Patricia Burns v. AmTrust International Underwriters Limited

Case 2:22-cv-03007-MWF-MAR Document 25 Filed 07/12/22 Page 1 of 7 Page ID #:228

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge

Deputy Clerk: Court Reporter:

Rita Sanchez Not Reported

Attorneys Present for Plaintiff: Attorneys Present for Defendants:

None Present None Present

Proceedings (In Chambers): ORDER DENYING PLAINTIFF’S MOTION

TO REMAND CASE [14]

Before the Court is Plaintiff Patricia Burns’s, as trustee of the Michael and

Patricia Burns Living Trust, Motion to Remand Case (the “Motion”), filed on June 3,

2022. (Docket No. 14). Defendant AmTrust International Underwriters Limited, now

known as Amtrust International Underwriters DAC (“AIUD”), filed an Opposition on

June 20, 2022. (Docket No. 17). Plaintiff filed a Reply on June 24, 2022. (Docket

No. 22).

The Court has read and considered the Motion and held a hearing on July 11,

2022.

For the reasons below, the Motion is DENIED. Defendant has established

diversity jurisdiction by a preponderance of the evidence.

I. BACKGROUND

Plaintiff Burns, through the Burns Trust, was the owner of an eleven-unit

apartment building in Monrovia, California. (Complaint ¶ 7). In late 2016, Plaintiff

discovered that the building required a roof repair, so it hired non-party Ameri Tech

Construction, Inc. to complete the repair work. (Id. ¶¶ 8, 18–20). The repair, however,

was disrupted by a weather incident that caused substantial damage to the property.

(Id. ¶ 21–23). To recoup the damages, Plaintiff ultimately sued Ameri Tech in state

court and obtained a default judgment in the amount of $1,123,197.86 (the “Ameri

Tech Judgment”). (Id. ¶ 27).

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

Defendant AIUD is an insurance company that insured Ameri Tech at the time

of the incident. (Id. ¶ 6). Plaintiff brings this action against AIUD to recover the

Ameri Tech Judgment under the terms of Ameri Tech’s insurance policy.

This action was originally filed in Los Angeles Superior Court but AIUD

removed it to this Court based on diversity jurisdiction. (Notice of Removal (Docket

No. 1)). The Notice of Removal asserts that the parties are diverse because Plaintiff is

a citizen of California and AIUD is an Irish corporation with its principal place of

business in Ireland. (Id. at 2). The Notice of Removal also claims that the $75,000

amount in controversy requirement is met, as Plaintiff is seeking to enforce the Ameri

Tech Judgment of $1,123,197.86. (Id.).

Plaintiff’s Motion seeks to remand this action back to superior court on ground

that AIUD has not sufficiently established that the parties are completely diverse from

each other.

II. LEGAL STANDARD

“On a plaintiff’s motion to remand, it is a defendant’s burden to establish

jurisdiction by a preponderance of the evidence.” Taylor v. United Road Services, No.

CV 18-330-LJO-JLT, 2018 WL 2412326, at *2 (E.D. Cal. May 29, 2018) (citing Dart

Cherokee Basin Operating Co. v. Owens, 547 U.S. 81, 86-87 (2014); Rodriguez v.

AT&T Mobility Servs., LLC, 728 F.3d 975, 978 (9th Cir. 2013)). The non-moving

party bears the burden of identifying “a legitimate source of the court’s jurisdiction”

and “[d]isputed questions of fact and ambiguities in the controlling law must be

resolved in favor of the remanding party.” Pac. Mar. Ass’n v. Mead, 246 F. Supp.2d

1087, 1089 (N.D. Cal. 2003) (citation omitted). Removability is determined based on

the removal notice and the complaint as it existed at the time of removal. See Miller v.

Grgurich, 763 F.2d 372, 373 (9th Cir. 1985).

To remove a case from state court to federal court, the defendant must file a

notice of removal in federal court that “contain[s] a short and plain statement of the

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

grounds for removal.” 28 U.S.C. § 1446(a). “If a defendant's assertion of diversity is

challenged, ‘both sides submit proof and the court decides, by a preponderance of the

evidence, whether [subject matter jurisdiction] has been satisfied.’” Hammond v.

Sutherland Glob. Servs., Inc., No. 221CV02999ODWAFMX, 2021 WL 2982909, at *2

(C.D. Cal. July 15, 2021) (quoting Dart Cherokee Basin Operating Co., LLC v. Owens,

574 U.S. 81, 88 (2014)). “Indeed, courts in the Ninth Circuit regularly find this

practice – i.e., supplementing allegations in the notice of removal with evidence

demonstrating the parties' citizenship – permissible.” Dejong v. Prod. Assocs., Inc.,

No. CV 14-02357 MMM DTBX, 2015 WL 1285282, at *3 (C.D. Cal. Mar. 19, 2015)

(citation omitted).

III. DISCUSSION

Defendant AIUD removed this action on the basis of diversity jurisdiction,

alleging that the parties are completely diverse and that the amount in controversy

requirement is satisfied. See id., at *2 (“In any case where subject matter jurisdiction

is premised on diversity, there must be complete diversity, i.e., all plaintiffs must have

citizenship different than all defendants.”) (citations omitted).

As relevant here, “a corporation shall be deemed to be a citizen of every State ...

by which it has been incorporated and of the State ... where it has its principal place of

business.” 3123 SMB LLC v. Horn, 880 F.3d 461, 462–63 (9th Cir. 2018) (quoting 28

U.S.C. § 1332(c)(1)). “[T]he Supreme Court has defined ‘principal place of business’

to mean ‘the place where the corporation's high level officers direct, control, and

coordinate the corporation's activities.’” Id. at 463 (quoting Hertz Corp. v. Friend, 559

U.S. 77, 80 (2010)). A corporation’s principal place of business – also known as the

“nerve center” – is typically found at a corporation’s headquarters. (Id.).

AIUD’s Notice of Removal asserts the following:

Plaintiff is, and at all relevant times was, an individual residing in Los

Angeles County who is a citizen of California. [AIUD] is, and at all

relevant times was, an Irish corporation with its principal place of

business in Ireland, and is duly authorized to and engaging in the business

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

of issuing policies in the State of California as a surplus lines insurance

company. Plaintiff seeks in excess of $1,123,197.86 from Defendant,

which represents the full amount of a default judgment entered against

[AIUD’s] named insured . . . which satisfies the $75,000 amount in

controversy requirement in 28 U.S.C. § 1332.

(Notice of Removal at 2).

Plaintiff does not dispute the alleged amount in controversy; rather, Plaintiff

argues that AIUD has not shown, by a preponderance of the evidence, that the parties

are diverse. Plaintiff argues that AIUD’s assertions concerning its citizenship are

insufficient because AIUD operates as a “syndicate,” not a corporation. Plaintiff

attaches an unauthenticated exhibit (“Exhibit A”) that she alleges is a screenshot from

AIUD’s website located at https://amtrustfinancial.com/about-us/history. (Motion;

Exhibit A; Reply at 2). Exhibit A states that, through an acquisition, “AmTrust”

entered the “Lloyd's of London Insurance Platform” in 2013. In her Motion, Plaintiff

helpfully quotes out-of-circuit authority to describe the function of the Lloyd’s

Platform:

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

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

Names will subscribe to a single policy, and the liability among the

Names is several, not joint.

Most Names or investors do not actively participate in the insurance

market on a day to day basis. Rather, the business of insuring risk at

Lloyd's is carried on by groups of Names called “Syndicates.” In order to

increase the efficiency of underwriting risks, a group of Names will, for a

given operating year, form a “Syndicate” which will in turn subscribe to

policies on behalf of all Names in the Syndicate. A typical Lloyd's policy

has multiple Syndicates which collectively are responsible for 100 percent

of the coverage provided by a policy. The Syndicates themselves have

been said to have no independent legal identity. Thus, a Syndicate is a

creature of administrative convenience through which individual investors

can subscribe to a Lloyd's policy. A Syndicate bears no liability for the

risk on a Lloyd's policy. Rather, all liability is born by the individual

Names who belong to the various Syndicates that have subscribed to a

policy.

Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 857–58 (5th Cir. 2003) (internal

citations omitted).

The citizenship of a syndicate (for diversity purposes) is determined by

considering the citizenship of every “Name,” similar to determining the citizenship of a

limited liability company, where citizenship is based upon the citizenship of each of its

members/partners. See TIG Ins. Co. v. Lloyd's Syndicate No. 1861, No. C06 0047 MJJ,

2006 WL 8460111, at *2 (N.D. Cal. Mar. 2, 2006) (“[M]any courts have reached the

same conclusion, namely, that a court must consider the citizenship of every Name in a

Lloyd's Syndicate for diversity purposes.”). According to Plaintiff, if AIUD entered

the Lloyd’s Insurance Platform, it must have been operating through a syndicate – so

AIUD must establish diversity by considering every “Name” involved.

In response, AIUD contends that it is a singular corporate insurer, not a

syndicate. And Ameri Tech’s underlying policy was purchased from AIUD, not

Lloyd’s. AIUD explains that Exhibit A is an inaccurate description of AIUD’s

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

operations because it is a screenshot of a website produced and controlled by AmTrust

Financial Services Inc. (“AFSI”), which is a non-party, multinational insurance holding

company. See Elias v. Am. Dental Partners of California, Inc., No. EDCV 11-1565

JST(Ex), 2011 WL 13225081, at *2 (C.D. Cal. Nov. 28, 2011) (“For the purposes of

diversity jurisdiction ‘in a suit involving a subsidiary corporation, the court looks to the

state of incorporation and principal place of business of the subsidiary, not its

parent.’”) (quoting Danjaq, S.A. v. Pathe Comm. Corp., 979 F.2d 772, 775 (9th Cir.

1992)).

AIUD correctly argues that the existence of a syndicate is not an issue here

because Plaintiff sued AIUD, a corporation – she did not sue AFSI or Lloyd’s. In each

case Plaintiff cites in support of her argument, Lloyd’s or a specific Lloyd’s syndicate

is a named party. Here, AIUD is the only named Defendant, so the Court will

determine its citizenship by determining its place of incorporation and its principal

place of business.

AIUD’s Opposition – supported by a sworn declaration from AIUD’s authorized

agent – explains that AIUD is incorporated and headquartered in Dublin, Ireland; its

employees are located in Dublin, Ireland; and it acts through its board of directors and

officers, who are citizens of Ireland, the United Kingdom, and New York. (Decl. of

James McKenna ¶¶ 3–4). Prior to the COVID-19 pandemic, all board meetings

occurred in Dublin, Ireland. (Id. ¶ 5). Critically, AIUD does not direct, control, or

coordinate any business affairs in California. (Id. ¶ 4).

Based on the foregoing, the Court concludes that Plaintiff is a citizen of the State

of California and AIUD is a citizen of Ireland because AIUD was incorporated in

Ireland and its principal place of business is Dublin, Ireland. See Hammond, 2021 WL

2982909, at *2 (“As the Ninth Circuit and other Central District courts have found, []

declaration evidence sufficiently supports [] allegations of citizenship.”) (collecting

cases); see also Bryndle v. Boulevard Towers, II, LLC, 132 F. Supp. 3d 486, 493

(W.D.N.Y. 2015) (accepting declaration declaring corporation’s citizenship from a

managing agent). Therefore, the parties are completely diverse and diversity

jurisdiction is proper.

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

Case No. CV 22-03007-MWF (MARx) Date: July 12, 2022

Title: Patricia Burns v. AmTrust International Underwriters Limited

The Motion is DENIED.

IT IS SO ORDERED.

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