United States District Court, S.D. New York
August 5, 2005.
DEAJESS MEDICAL IMAGING, P.C. as assignee of SLAVIK ABAYEV and the other injured persons listed in attached rider and MOSHE D. FULD, P.C., Plaintiffs,
ALLSTATE INSURANCE COMPANY, Defendant. DEAJESS MEDICAL IMAGING, P.C. as assignee of GAVRIYEL ABRAMOV and the other injured persons listed in attached rider and MOSHE D. FULD, P.C., Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. BOSTON POST ROAD MEDICAL IMAGING, P.C. as assignee of AISHA ADAMS and the other injured persons listed in attached rider and MOSHE D. FULD, P.C., Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: JOHN SPRIZZO, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Deajess Medical Imaging, P.C. ("Deajess") and Boston
Post Road Medical Imaging, P.C. ("Boston Post Road") and Moshe D.
Fuld, P.C.,*fn1 the attorney for plaintiffs in these actions
(together "plaintiffs"), bring the virtually identical
above-captioned actions against defendants Allstate Insurance
Company ("Allstate") and State Farm Mutual Automobile Insurance
Company ("State Farm"), respectively, seeking payment for medical
services provided to individuals who had automobile insurance
policies issued by defendants and were subsequently injured in
accidents involving the use of the vehicles insured by
defendants. See 03 Civ. 3918 Compl. ¶¶ 6-13; 03 Civ. 6640
Compl. ¶¶ 6-13; 03 Civ. 7389 Compl. ¶¶ 6-13.*fn2 Defendants
move to dismiss the above-captioned actions, arguing that the
Court lacks subject matter jurisdiction over these controversies.
Because the Court finds that plaintiffs have improperly invoked
the jurisdiction of the Court, the above-captioned actions are
The facts in these actions are virtually identical and
straightforward: defendants are foreign car insurance companies
that insured the individual assignors listed in the
above-captioned actions. Compl. ¶¶ 3, 6. These various assignors
suffered injuries in unrelated car accidents arising out of the
use of vehicles insured by defendants. Compl. ¶ 6. Plaintiffs,
New York residents, subsequently rendered medical services to the
assignors in exchange for the assignment of their respective
no-fault insurance benefits. Compl. ¶¶ 6-9. Despite demands
having been made on defendants by plaintiffs for payment of such
no-fault benefits, no payment has been made. Compl. ¶¶ 11-12.
Defendants instead denied payment on each separate claim for
distinct reasons. Plaintiffs then aggregated their claims against
the respective insurance companies, which individually ranged from about $800.00 to
approximately $3500.00, see Compl. Rider, thereby increasing
the amount in controversy claimed in each action to an amount
above the $75,000 threshold established by 28 U.S.C. § 1332, and
brought suit in this Court based on diversity jurisdiction.
Defendants now claim that the Court should dismiss these
actions pursuant to Federal Rule of Civil Procedure 12(b)(1) and
28 U.S.C. § 1332. Defendants collectively make three primary
arguments: first, that assignee plaintiffs are not the real
parties in interest in these actions for purposes of determining
diversity jurisdiction, 03 Civ. 3918 Def.'s Mem. at 9-11; second,
that the assignments involved were collusively made and
aggregated purely for the purpose of meeting the $75,000 minimum
requirement to obtain jurisdiction in this Court, 03 Civ. 3918
Defs.' Mem. at 6, 8, 11; 03 Civ. 6640 Def.'s Aff. at 11-13; and
third, that the Court should sever the claims comprising each
action and then dismiss the actions on the grounds that each
severed claim fails to meet the $75,000 jurisdictional
requirement, 03 Civ. 7389 Def.'s Affirmation ¶ 2.
This factual predicate is not without precedent; attorney Moshe
D. Fuld, who represents plaintiffs in all three of the
above-captioned actions, has brought over thirty cases presenting
this issue in this district, resulting in varying conclusions.
See Boston Post Road Med. Imaging, P.C. v. Allstate Ins. Co.,
03 Civ. 3923 (RCC), 2004 WL 1586429, at *1 n. 2 (S.D.N.Y. July
15, 2004) (listing nearly thirty such actions). For example, in
Preferred Med. Imaging P.C. v. Geico Gen. Ins. Co., Judge
Buchwald "disaggregated" the sixty-seven unrelated claims
assignee plaintiff had aggregated to reach the jurisdictional
minimum amount and then dismissed for lack of subject matter
jurisdiction because, once disaggregated, "none of the individual
claims satisfies the amount in controversy requirement." 03 Civ.
8726 (NRB), 2004 WL 690735, at *1 (S.D.N.Y. Mar. 31, 2004); see
also Boston Post Road Med. Imaging, P.C., 2004 WL 1586429, at
*1-3; Preferred Med. Imaging, P.C. v. Allstate Ins. Co.,
303 F. Supp. 2d 476, 477 (S.D.N.Y. 2004); Boston Post Road Med. Imaging, P.C.
v. Geico Gen. Ins. Co. 03 Civ. 7390 (JCF), 2004 WL 1810572, at
*4-5 (S.D.N.Y. Aug. 12, 2004). Judge Scheindlin, in contrast,
denied defendant's motion to dismiss when presented with the same
scenario, finding that the assignee plaintiff was the real party
in interest for purposes of determining diversity jurisdiction,
that the assignments made by the injured insured individuals were
not collusive assignments, and that aggregation of the claims was
permissible. Boston Post Road Med. Imaging, P.C. v. Allstate
Ins. Co., 03 Civ. 6150 (SAS), 2004 WL 830154, at *2-5 (S.D.N.Y.
Apr. 13, 2004); see also Deajess Med. Imaging P.C. v.
Allstate Ins. Co., 03 Civ. 3920 (RWS), 2004 WL 1632596, at *3-5
(S.D.N.Y. July 22, 2004) (determining that plaintiff was real
party in interest and that assignments were not collusive).
Under the diversity statute, 28 U.S.C. § 1332, federal district
courts have subject matter jurisdiction over "all civil actions
where the matter in controversy exceeds the sum or value of
$75,000 . . . and is between . . . citizens of different States."
28 U.S.C. § 1332(a). This statute is to be strictly construed
against finding jurisdiction. Healy v. Ratta, 292 U.S. 263, 270
(1934). The party asserting diversity jurisdiction bears the
burden of so establishing once it has been challenged. Thomson
v. Gaskill, 315 U.S. 442, 446 (1942). While the Court must
accept the factual allegations in a complaint to be true on
motions to dismiss for lack of subject matter jurisdiction,
Serrano v. 900 5th Ave. Corp., 4 F. Supp. 2d 315, 316 (S.D.N.Y.
1998), the Court may refer to evidence outside the pleadings to
resolve jurisdictional disputes. See Flores v. S. Peru Copper
Corp., 343 F.3d 140, 161 n. 30 (2d Cir. 2003). Under the diversity statute it is ordinarily permissible for
plaintiffs to aggregate claims in order to satisfy the amount in
controversy requirement. See Snyder v. Harris, 394 U.S. 332,
335 (1969). Federal Rule of Civil Procedure 18 governs
aggregation, and does not require that the aggregated claims be
factually related. See Wolde-Meskel v. Vocational Instruction
Project Cmty. Servs., Inc., 166 F.3d 59, 62 (2d Cir. 1999).
"[C]laims joined under Rule 18 need not be part of the same case
or controversy as claims over which the court would have
independent original jurisdiction." Id. However,
28 U.S.C. § 1359 makes clear that a "district court shall not have
jurisdiction of a civil action in which any party, by assignment
or otherwise, has been improperly or collusively made or joined
to invoke the jurisdiction of such court." Thus, assignments made
for the purpose of creating federal jurisdiction are collusive
and cannot provide a proper jurisdictional basis. See Airlines
Reporting Corp. v. S & N Travel, Inc., 58 F.3d 857, 862 (2d Cir.
Turning first to defendants' severance argument, several judges
in this district in virtually identical actions severed
plaintiffs' aggregated claims for no-fault benefits because they
arose from separate, unrelated car accidents and, once severed,
dismissed the entire action because no individual claim met the
$75,000 jurisdictional requirement. See Deajess Med. Imaging,
P.C. v. Travelers Indem. Co., 222 F.R.D. 563, 563-64 (S.D.N.Y.
2004); Boston Post Road Med. Imaging, P.C., 2004 WL 1586429, at
*1-3; Preferred Med. Imaging, P.C., 303 F. Supp. 2d at 477;
Deajess Med. Imaging, P.C. v. Allstate Ins. Co., 03 Civ. 3916
(LTS), 2004 WL 1920803, at *5 (S.D.N.Y. Aug. 27, 2004); Deajess
Med. Imaging, P.C. v. Travelers Prop. Cas. Ins. Co., 03 Civ.
6635 (NRB), Summary Order, at 1 (S.D.N.Y. Mar. 11, 2004); Boston
Post Road Med. Imaging, P.C. v. State Farm Mut. Auto. Ins. Co.,
03 Civ. 6643 (AKH), Summary Order, at 1 (S.D.N.Y. Mar. 9, 2004).
Although severance appears appropriate in cases such as these for
the reasons articulated by Magistrate Judge Francis, see Boston
Post Road Med. Imaging, P.C., 2004 WL 1810572, at *4-5, namely
because the claims at issue arose out of distinct car accidents,
the assigned claims were denied for varying reasons and thus
different provisions of the insurance policies will be relevant
to different claims, and the trying of these claims together
would prove very cumbersome, this Court does not agree that, once
severed, these cases can be dismissed. It is well-settled that
"[s]atisfaction of the § 1332(a) diversity requirements . . . is
determined as of the date that suit is filed the
`time-of-filing' rule. `Events occurring subsequent to the
institution of suit which reduce the amount recoverable below the
statutory limit do not oust jurisdiction.'" Wolde-Meskel,
166 F.3d at 62 (citing St. Paul Mercury Indem. Co. v. Red Cab Co.,
303 U.S. 283, 289-90 (1938)). Thus, if this Court were to sever
plaintiffs' claims at this point it would merely be an event
"occurring subsequent to the institution of a suit which
reduce[s] the amount recoverable below the statutory limit" and
therefore would not "oust jurisdiction." Id.; see also
Long & Foster Real Estate, Inc. v. NRT Mid-Atlantic, Inc.,
357 F. Supp. 2d 911, 920, 924 (E.D. Va. 2005) (finding plaintiff's
aggregation of 150 validly assigned separate and distinct claims
against one defendant to be permissible and suggesting that
procedural complexities could be resolved through severance).
Nor does this Court find defendants' argument that the assignee
plaintiffs are not the real party in interest for purposes of
determining diversity jurisdiction to be persuasive for the
reasons already articulated by Judge Scheindlin and agreed with
by Judge Sweet: in short, assignee plaintiffs here own "the
claims in issue and if [they are] not successful in this action,
[they] will not be compensated for the services [they] provided.
Thus, it cannot be said that [plaintiffs are] suing as [agents]
on behalf of the patient-assignors who clearly do not have stake in this litigation." Boston Post Road Med. Imaging, P.C., 2004
WL 830154, at *2; see also Deajess Med. Imaging, P.C., 2004
WL 1632596, at *4-5.
Additionally, this Court rejects defendants' argument that the
assignments given to plaintiffs by the injured insureds were
collusively made. Section 1359 prohibits collusive assignments
from giving rise to jurisdiction. See 28 U.S.C. § 1359. The
section has been interpreted to bar agreements where the
"`primary aim' is to concoct federal diversity jurisdiction."
Airlines Reporting Corp., 58 F.3d at 862 (quoting O'Brien v.
AVCO Corp., 425 F.2d 1030, 1034 (2d Cir. 1969)). The primary aim
of the assignments made by the injured insureds to the
medical-service-provider plaintiffs in these actions was not to
concoct federal diversity jurisdiction. Rather, as Judge Kaplan
previously found on similar facts, "[t]he assignments appear to
have been for the purpose of enabling [plaintiff] to provide
costly medical services to its patients without requiring them to
pay out-of-pocket for those services." Deajess Medical Imaging,
P.C. v. Allstate Ins. Co., 344 F. Supp. 2d 907, 911 (S.D.N.Y.
2004). This is clearly a legitimate business purpose. The timing
of the assignments, which were done at the time treatment was
rendered, further supports their legitimacy. There is nothing in
the above-captioned actions to suggest that the relevant
assignments were made to manufacture diversity jurisdiction and
this Court therefore concludes, as have several other judges in
this district, that such assignments were not collusive. See
Boston Post Road Med. Imaging, P.C., 2004 WL 830154, at *2-3;
Deajess Med. Imaging P.C., 2004 WL 1632596, at *5; Deajess
Med. Imaging, P.C. v. Geico Gen. Ins. Co., 03 Civ. 7388 (DF),
2004 WL 1576536, at *3-4 (S.D.N.Y. July 15, 2004).
This Court nonetheless determines that these actions must be
dismissed. Section 1359 states, "[a] district court shall not
have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively
made or joined to invoke the jurisdiction of such court."
28 U.S.C. § 1359 (emphasis added). It is a well-known "canon of
statutory construction that a statute should not be construed to
render a word or clause inoperative." United States v.
Peterson, 394 F.3d 98, 106 (2d Cir. 2005) (citing Bell v.
Reno, 218 F.3d 86, 91 (2d Cir. 2000)). In addition to barring
collusive assignments, then, this statute also prevents claims
that have been "improperly" joined from giving rise to
jurisdiction. See 28 U.S.C. § 1359.
While a party is ordinarily permitted to join as many claims as
it has against an opposing party in order to meet the $75,000
amount in controversy requirement for diversity jurisdiction,
see Fed.R.Civ.P. 18(a); Snyder, 394 U.S. at 335,*fn3
the manner in which these particular plaintiffs have joined their
numerous, small, unrelated claims is "improper." Plaintiffs are
not parties to the actual controversies in these actions, which
are disputes over whether individual car crash victims are
entitled to insurance coverage. Plaintiffs were not involved in
any of the car accidents nor in defendants' decision to deny
payment on the claims arising from them. Every defense offered by
the insurance companies in these actions will inevitably be aimed
at the insureds, not at plaintiffs who merely stand in the shoes
of the injured individuals for payment purposes.
In addition, not one of plaintiffs' controversies nears the
$75,000 threshold established by § 1332, a point made more
problematic when considered in light of the Supreme Court's
recent holding that at least one plaintiff must satisfy the
amount in controversy requirement before supplemental jurisdiction can be exercised over other plaintiffs'
claims that fail to meet that minimum amount. Exxon Mobil Corp.
v. Allapattah Servs., Inc., 125 S. Ct. 2611, 2615 (2005). In
Exxon the Court additionally required that the claims for less
than $75,000 be related to the claim exceeding that number in
order for supplemental jurisdiction to be appropriate. See
id. at 2624-25. Plaintiffs' conduct, specifically joining
together separate and unrelated controversies as the mechanism by
which to wedge their way into a federal forum, should not be
In sum, plaintiffs' joining together of numerous, small,
unrelated controversies in a deliberate effort to meet the
required jurisdictional amount constitutes improper joinder and
cannot give rise to jurisdiction. See 28 U.S.C. § 1359; cf.
O'Brien v. AVCO Corp., 425 F.2d 1030, 1034, 1036 (2d Cir. 1969)
(holding that § 1359 bars agreements where the primary aim is "to
vest the court with a jurisdiction it had not formerly enjoyed"
and writing that "`[t]here is no proper place in the federal
courts for cases in which diversity has thus been deliberately
created in order to obtain a federal forum . . .'") (quoting
American Law Institute, Study of the Division of Jurisdiction
Between State and Federal Courts, 118 (1969)). But see Tam
v. Lo, 968 F. Supp. 1326, 1328 (N.D. Ill. 1997).
The impropriety of plaintiffs' course of action is accentuated
by the fact that, instead of aggregating all claims against the
respective defendants in one comprehensive (albeit unwieldy)
case, plaintiffs here have created at least thirty such actions
in this district to date. For example, plaintiff Boston Post Road
has brought six different actions against defendant Allstate in
this district thus far, none exceeding $200,000 (indeed, most
total just over $100,000). Each case was assigned to a different
judge and, while some have since been dismissed, others have not.
Plaintiff Deajess has brought seven different actions against
defendant Allstate here and these actions have likewise met dissimilar fates. Compounding this
waste of judicial resources is the fact that plaintiffs will
continue to have these claims against the insurance companies to
which their patients belong for as long as they are in business;
thus, the reality of the situation is that plaintiffs can
continue to so join their small, unrelated controversies to get
to the magical $75,000 number, thereby creating an unlimited
amount of these actions in federal court for perpetuity.
To allow plaintiffs to continue flooding federal courts with
their patchwork runs contrary not only to the purpose behind the
amount in controversy requirement, which is "to ensure that a
dispute is sufficiently important to warrant federal-court
attention," Exxon, 125 S.Ct. at 2622; see also Snyder,
394 U.S. at 339-40, but additionally to the purpose behind §
1359, which is to prevent the "manufacture of Federal
jurisdiction," Kramer v. Caribbean Mills, Inc., 394 U.S. 823,
829 (1969), in an effort to aid "the already over-burdened
federal courts." O'Brien, 425 F.2d at 1033-34, 1035. This Court
will not allow plaintiffs to so easily circumvent these policy
For the aforementioned reasons, defendants' motions to dismiss
are granted. The Clerk of the Court is hereby directed to close
the above-captioned actions.
It is SO ORDERED.