Bourg v. Southern Fidelity Insurance Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

JACOB BOURG, ET AL. CIVIL ACTION

VERSUS NO. 22-191

SOUTHERN FIDELITY INSURANCE SECTION “R” (4)

COMPANY, ET AL.

ORDER AND REASONS

This is a property insurance dispute arising from damage caused by

Hurricane Ida in August 2021.1 Plaintiffs brought this action against

Southern Fidelity Insurance Company (“Southern Fidelity”) in the Thirty-

Second Judicial District Court for the Parish of Terrebonne.2 Defendant

removed the matter on January 28, 2022, on the basis of diversity

jurisdiction.3 The Court stayed plaintiffs’ claims when Southern Fidelity was

declared insolvent and placed into liquidation by the Second Judicial Circuit

Court in Leon County, Florida.4 On January 9, 2023, plaintiffs filed an

amended complaint adding the Louisiana Insurance Guaranty Association

(“LIGA”) as a defendant in this case.5

1 R. Doc. 1.

2 R. Doc. 1-2.

3 R. Doc. 1.

4 R. Docs. 9 & 10.

5 R. Doc. 14.

Under 28 U.S.C. § 1332(a), federal district courts have original

jurisdiction over civil actions between citizens of different states when the

amount in controversy exceeds $75,000, exclusive of interests and costs. 28

U.S.C. § 1332(a). For diversity jurisdiction to exist, there must be complete

diversity between the parties. McLaughlin v. Miss. Power Co., 376 F.3d 344,

353 (5th Cir. 2004). Having a plaintiff and a defendant who are citizens of

the same state ordinarily destroys complete diversity. Id. (quoting Harrison

v. Prather, 404 F.2d 267, 272 (5th Cir. 1968)). “Citizenship for an individual

is synonymous with the person’s domicile; for a corporation, it is that of the

state in which it is incorporated and the state where it has its principal place

of business.” English v. Aramark Corp., 858 F. App’x 115, 116 (5th Cir. 2021)

(citing Mullins v. TestAmerica, Inc., 564 F.3d 386, 397 n.6 (5th Cir. 2009)).

For purposes diversity jurisdiction, the citizenship of the parties is to

be determined with reference to the facts as they existed at the time of

removal. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830

(1989); Tex. Beef Grp. v. Winfrey, 201 F.3d 680, 686 (5th Cir. 2000)

(citation omitted). Once jurisdiction is properly established, subsequent

events will generally not divest the court of jurisdiction. Freeport-

McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991). Nevertheless,

“[i]f at any time before final judgment it appears that the district court lacks

subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c);

see also Hager v. Thomas, No. 18-cv-139, 2019 WL 13200643, at *1 (S.D.

Miss. Apr. 9, 2019) (“Federal courts are duty-bound to examine their own

jurisdiction and not proceed where it is apparent that jurisdiction does not

exist.” (citation omitted)).

The addition of a nondiverse party is one event that defeats

jurisdiction. Hensgens v. Deere & Co., 833 F.2d 1179, 1181 (5th Cir. 1987)

(citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978)). As

explained by the Supreme Court, “when a plaintiff files a complaint in federal

court and then voluntarily amends the complaint, courts look to the

amended complaint to determine jurisdiction.” Rockwell Int’l Corp. v.

United States, 549 U.S. 457, 473-74 (2007). When a plaintiff’s amendment

after removal would destroy subject matter jurisdiction, 28 U.S.C. § 1447(e)

applies. Section 1447(e) provides that, “[i]f after removal the plaintiff seeks

to join additional defendants whose joinder would destroy subject matter

jurisdiction, the court may . . . permit joinder and remand the action to the

State court.” 28 U.S.C. § 1447(e); see also Cobb v. Delta Exps., Inc., 186 F.3d

675, 677 (5th Cir. 1999) (“[P]ost-removal joinder of non-diverse defendants

pursuant to Fed. R. Civ. P. 19 destroys diversity for jurisdictional purposes

and requires remand, even when the newly joined defendants are not

indispensable.”).

Here, plaintiffs’ amended complaint vitiates the Court’s subject matter

jurisdiction under 28 U.S.C. § 1332, because the addition of LIGA destroys

complete diversity. Plaintiffs are citizens of Louisiana.6 LIGA is an

unincorporated association of Louisiana insurers and “has the citizenship for

diversity purposes of each of its constituent member insurers.” Temple

Drilling Co. v. La. Ins. Guar. Ass’n, 946 F.2d 390, 394 (5th Cir. 1991). While

plaintiffs do not specifically allege the citizenship of LIGA’s constituent

members, courts have remanded similar cases because LIGA has constituent

member insurers domiciled in Louisiana. See, e.g., Brunet v. S. Fid. Ins. Co.,

No. 21-2308, 2023 WL 4541114, at *4 (E.D. La. July 14, 2023) (Vitter, J.);

Williams v. S. Fid. Ins. Co., No. 22-815, 2023 WL 3224751, at *1 (E.D. La.

May 3, 2023) (Morgan, J.); 14th St. Props., LLC v. S. Fid. Ins. Co., No. 22-

1593, 2023 WL 416317, at *1 (E.D. La. Jan. 26, 2023) (Brown, C.J.); Soza v.

S. Fid. Ins. Co., No. 22-985, 2023 WL 315948, at *1 n.3 (E.D. La. Jan. 19,

2023) (Ashe, J.).

6 R. Doc. 1-2 at 3.

Because complete diversity no longer exists between the parties,

plaintiffs’ claims must be remanded for lack of subject matter jurisdiction,

28 U.S.C. § 1447(e).

I. CONCLUSION

For the foregoing reasons, plaintiffs’ claims are REMANDED to the

Thirty-Second Judicial District Court for the Parish of Terrebonne.

New Orleans, Louisiana, this 27th day of September, 2023.

SARAH S. VANCE

UNITED STATES DISTRICT JUDGE