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INDIAN CHEF INC v. FIRE AND CASUALTY INS. CO.

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 Page 2 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 Page 3 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.

  Background

  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 business income.

  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 Page 4

  Discussion

  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 ยง 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." Page 5 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 jurisdiction. Page 6

  Conclusion

  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.

  SO ORDERED.


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