Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-7_19-cv-01839/USCOURTS-alnd-7_19-cv-01839-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

CAHABA VALLEY HEALTH 

SERVICES, INC.,

Plaintiff,

v.

TRUCK INSURANCE EXCHANGE, et 

al.,

Defendants.

}

}

}

}

}

}

}

}

}

Case No.: 7:19-cv-01839-RDP

MEMORANDUM OPINION

This case is before the court on Defendant Truck Insurance Exchange’s (“Truck”) Motion 

for Dismiss for Lack of Subject Matter Jurisdiction. (Doc. # 6), filed December 5, 2019. On 

December 20, 2019, Defendants Jackson Business (“Jackson”) and Shezad Keshwani

(“Keshwani”) filed a response brief. (Doc. # 14).

1 Plaintiff Cahaba Valley Health Services, Inc., 

has not responded. After careful consideration, and for the reasons discussed below, Defendant 

Truck’s Motion to Dismiss (Doc. # 6) is due to be granted. 

Plaintiff’s Complaint states that “[t]he United States District Court has subject matter 

jurisdiction of this declaratory judgment [action] pursuant to 28 U.S.C. § 2201.” (Doc. # 1 at 1).

Although not explicitly stated, it appears that Plaintiff relies on § 2201, the Declaratory Judgment

Act, to confer federal question jurisdiction.2(Doc. # 6, Exh. A). This is improper.

1 Defendant Keshwani and Defendant Jackson filed a response to the Motion to Dismiss (Doc. # 6) in anticipation of 

being realigned as Plaintiffs. (Doc. # 14 at 1). 

2 The court bases this inference on Plaintiff’s assertion, on the civil cover sheet, that the basis of jurisdiction is federal 

question. 

FILED

 2020 Feb-28 AM 09:25

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 7:19-cv-01839-RDP Document 24 Filed 02/28/20 Page 1 of 4
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A federal court has subject matter jurisdiction over civil cases “arising under the 

Constitution, laws, or treaties of the United States,” and over civil cases in which the amount in 

controversy exceeds $75,000, exclusive of interest and costs, and in which diversity of citizenship 

exists between the parties. 28 U.S.C. §§ 1331, 1332. Section 2201 is a procedural statute that 

provides a judicial declaration of rights under the Declaratory Judgment Act. It is well-settled that 

the Declaratory Judgment Act does not, on its own, confer subject matter jurisdiction. See Skelly 

Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671–72 (1950) (holding that “the requirements 

of jurisdiction—the limited subject matters which alone Congress had authorized the District 

Courts to adjudicate—were not impliedly repealed or modified [by the Declaratory Judgment 

Act].”). Rather, a federal district court must have an independent basis for federal subject matter 

jurisdiction. 

Through the procedural vehicle § 2201, Plaintiff has requested relief based on Alabama 

state law. (Doc. # 1 at 5–6). Specifically, Alabama Code § 6-6-222 and § 27-23-2. (Id.). Because 

a federal question is not asserted on the face of Plaintiff’s complaint, there is not an independent 

basis for federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331. So, the court looks see 

if there is diversity jurisdiction in this case. 

Diversity jurisdiction is proper if (1) the amount in controversy exceeds $75,000, and (2) 

there is complete diversity of citizenship. 28 U.S.C. § 1332. In this case, the first prong is satisfied 

because Plaintiff seeks a declaratory judgment in the amount of $ 1,825,000. (Doc. # 1 at 5). But, 

the second prong is not satisfied because the parties are not completely diverse. 

Here, Plaintiff Cahaba, an Alabama citizen, has sued three defendants: (1) Jackson 

Business, an Alabama citizen; (2) Shezad Keshwani, an Alabama citizen; and (3) Truck Insurance 

Case 7:19-cv-01839-RDP Document 24 Filed 02/28/20 Page 2 of 4
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Exchange, a reciprocal insurance exchange.3 As an unincorporated association, a reciprocal

insurance exchange is considered to have the citizenship of its members for diversity purposes in 

federal court. Girgis v. Fire Ins. Exch., No. CV-12-J-222-NE, 2012 WL 13019064, at *2 (N.D. 

Ala. Mar. 19, 2012) (“Courts have long recognized that reciprocal exchange insurance

associations, like defendant, do not receive fictional citizenship as do corporations but, instead, 

bear the citizenship of each member.”); see Florida Hosp. Trust Fund. v. Comm’r, 71 F.3d 808, 

812 (11th Cir. 1996). In addition to its Motion to Dismiss, Truck submitted an affidavit from 

Margaret Giles, an Assistant Secretary at Truck Insurance Exchange, who is familiar with the 

organizational structure of Truck and has personal knowledge of its subscribers. (Doc. # 22). In 

the affidavit, Ms. Giles states that “Truck [] [] is a reciprocal or inter-insurance exchange. 

Ownership of Truck Insurance Exchange is vested entirely with its subscribers some of whom 

reside in the State of Alabama.” (Doc. # 22 at 4). Thus, Defendant Truck is a citizen of Alabama 

for purposes of diversity jurisdiction. And, as such, complete diversity is not present in this case. 

Of course, this current alignment of the parties is not the only possible party alignment in 

this case. Under established Eleventh Circuit precedent, the court may re-align the insureds 

(Jackson and Keshwani) as “plaintiffs” alongside the judgment plaintiff (Cahaba), because of their 

common interest in the disposition of insurance proceeds. (Doc. # 14, at 1 n.1); City of Vestavia 

Hills v. General Fidelity Ins. Co., 676 F.3d 1310 (11th Cir. 2012). But, even if the parties were 

realigned, there still would not be complete diversity. In fact, even if realignment were to occur, 

3 Alabama law recognizes a reciprocal exchange as authorized to transact the business of insurance in the state of 

Alabama. ALA. CODE. § 27-13-20(6) (defining insurer as “Any person or persons, corporation, association, 

partnership, reciprocal exchange, or company authorized by the laws of this state to transact the business of insurance 

in this state.”). The Eleventh Circuit has defined reciprocal insurance as “the system whereby individuals, partnerships, 

or corporations engaged in similar lines of business undertake to indemnify each other against certain kinds of losses 

through the mutual exchange of insurance contracts, with each member acting as both an insurer and an insured . . . .” 

Home Warranty Corp. v. Caldwell, 777 F.2d 1455, 1467 (11th Cir. 1985) (citing 2 COUCH ON INSURANCE 2d (Rev. 

ed.) § 18.12). 

Case 7:19-cv-01839-RDP Document 24 Filed 02/28/20 Page 3 of 4
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citizens of Alabama remain on both sides of this case. Therefore, there is no conceivable way to 

arrange the parties in this case to achieve complete diversity. Thus, it follows that diversity 

jurisdiction does not exist here.

Because this court does not have subject-matter jurisdiction over this case, Defendant 

Truck’s Motion to Dismiss (Doc. # 6) is due to be granted and this case is due to be dismissed 

without prejudice. 

DONE and ORDERED this February 28, 2020.

_________________________________

R. DAVID PROCTOR

UNITED STATES DISTRICT JUDGE

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