plaintiffs instituted this action in Supreme Court, Queens County in 1993, claiming that the defendant Primary Carriers breached their duty to negotiate a settlement of the underlying lawsuit within the primary policy limits. The claims in this action arose out of an underlying personal injury lawsuit which occurred in 1990 (the "Tobar action"). In the Tobar action, the plaintiffs therein were awarded over $ 20 million in damages as a result of a vehicle accident between the Tobars' car and a truck owned by American President Lines ("APL"). After the jury verdict, the awarded was ultimately reduced to $ 7 million, $ 5 million contributed by the Excess Carriers, $ 1 million contributed by the co-defendant in the Tobar action, and the other $ 1 million from the Primary Carriers. In the complaint, the plaintiffs seek only the $ 5 million they paid to the Tobars, along with legal fees, disbursements and costs from both the instant action and the Tobar action.
APL carried a primary insurance policy from defendant Truck with a policy limit of $ 1 million. APL also carried an excess coverage policy in the amount of $ 25 million from a pool of excess carriers, including plaintiffs Arkwright-Boston Manufacturers Mutual Insurance Company (providing 44% of the excess coverage), American Home Assurance Company (providing 20% of the excess coverage), Employers Insurance of Wausau (providing 8% of the coverage) and Continental Insurance Company (providing 20% of the excess coverage). Plaintiff West Coast Marine Managers, Inc. ("West Coast Marine") was also a signatory on the excess policy, as managing agent for certain other excess carriers who provided the remaining 8% of the $ 25 million excess coverage. West Coast Marine, as attorney-in-fact, subscribed to the excess policy on behalf of the following insurers: (1) Republic Insurance Company; (2) Midland Insurance Company; (3) Reinsurance Corp. of New York; (4) Pennsylvania Lumbermen's Mutual Insurance Company; (5) Ranger Insurance Company; (6) Lumbermen's Mutual Insurance Company; and (7) Northeastern Insurance Company. West Coast Marine subscribed to the percentage of the excess policy solely as manager for these other insurance companies and not on its own behalf, and did not share the risk of loss. Deans Dep. at 14. Brian Deans, President of West Coast Marine, also testified at his deposition that in settlement of the Tobar action, West Coast Marine was reimbursed for every dollar from the insurance companies it represented in signing the excess policy. Deans Dep. at 14, 69.
As mentioned above, on May 25, 1994, the defendants removed this action to federal court, claiming a diversity of citizenship among the real parties in interest to this action. In their notice of removal, the defendants provided the following list of citizenship for the real parties in interest, based on the state of incorporation and the state of the principal place of business ("PPB"):
Arkwright-Boston Manufacturers Mutual Insurance Company
American Home Assurance Company
Employers Insurance of Wausau:
Continental Insurance Company
Incorporation: New Hampshire
Republic Insurance Company:
Midland Insurance ...