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Michael J. Carlson, Sr., Individually and As Administrator of the v. American International Group

April 10, 2012

MICHAEL J. CARLSON, SR., INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF CLAUDIA D'AGOSTINO CARLSON AND AS ASSIGNEE OF WILLIAM PORTER, PLAINTIFF,
v.
AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., AMERICAN ALTERNATIVE INSURANCE CO., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, AND DHL EXPRESS (USA) INC. F/K/A DHL WORLDWIDE EXPRESS, INC., DEFENDANTS.



The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge

DECISION AND ORDER

This is an auto accident insurance coverage dispute. It follows an earlier state court wrongful death and personal injury verdict against defendant DHL Express (USA) Inc. ("DHL") and others that was overturned on appeal as against defendant DHL. The case arises from attempts by the plaintiff, Michael J. Carlson, Sr., Individually and as Administrator of the Estate of Claudia D'Agostino Carlson, and as Assignee of William Porter, to recover under two insurance policies issued to DHL on the theory that other persons who are liable for the accident were covered under the insurance policies issued to DHL even though they were not named in the insurance policies and even though the verdict against DHL was overturned on appeal.

The case was removed from state court pursuant to 28 U.S.C. § 1441(a) by the defendants, American International Group, Inc., AIG Domestic Claims, Inc., American Alternative Insurance Co., National Union Fire Insurance Company of Pittsburgh, PA, and DHL, based upon alleged federal-question jurisdiction under 28 U.S.C. § 1331. It is now before the Court on a motion filed by plaintiff Carlson to remand it to state court pursuant to 28 U.S.C. § 1447(c).

For the reasons that are stated below, plaintiff Carlson's motion to remand the case is granted. The Court lacks subject matter jurisdiction because the case is not within the narrow category of cases in which a state-law claim arises under federal law.

BACKGROUND

On July 7, 2004, Claudia D'Agostino Carlson suffered severe injuries in an automobile accident. The accident took place on Niagara Falls Boulevard in the town of Wheatfield, New York. Ms. D'Agostino Carlson's vehicle was hit, head on, by a commercial delivery van being driven by William Porter as Mr. Porter was trying to avoid colliding with another vehicle.

Ms. D'Agostino Carlson passed away on July 20, 2004 as a result of her injuries. She is survived by her husband, Michael J. Carlson, Sr., the plaintiff in this action, and by their three children.

The delivery van that collided with Ms. D'Agostino Carlson's vehicle was owned by MVP Delivery and Logistics, Inc. ("MVP"). It was carrying property for DHL pursuant to a written cartage contract between MVP and DHL. The driver of the delivery van, Mr. Porter, was an employee of MVP, but Mr. Porter was on a personal errand at the time of the accident.

A wrongful death and personal injury trial in state court resulted in a jury verdict in favor of Ms. D'Agostino Carlson's estate and plaintiff Carlson individually against MVP, DHL, Mr. Porter, and others, and judgment was entered on March 13, 2007. On appeal, the verdict against DHL was set aside on the ground that DHL was not liable for the accident based upon a theory of respondeat superior due to the negligence of the driver of the delivery van, Mr. Porter,because Mr. Porter was not acting within the scope of his employment with MVP at the time of the accident. Carlson v. Porter, 53 A.D.2d 1129 (4th Dep't 2008). A final judgment of $7.3 million was entered against Mr. Porter, MVP*fn1 , and other defendants who are not named here, on May 12, 2009.

Although the jury verdict against DHL was set aside on appeal, this case was filed by plaintiff Carlson on January 25, 2011, in New York State Supreme Court, County of Niagara, to obtain proceeds of two DHL insurance policies, one issued by defendant American Alternative Insurance Co., the other by defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), to satisfy the $7.3 million judgment against Mr. Porter, MVP, and others. The plaintiff alleges a breach of contract and seeks direct recovery on the DHL insurance policies pursuant to New York Insurance Law § 3420, even though DHL was found on appeal not to be liable for the accident, on the ground that Mr. Porter and MVP, who are liable, qualified as "insured" persons covered pursuant to the terms of the DHL insurance policies, the written cartage contract between MVP and DHL, and the course of dealing between MVP and DHL. The plaintiff is also seeking damages resulting from alleged tortious conduct by DHL and the defendants, including the defendants American International Group, Inc. and AIG Domestic Claims, Inc., which are affiliates of National Union, partly for the defendants' refusals to pay the plaintiff as a judgment creditor and as the assignee of Mr. Porter's rights as an insured person.

The defendants filed motions to dismiss plaintiff Carlson's complaint in state court. Based upon arguments of the plaintiff in response to the defendants' motions to dismiss, on October 19, 2011, the case was removed to this Court by defendant American Alternative Insurance Co. ("AAIC") pursuant to 28 U.S.C. § 1441(a) based upon federal-question jurisdiction. On November 15, 2011, the plaintiff moved to remand the case to state court pursuant to 28 U.S.C. § 1447(c) based upon alleged procedural defects in the removal and a lack of federal subject matter jurisdiction*fn2

DISCUSSION

Defendant AAIC's Notice of Removal acknowledges that plaintiff Carlson's complaint asserting the state-law breach of contract and direct recovery claim did not raise any issue of federal law and AAIC maintains that no substantial federal question was reasonably ascertainable from the complaint alone. AAIC alleges that the plaintiff later asserted a federal question when opposing the defendants' motions to dismiss the complaint because the plaintiff relied upon an endorsement in the AAIC-DHL policy required by the federal Motor Carrier Act of 1980 that provides for mandatory-minimum personal injury liability insurance coverage for the public. See 49 U.S.C. § 31139.

Plaintiff Carlson moved to remand the case to state court on the ground that the removal by the insurance company AAIC did not timely occur within 30 days of AAIC's receipt of the complaint in February of 2011, and on the alternative ground that DHL did not timely file unambiguous proof of consent to the removal in October of 2011. The plaintiff also disputes that there is a federal question and argues that the federal law requiring a commercial motor carrier to have mandatory-minimum personal injury liability insurance coverage poses neither a necessary nor a sufficiently substantial question of law for federal-question jurisdiction to lie pursuant to 28 U.S.C. § 1331.

Because Fed. R. Civ. P. 12(h)(3) and 28 U.S.C. ยง 1447(c) require the Court to dismiss any case found to be lacking subject matter jurisdiction, the Court's analysis begins with its subject ...


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