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Saylab v. Harford Mutual Insuance Co.

May 15, 2003


The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge


On August 2, 1998, Oscar Flores drove his car head-on into a vehicle in which the Saylab family was riding, causing the deaths of Salma and Sarvanna Saylab and injuries to Ahmad and Malika Saylab. Mr. Flores was intoxicated at the time of the incident. The Saylab family sued the El Tipico restaurant and its owner, Alicia DeLeon, and the Don Juan restaurant and its owners, Rosa Ruiz and Luis Alberto Ferrufino, in the Superior Court of the District of Columbia. These defendants are allegedly responsible to the Saylabs for continuing to serve alcoholic beverages to an intoxicated customer and allowing him to drive his car in an intoxicated state.

On January 31, 2002, the Saylab family filed the instant complaint against The Harford Mutual Insurance Company ("Harford"), Associated Insurance Management, Inc. ("Associated"), Judith Meyers, the Don Juan restaurant, and that restaurant's two owners. Essentially, this lawsuit seeks a judicial declaration that Harford, Associated, and/or Ms. Meyers (collectively, "Insurance Defendants") owe a duty to indemnify, and a duty to defend, Don Juan and its owners for any liabilities that may be found against them. The Insurance Defendants removed the case from Superior Court. Pending before this Court are a motion to remand filed by the Saylab family and motions to dismiss filed by Harford and Associated/Ms. Meyers.

There is an underlying tragedy here of which this fight over insurance coverage is blocking the resolution. There has been no determination on liability because the Superior Court stayed the original suits against the restaurants until the question of insurance coverage was determined. Unfortunately, a ruling on the pending motions will not answer that question.


The litigation began when the Saylab family instituted four separate lawsuits against the El Tipico restaurant and its owner (collectively, "El Tipico") on August 1, 2000, claiming liability for the family's losses and injuries. The lawsuits were consolidated into a single action. Thereafter, the complaint was amended on July 25, 2001, to add the Don Juan restaurant and its owners (collectively, "Don Juan"). In September 2001, those cases were stayed pending resolution of the insurance issues.

It appears from the record that Don Juan may not have the resources to defend itself. Thus, the Saylab family has taken on the task of attempting to require one or all of the Insurance Defendants to indemnify and defend Don Juan – both for purposes of proving liability and to obtain an eventual remedy. After Harford denied insurance coverage, the Saylab family instituted a lawsuit in Superior Court against Harford, Associated, Ms. Meyers, and Don Juan. Judge Duncan-Peters consolidated the lawsuit against the Insurance Defendants and Don Juan with the pending cases against the restaurants on March 6, 2003. See Pls. Opp. to Def. Harford's Mot. to Dismiss Ex. 3. The Insurance Defendants filed a notice of removal to federal court on March 11, 2003. Only the January 31, 2002, complaint filed against the Insurance Defendants and Don Juan is before this Court.

As to Harford, the lawsuit is styled as a declaratory judgment action brought by the alleged beneficiary of the insurance policy prior to a determination of the insured's liability. It contends that Harford has improperly denied insurance coverage to Don Juan as required by law. Alternatively, it seeks to have certain exclusions declared void as against public policy.

The theories of the complaint are more complex as to the other defendants. Ms. Meyers is an insurance agent who works for Associated, an insurance agency. They procured the Harford insurance policy on behalf of Don Juan. The Saylab family is suing Associated and Ms. Meyers together, alleging that they failed to obtain adequate insurance coverage, failed to notify the insured that the policy did not have the coverages allegedly requested, and otherwise deceived the insured as to the nature and scope of the policy actually obtained.

The complaint also names Don Juan (and its owners), alleging a failure to supervise, failure to train, and negligence. No remedy is sought from these particular defendants by way of this complaint. On March 22, 2003, Don Juan attempted to file an answer and cross-claim in Superior Court, adopting the complaint allegations against the Insurance Defendants. Because the case had already been removed, that court refused to accept the pleading. It is not docketed in this Court, although it is attached to the parties' briefs and referenced liberally.

II. Legal Standards

The Insurance Defendants separately move to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Dismissal under Rule 12(b)(6) is appropriate only when "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "'[T]he complaint must set forth sufficient information to suggest that there exists some recognized legal theory upon which relief can be granted. A court must dismiss a complaint where, even assuming all the factual allegations are true, the plaintiff has failed to establish a right to relief based on those facts.'" Caudle v. Thomason, 942 F. Supp. 635, 638 (D.D.C. 1996) (quoting Gregg v. Barrett, 771 F.2d 539, 547 (D.C. Cir. 1985) (internal citations and punctuation omitted)).

The Saylab family moves to remand this case to the Superior Court, arguing that this Court lacks subject matter jurisdiction and diversity jurisdiction under 28 U.S.C. § 1332(a), as well as removal jurisdiction under 28 U.S.C. § 1441(b), because not all of the defendants joined in the notice of removal. Although a federal district court is a court of limited jurisdiction, it enjoys diversity jurisdiction to hear disputes between citizens of different states when the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a). Complete diversity of citizenship must exist between opposing parties. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). In determining citizenship for purposes of removal, the citizenship of purely nominal or formal parties may be disregarded.*fn1 See 14B WRIGHT, MILLER & COOPER, FEDERALPRACTICE ANDPROCEDURE § 3723 (3d ed. 1998); Abels v. State Farm Fire & Casualty Co., 770 F.2d 26, 29 (3rd Cir. 1985). On a motion to remand, the defendants bear the burden of establishing diversity of citizenship and removal status is strictly construed. See Johnson-Brown v. 2200 M St. LLC, No. 02-1756, 2003 U.S. Dist. LEXIS 5947, at *5 (D.D.C. Apr. 8, 2003).


A. Motion to Remand

The Saylabs present three arguments in support of their motion to remand to Superior Court: (i) diversity jurisdiction does not exist; (ii) 28 U.S.C. ยง 1441(c) bars the Court from asserting jurisdiction; and (iii) all defendants did not consent to removal. They also seek to require the Insurance ...

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