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Gayle Stewart v. Michael Atwood and and Barry Bistis

October 27, 2011

GAYLE STEWART,
PLAINTIFF,
v.
MICHAEL ATWOOD AND AND BARRY BISTIS,
DEFENDANTS.



The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge

REPORT and RECOMMENDATION DECISION

ORDER

JURISDICTION

This case was referred to the undersigned by Honorable William M. Skretny on November 15, 2010, for pretrial nondispositive motions. The matter is presently before the court on a motion filed April 4, 2011, by Healthnow New York Inc. to intervene *fn1 (Doc. No.14).

BACKGROUND and FACTS *fn2

On September 22, 2007, Plaintiff Gayle Stewart ("Plaintiff" or "Stewart"), sustained personal injuries while a guest upon "Telos," a boat owned and captained by Defendant Michael Atwood ("Atwood"), the Telos lost steering capability, and another boat, the "Watermark," owned and captained by Defendant Michael Bistis ("Bistis"), attempted to assist in towing the Telos ("the accident"). The accident occurred in Lake Erie within the continental boundary of the United States. At all time relevant to this action, Plaintiff has been a participant in a healthcare plan ("insurance policy") administered by HealthNow New York Inc. ("HealthNow" or "Movant") pursuant to an Employee Welfare Benefit Plan through Plaintiff's employer, Ingram Micro Inc., a locally headquartered software and computer technology reseller. Pursuant to the terms of the insurance policy, HealthNow has paid in excess of $12,000 for certain medical, surgical and other healthcare benefits Plaintiff received in treatment for Plaintiff's injuries sustained in the accident.

The insurance policy contains a "Rider for Subrogation Rights" ("Subrogation Rider") *fn3 providing, as relevant, that in the event the insured in injured in an accident for which another party is responsible, and HealthNow has paid health insurance benefits as a result of that injury, HealthNow "will be subrogated and succeed to the right of recovery against the party responsible" for the injury to the extent of health insurance benefits paid by HealthNow. Subrogation Rider ¶ 1. The Subrogation Rider further provides HealthNow is entitled to be reimbursed for any health insurance benefits paid by HealthNow, from any settlement or judgment funds received by the insured from the party responsible for the insured's injuries, provided the settlement or judgment received "specifically identifies or allocates monetary sums directly attributable to expenses for which we have paid benefits." Id .

Plaintiff commenced this action in New York Supreme Court, Erie County, on September 22, 2010, seeking to recover for personal injuries sustained in the September 22, 2007 boating accident. Plaintiff and Atwood are both residents of New York, whereas Bistis is a resident of South Carolina. In view of the absence of the requisite complete diversity necessary for jurisdiction under 28 U.S.C. § 1332(a), on October 26, 2010, Atwood removed the action to this court, asserting Plaintiff's allegations comprise a maritime claim within this court's admiralty jurisdiction pursuant to 28 U.S.C. § 1333. The Notice of Removal (Doc. No. 1) ("Removal Petition"), states that Bistis consented to the removal. Removal Petition ¶ 6. *fn4 Plaintiff did not challenge the removal.

Atwood's answer, filed November 15, 2010 (Doc. No. 2) ("Atwood's Answer"), asserts as his Fourth Affirmative Defense that Atwood is, pursuant to the Limitation of Liability Act of 1851, 46 U.S.C. § 30501 et seq. ("Limitation of Liability Act" or "the Act"), entitled to exoneration from or limitation of liability up to the value of the Telos, and asserts a cross-claim against Bistis for indemnification and contribution. Similarly, Bistis's Answer, filed December 14, 2010 (Doc. No. 5) ("Bistis's Answer"), asserts as his Ninth Affirmative Defense, that Bistis also is, pursuant to the Act, entitled to exoneration from or limitation of liability to the extent of the value of the Watermark, and asserts a cross-claim against Bistis for indemnification and contribution.

On April 14, 2011, Movant HealthNow filed a motion to intervene in this action (Doc. No. 14) ("motion to intervene"), supported by the attached Declaration of Donall O'Carroll ("O'Carroll Declaration"), exhibits A through D ("Movant's Exh(s). __"), and the Memorandum of Law in Support of Motion to Intervene by HealthNow New York, Inc. ("Movant's Memorandum"). By Order filed April 22, 2011 (Doc. No. 15), the parties were directed to file their responses to the motion to intervene by May 13, 2011, and any replies were to be filed by May 20, 2011.

On May 24, 2011, Plaintiff and Bistis filed a Stipulation of Dismissal as to Defendant Bistis (Doc. No. 16) ("Stipulation of Dismissal"), based on settlement. By text order entered May 26, 2011 (Doc. No. 17), the Stipulation of Dismissal was "So Ordered" by Chief District Judge Skretny.

By letter to the undersigned dated June 17, 2011 (Doc. No. 18) ("June 17, 2011 Letter"), Bistis advised that Judge Skretny's approval of the Stipulation of Dismissal rendered the pending motion to intervene moot as to Bistis. By letter to the undersigned dated June 21, 2011 (Doc. No. 19) ("June 21, 2011 Letter"), Movant disputed Bistis's assertion that the motion to intervene was moot as to Bistis on the ground that the motion to intervene was pending when the Stipulation of Dismissal, which does not purport to dismiss HealthNow's claims against Defendants, was filed, and that HealthNow, which is not a party to this action, was not aware of any settlement between Plaintiff and Bistis and thus was unable to secure its purported subrogation claim against Bistis. June 21, 2011 Letter at 1. Movant further asserts that because an insurer's claims for amounts paid by it are divisible and independent of the insured's claim for uninsured losses, the fact that Bistis has settled with Pliantiff does not negate Movant's right to pursue its subrogation claims against Bistis as a tortfeasor. Id . at 2. Oral argument was deemed unnecessary.

Based on the following, the action should be REMANDED to New York Supreme Court, Erie County for lack of subject matter jurisdiction, and Movant's motion to intervene (Doc. No. 14), dismissed as moot. Alternatively, Movant's motion to intervene (Doc. No. 14) is DENIED.

DISCUSSION

1. Jurisdiction

Defendants, in removing the instant action to this court, asserted that Plaintiff has essentially alleged a maritime claim within this court's admiralty jurisdiction under 28 U.S.C. § 1333. Plaintiff did not seek remand or otherwise challenge the removal, and the 30 days in which to do so has now expired except for remand based on lack of subject matter jurisdiction. 28 U.S.C. § 1447(c). Regardless of whether the issue is raised by the parties, a district court is required to inquire into and determine whether federal subject matter jurisdiction in a removed action exists. Mehlenbacher v. Akzo Nobel Salt, Inc. , 216 F.3d 291, 295-96 (2d Cir. 2000). See also College Standard Magazine v. Student Association of State University of New York at Albany , 610 F.3d 33, 35 (2d Cir. 2010) (federal courts, including district courts, "'have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte .'" (quoting Joseph v. Leavitt , 465 F.3d 87, 89 (2d Cir. 2006))). Such obligation equally applies to removal based on admiralty jurisdiction. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp, Division of Ace Young Inc. , 109 F.3d 105, 108 (2d Cir. 1997) (remanding action to district court to determine whether admiralty jurisdiction existed, despite absence of any challenge by parties to such jurisdiction). Unlike personal jurisdiction, the lack of federal subject matter jurisdiction for a removed action cannot be waived by either party, and may be raised at any time, either on motion, or sua sponte by the court. Caterpillar Inc. v. Lewis , 519 U.S. 61, 69 (1996). *fn5

In removing the instant action to this court, Atwood asserts Plaintiff's allegations comprise a maritime claim within this court's admiralty jurisdiction under 28 U.S.C. § 1333, pursuant to which "federal jurisdiction exists in '[a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled .'" Voytovich v. 1111 Fuhrman Boulevard, Inc. , 2003 WL 21919461, at * 1 (W.D.N.Y. July 25, 2003) (italics added and quoting 28 U.S.C. § 1333(1)). The "saving to suitors" clause thus "permits plaintiffs to seek common law remedies to which they may be entitled; plaintiffs are thus entitled to proceed in state court." Id . (citing Lewis v. Lewis & Clark Marine, Inc. , 531 U.S. 438, 443-54 (2001)). *fn6 A plaintiff injured in a maritime accident thus may elect to bring a state common law claim in state court, or a maritime claim in federal court pursuant to admiralty jurisdiction. J. Aron & Company v. Chown , 894 F.Supp. 697, 698 (S.D.N.Y. 1995) ("'plaintiffs with a common law claim arising from a transaction over which a federal court would have admiralty jurisdiction may either avail themselves of federal admiralty jurisdiction or sue at law in state court.'" (quoting McAllister Brothers, Inc. v. Ocean Marine Indemnity Co. , 742 F.Supp. 70, 75 (S.D.N.Y. 1989))). Further, the Second ...

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