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Watts v. Underwriters at Lloyd's, London

United States District Court, M.D. Louisiana

April 16, 2018

MARCUS WATTS
v.
UNDERWRITERS AT LLOYD'S LONDON

          NOTICE AND ORDER

          ERIN WILDER-DOOMES UNITED STATES MAGISTRATE JUDGE.

         On October 31, 2017, plaintiff, Marcus Watts (“Plaintiff”), filed a Complaint against defendant, Underwriters at Lloyd's, London (“Lloyd's” or “Defendant”), for damages allegedly arising from Defendant's breach of an insurance contract.[1] Plaintiff contends that Lloyd's issued a private flood insurance policy and that following long-duration flooding that caused damage to Plaintiff's insured property, Defendant failed to adequately compensate Plaintiff for covered losses.

         Plaintiff asserts that this court has federal subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332.[2] Plaintiff alleges that he is “domiciled” in Louisiana. This is a sufficient allegation with respect to Plaintiff's citizenship.[3] However, with respect to Defendant, Plaintiff alleges that Lloyd's “is a foreign insurance company.”[4] As explained herein, this is not an adequate allegation of Lloyd's citizenship, and also raises issues with respect to whether the amount in controversy requirement of 28 U.S.C. § 1332 can be met in this case.

         “Lloyd's ‘presents a unique structure for jurisdictional analysis.'”[5] As explained by the Fifth Circuit:

Lloyds of London is not an insurance company but rather a self-regulating entity which operates and controls an insurance market. The Lloyd's entity provides a market for the buying and selling of insurance risk among its members who collectively make up Lloyd's. Thus, a policyholder insures at Lloyd's but not with Lloyd's.
The members or investors who collectively make up Lloyd's are called “Names” and they are the individuals and corporations who finance the insurance market and ultimately insure risks. Names are underwriters of Lloyd's insurance and they invest in a percentage of the policy risk in the hope of making return on their investment. Lloyd's requires Names to pay a membership fee, keep certain deposits at Lloyd's, and possess a certain degree of financial wealth. Each Name is exposed to unlimited personal liability for his proportionate share of the loss on a particular policy that the Name has subscribed to as an underwriter. Typically hundreds of Names will subscribe to a single policy, and the liability among the Names is several, not joint.

Corfield v. Dallas Glan Hills, LP, 355 F.3d 853, 857-858 (5th Cir. 2003) (internal quotations and citations omitted).

         Based on this unique structure, courts in this Circuit have “found that when determining the diversity of citizenship of the parties in a case involving Lloyd's, the citizenship of all of the Names subscribing to the policy must be taken into consideration.”[6] Additionally, “the amount in controversy must be established as to each Name subscribing to the policy.”[7]

         Accordingly, IT IS HEREBY ORDERED that Plaintiff shall file a Motion to Substitute the Complaint with a proposed comprehensive Amended Complaint that adequately: (1) identifies and alleges the citizenship of the appropriate defendant(s); and (2) sets out the amount in controversy. Plaintiff shall have twenty-one (21) days from the date of this Notice and Order to file the Motion to Substitute. No further leave of court is necessary to timely file the Motion to Substitute.

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Notes:

[1] R. Doc. 1.

[2] Although Plaintiff explicitly alleges that the amount in controversy exceeds $75, 000, R. Doc. 1, ¶ 1, as described herein, the naming of Lloyd's as the defendant raises particular issues regarding the amount in controversy.

[3] R. Doc. 1, ¶ 5. See, Mas v. Perry, 489 F.2d 1396, 1399 (5th Cir. 1974) (“For diversity purposes, citizenship means domicile, mere residence in the State ...


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