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Cincinnati Insurance Co. v. Excelsior Insurance Co.

United States District Court, N.D. New York

January 6, 2015



LAWRENCE E. KHAN, District Judge.


Plaintiffs Cincinnati Insurance Company ("Cincinnati") and Charles A. Gaetano Construction Company ("Gaetano") (collectively, "Plaintiffs") commenced this insurance liability coverage action against Defendants Excelsior Insurance Company ("Excelsior") and Peerless Insurance Company ("Peerless") (together, the "Insurer Defendants"); Boscar Electric Co., Inc. ("Boscar"); American Alloy Steel, Inc. ("American Alloy"); and Joshua P. Shannon and Shannon L. Shannon (together, the "Shannons") in New York Supreme Court, County of Oneida. Dkt. No. 1-1 ("Complaint"). The Insurer Defendants removed this action to the Northern District. Dkt. No. 1 ("Notice of Removal"). Presently before the Court are Motions to remand by Plaintiffs and American Alloy. Dkt. Nos. 11 ("Plaintiffs' Motion"); 18 ("AA Motion").[1] For the following reasons, this action is remanded.


American Alloy entered into a contract with Gaetano (the "Work Agreement") to perform work at American Alloy's premises. Pls.' Mem. at 2. Gaetano then entered into a sub-contract with Boscar (the "Sub-Contract Agreement"), which required Boscar to indemnify and hold harmless Gaetano and American Alloy for any bodily injury claims arising from the underlying work. Id . The Sub-Contract Agreement also required Boscar to obtain liability insurance coverage naming Gaetano and American Alloy as insureds. Id . Boscar secured such policies from the Insurer Defendants. Id.

Mr. Shannon performed work for Boscar and alleges that he sustained injuries while working on American Alloy's premises. Id . The Shannons brought an action against American Alloy in New York State Supreme Court, Oneida County, for Mr. Shannon's personal injuries. Id . American Alloy tendered its defense to Cincinnati, Gaetano's insurer, pursuant to the Work Agreement. Id. at 3. American Alloy also brought a third-party complaint against Gaetano and Boscar in Supreme Court seeking a defense and indemnification. See id.

Plaintiffs then commenced this action seeking declarations that the Insurer Defendants are required to defend and indemnify Gaetano and American Alloy in their respective state actions. Id . The Insurer Defendants removed this case and did not seek consent from Boscar, American Alloy, or the Shannons on the grounds that they were nominal defendants, and their consent was therefore not required. Not. Removal at 10-11. Plaintiffs subsequently filed the Motion to remand, arguing that the Court lacks subject matter jurisdiction due to a lack of diversity among the parties. See Pls.' Mem. at 4. It is undisputed that both Gaetano and Boscar are citizens of New York. See id. at 2; Defs.' Mem. at 5.


A. Removal

"Generally, a defendant in an action pending in state court may remove that case to federal court only if it could have originally been commenced in federal court on either the basis of federal question jurisdiction or diversity jurisdiction." Citibank, N.A. v. Swiatkoski, 395 F.Supp.2d 5, 8 (E.D.N.Y. 2005) (citing 28 U.S.C. § 1441(a)). The Second Circuit has clearly explained that "[i]n light of the congressional intent to restrict federal court jurisdiction, as well as the importance of preserving the independence of state governments, federal courts construe the removal statute narrowly, resolving any doubts against removability." Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 274 (2d Cir. 1994) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941)). At all times, the party seeking removal bears the burden of proving that the jurisdictional and procedural requirements have been met. Burr v. Toyota Motor Credit Co., 478 F.Supp.2d 432, 436 (S.D.N.Y. 2006) (citing Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 296 (2d Cir. 2000)).

B. Diversity Jurisdiction

Here, the only asserted basis for subject-matter jurisdiction is diversity jurisdiction. See Not. Removal ¶ 5. Diversity jurisdiction requires "complete" diversity among the parties-that is, no adverse parties may be citizens of the same state. See Herrick Co. v. SCS Commc'ns, Inc., 251 F.3d 315, 322 (2d Cir. 2000) (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)); St. Paul Fire & Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80 (2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state as any defendant." (citing Owen Equipment, 437 U.S. at 373-74)). For purposes of diversity jurisdiction, a corporation is a citizen of any state in which it is incorporated, as well as the state where it maintains its principal place of business. 28 U.S.C. § 1332(c)(1); Lincoln Prop. Co. v. Roche, 546 U.S. 81, 94 (2005).[3]


Plaintiffs argue that this action should be remanded because: (1) both Gaetano and Boscar are New York citizens, and therefore diversity jurisdiction is lacking; (2) the Insurer Defendants have failed to demonstrate a reasonable probability that the amount in controversy exceeds $75, 000; and (3) removal was procedurally defective due to the Insurer Defendants' failure to obtain consent from American Alloy and Boscar. See Pls.' Mem. at 4. The Insurer Defendants argue that removal was proper because Boscar and American Alloy are nominal defendants and were fraudulently joined; thus, ...

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