United States District Court, S.D. New York
March 9, 2004.
INDIAN CHEF, INC. d/b/a NEW PASSAGE TO INDIA, Plaintiff, -v- FIRE AND CASUALTY INSURANCE COMPANY OF CONNECTICUT, Defendant
The opinion of the court was delivered by: DENISE COTE, District Judge
MEMORANDUM OPINION AND ORDER
On May 2, 2002, Indian Chef, Inc. ("Indian Chef") filed this action
to recover insurance proceeds to which it alleges it is entitled under
the terms of its policy with Fire and Casualty Insurance Company of
Connecticut ("FCIC") (the "Policy"). Indian Chef is located near the
former site of the World Trade Center and seeks approximately $60,000 for
property damage and lost business income suffered in the wake of the
events of September
11, 2001 ("September 11"). Indian Chef relied exclusively on
Section 408(b)(3) of the Air Transportation Safety and System
Stabilization Act, Pub.L. No. 107-42, 115 Stat. 2307 (Sept. 22, 2001)
("Air Stabilization Act") (amended by the Aviation and Transportation
Security Act, Pub.L. No. 107-71, 115 Stat. 597 (Nov. 19, 2001)
("Aviation Security Act")), to assert that there was subject matter
jurisdiction over the claim.
On February 13, 2003, this Court denied FCIC's motion for partial
summary judgment that FCIC was entitled to an appraisal under its Policy
with Indian Chef. On September 3, following discovery, FCIC moved for an
order permitting it to amend its answer to assert an affirmative defense
of fraud, granting partial summary judgment limiting Indian Chef's
damages under the terms of the Policy, and precluding Indian Chef from
offering certain evidence at trial.
On October 2, Indian Chef sent a letter to the Court seeking dismissal
of the complaint for lack of subject matter jurisdiction, referring to
the Second Circuit's decision in Canada Life Assurance Company v.
Converium Ruckversicherung (Deutschland) AG, 335 F.3d 52 (2d Cir.
2003). FCIC opposed the request. On October 17, Indian Chef filed a
motion to dismiss for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1), Fed.R.Civ.P.
On October 15, Indian Chef filed a cross motion for partial summary
judgment and for sanctions. The parties' cross motions for summary
judgment seek interpretation of Policy provisions
governing the duration of time for which Indian Chef may recover
damages for lost business income.
This Opinion need not address the parties' motions for summary
judgment. Indian Chef's motion to dismiss this action for lack of subject
matter jurisdiction is granted for the following reasons.
For the purpose of resolving this motion to dismiss, the facts in this
Opinion are taken from the complaint. Indian Chef is a restaurant located
in downtown Manhattan whose premises were damaged as a result of the act
of terrorism that destroyed the World Trade Center on September 11. At
that time, Indian Chef was insured under an FCIC policy for commercial
property containing provisions covering both property damage and lost
Indian Chef alleges that it suffered property damage in excess of the
$50,000 policy limit and lost business income in excess of the $25,000
limit. As of the date of the complaint, FCIC had paid Indian Chef
$8,457.41 in connection with its claim for property loss and $4,695.00 in
connection with its claim for lost business income. Indian Chef brought
suit to recover the difference between the amount paid by FCIC and the
full amount under the Policy.*fn1
The party seeking to establish jurisdiction has the burden of "showing
by a preponderance of the evidence that subject matter jurisdiction
exists." APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003).
"Jurisdiction must be shown affirmatively, and that showing is not made
by drawing from the pleadings inferences favorable to the party asserting
it." Id. (citing Shipping Fin. Serv. Corp. v. Drakos,
140 F.3d 129, 131 (2d Cir. 1998)). When considering a motion to dismiss
for lack of subject matter jurisdiction, a court must accept as true all
material factual allegations in the complaint. Shippingm, 140
F.3d at 131.
The Air Stabilization Act was enacted by Congress in the immediate
aftermath of September 11 in response to concerns that the airline
industry was on the brink of collapse. Canada Life, 335 F.3d at
55. Section 408(b)(3) of the Air Stabilization Act provides for exclusive
jurisdiction in the Southern District of New York as follows:
The United States District Court for the Southern
District of New York shall have original and
exclusive jurisdiction over all actions brought
for any claim (including any claim for
loss of property, personal injury, or death)
resulting from or relating to the
terrorist-related aircraft crashes of
September 11, 2001.
Air Stabilization Act § 408(b)(3) (emphasis supplied). This
provision of the Air Stabilization Act was subsequently amended by the
Aviation Security Act, which states that "Subsections (a) and (b) [of
Section 408 of the Air Stabilization Act] do not apply to civil
actions to recover collateral source obligations."
Aviation Security Act 201(b)(3) (emphasis supplied).
The amendment supplied by the Aviation Security Act is "Congress's
explicit exemption from the exclusive jurisdictional provision of Section
408(b)(3) . . . actions to recover collateral source obligations."
Canada Life, 335 F.3d at 58 n.4, A collateral source
compensates a party for its injuries but is independent of the actual
tortfeasor. Black's Law Dictionary 256-57 (7th ed. 1999).
Insurance proceeds are the most common type of collateral source.
Id.; see, e.g. Ocean Ships, Inc. v. Sfiles,
315 F.3d 111, 116 (2d Cir. 2002) (describing collateral source). Under the Air
Stabilization Act, as amended, suits for losses against "primary
insurers" are to be brought wherever jurisdiction and venue are proper,
without reliance on Section 408(b)(3). Canada Life, 335 F.3d
at 58 n.4.
Indian Chef's complaint seeks recovery of benefits that it alleges it
is owed under the commercial policy it entered with FCIC, its primary
insurer. This is an action to recover a collateral source obligation and
is therefore outside the scope of the jurisdiction embodied in Section
408(b)(3) of the Air Stabilization Act, as amended by the Aviation
Security Act. Since it is undisputed that there is no other basis for
jurisdiction over this claim, this Court lacks subject matter
Indian Chef's motion to dismiss pursuant to Rule 12(b)(1),
Fed.R.Civ. P., is granted. The Clerk of Court shall close the case.