Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_16-cv-00392/USCOURTS-alsd-1_16-cv-00392-0/pdf.json

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

---

1

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

NORTHERN DIVISION

SOUTHEAST CRANE INSPECTIONS, *

LLC; *

*

 Plaintiff, *

*

vs. * CIVIL ACTION NO.16-00392-KD-B

*

CHAUCER CORPORATE CAPITAL(NO.3) *

LIMITED, *

 *

 Defendant. *

Report and Recommendation

This matter, which was referred to the undersigned 

Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(B), is before 

the Court on Plaintiff’s Motion to Remand to State Court and 

Motion for Attorney Fees and Costs. (Docs. 5, 7). The motions 

have been fully briefed, and a hearing was conducted on August 

30, 2016, with counsel for all parties in attendance. Based 

upon representations of counsel at the hearing, and a review of 

the motion, and the supporting and opposing briefs and 

materials, the undersigned recommends that the motion to remand 

be granted, that the motion for fees be denied, and that this 

case be remanded to the Circuit Court of Hale County, Alabama.

I. Background

Plaintiff Southeast Crane Inspections, LLC (hereinafter 

“Plaintiff” or “SCI”) filed suit in the Circuit Court of Hale 

County, Alabama against Certain Underwriters at Lloyd’s of 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 1 of 10
2

London. (Doc. 1-1). In the complaint, SCI asserts that it 

secured an errors and omissions insurance policy with a 

$1,000,000 limit (policy No. LEO 000 3114) through Lloyd’s of 

London, and that Lloyd’s of London breached the insurance 

contract by failing to resolve an underlying wrongful death case

against it, thereby resulting in a substantial excess verdict 

being entered against SCI. (Id.)

Chaucer Corporate Capital (No.3) Limited removed this 

action to this Court. (Doc. 1). In its Limited Notice of 

Removal, Chaucer Corporate Capital (No.3) Limited (hereinafter 

“Chaucer”) asserts that “Certain Underwriters at Lloyd’s London” 

is not a legal entity, and that Chaucer is the proper Defendant 

because it is the lead underwriter on Plaintiff’s policy, and 

its share of the total risk on the policy is 38%, which exceeds 

the jurisdictional amount. According to Chaucer, complete 

diversity exists because Plaintiff SCI is a LLC whose sole 

member is a citizen of Mississippi, and Chaucer is organized 

under the laws of the United Kingdom with its principal place of 

business in London, England. Chaucer thus asserts that because 

“Certain Underwriters at Lloyd’s London” does not exist, it was 

not required to consent to the removal of tis action, and its 

citizenship may be disregarded.

As noted supra, SCI seeks to have this case remanded to 

state court. SCI argues that courts have repeatedly observed 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 2 of 10
3

that Certain Underwriters at Lloyd’s London is composed of 

separate syndicates that underwrite insurance in one marketplace 

known as Lloyd’s of London, that each syndicate is composed of 

members or “names” that fund the insurance policy, and that for 

diversity purposes, each member or name must be completely 

diverse from the opposing party. SCI further asserts that 

because Defendant did not allege the citizenship of every member 

subscribing to the insurance policy at issue, this case is due 

to be remanded. Plaintiff further asserts that Chaucer cannot 

substitute itself for Defendant Certain Underwriters at Lloyd’s 

London; thus, Chaucer lacks standing to remove this case.

II. Analysis

A. Standard of Review

A removing defendant has the burden of proving proper 

federal jurisdiction. See Adventure Outdoors, Inc. v. Bloomberg, 

552 F.3d 1290, 1294 (11th Cir. 2008); Friedman v. New York Life 

Ins. Co., 410 F.3d 1350, 1353 (11th Cir. 2005)(“In removal cases, 

the burden is on the party who sought removal to demonstrate 

that federal jurisdiction exists.”)(citation omitted). Because 

removal infringes upon state sovereignty and implicates central 

concepts of federalism, removal statutes must be construed 

narrowly, with all doubts resolved in favor of remand. See Univ. 

of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 

1999); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 3 of 10
4

1994). Furthermore, “once a federal court determines that is 

without subject matter jurisdiction, the court is powerless to 

continue.” Underwriters at Lloyd’s, London v. Osting-Schwinn, 

613 F.3d 1079, 1092 (11th Cir. 2010)(internal quotes omitted). 

Where removal is predicated on diversity jurisdiction, the 

removing party bears the burden of establishing complete 

diversity of citizenship and of establishing by a preponderance 

of the evidence that the amount in controversy exceeds $75,000. 

Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1356 (llth 

Cir. 1996), overruled on other grounds by Cohen v. Office Depot, 

Inc., 204 F. 3d 1069 (llth Cir. 2000).

B. Discussion

As the removing defendant, Chaucer has the burden of 

establishing complete diversity of citizenship. Upon review, the 

undersigned finds that Chaucer has not carried its burden. The 

Eleventh Circuit’s decision in Underwriters at Lloyd’s London v. 

Osting-Schwinn, 613 F. 3d 1079 (llth Cir. 2010) is controlling 

in this case. Underwriters at Lloyd’s, London involved a case 

in which Underwriters at Lloyd’s London filed a diversity action 

seeking a declaratory judgment that an underlying lawsuit was 

barred by a prior settlement. The defendant sought dismissal 

for lack of subject matter jurisdiction because Lloyd’s, London

only disclosed the citizenship of the “lead underwriter”. The 

trial court denied the request for dismissal and granted 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 4 of 10
5

Lloyd’s, London’s motion for summary judgment. The defendant 

appealed both rulings. Id. at 1081-1082. On appeal, the 

Eleventh Circuit explained that:

The Society of Lloyd’s, London, is not an 

insurance company, but rather a British organization 

that provides infrastructure for the international 

insurance market. . .Lloyd’s itself does not insure 

any risk. Individual underwriters, known as “Names” 

or “members”, assume the risk of the insurance loss. 

Names can be people or corporations; they sign up for 

certain percentages of various risks across several 

policies. . .Critical to the diversity jurisdiction 

question, Names are not only British citizens, but may 

be of many nationalities. Lloyd’s Act 

1982,c.14,pmbl.(5). Names underwrite insurance through 

administrative entities called syndicates, which 

cumulatively assume the risk of a particular policy. . 

. .As mere administrative structures, the syndicates 

themselves bear no risk on the policies that they 

underwrite; the constituent Names assume individual 

percentages of underwriting risk. The Names are not 

liable for the risks that the other Names assume. 

Lloyd’s Act, 1982,c.14 B 8(1).. . Lead underwriters, 

or active underwriters, serve as the public faces for 

particular syndicates. . . This [Lead] underwriter is 

usually the only Name disclosed on the policy, 

although the Lloyd’s Policy Signing Office keeps 

records on the identity of each Name underwriting a 

policy. . . Crucially, each Name’s liability is 

several and not joint. . . Through contractual 

agreement, the other Names that are members of the 

underwriting syndicates on the policy remain liable 

for their proportional share of any adverse judgments.

613 F.3d at 1083-1084.

After thoroughly explaining the Lloyds, London structure, 

and discussing the courts’ long standing treatment of 

unincorporated associations for diversity purposes, the Eleventh 

Circuit held that the Lloyd’s, London syndicates fall squarely 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 5 of 10
6

within the class of unincorporated associations, for which the 

pleading of every member’s citizenship is essential to 

establishing diversity jurisdiction. Id. at 1089. The Court 

then concluded that a remand was required because “the record 

[did] not disclose the identity, let alone the citizenship, of 

the Names involved in the case. According to the Court, 

“without knowledge of that citizenship, it [is] impossible to 

say that complete diversity exists.” Id. at 1092 (citation 

omitted).

The Underwriters at Lloyd’s, London decision makes clear 

that in determining whether diversity jurisdiction exists in 

this case, the Court is required to determine the citizenship of 

each of the Names or members underwriting the insurance policy 

at issue. While Chaucer, as lead member or underwriter, has 

provided citizenship information for itself, it has not 

identified the other Names underwriting the policy nor has it 

provided information regarding their citizenship. 

And, Chaucer’s reliance on language in the Underwriters at 

Lloyd’s, London decision whereby the court acknowledged that if 

an individual underwriter, proceeding in its individual 

capacity, satisfied the amount in controversy requirement, it 

would not appear that another underwriter’s citizenship would be 

determinative, is misplaced. In Underwriters at Lloyd’s,

London, the Lloyd’s, London underwriters were the plaintiffs as 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 6 of 10
7

opposed to the removing Defendants. Further, the Eleventh 

Circuit held that it was not necessary to reach that issue 

because it was not clear that the lead member intended to sue in 

its individual capacity. In this case, there is nothing in 

Plaintiff’s complaint that indicates that in bringing this 

action based on Lloyd, London policy No. LEO 000 3114, Plaintiff 

intended to sue only Chaucer, the lead underwriter, who has a 

38% stake in the policy. To the contrary, Plaintiff is suing 

for breach of the policy in total, as opposed to 38% of the 

policy. Accordingly, Defendant was required to identify all of 

the Names/members (underwriters) of the subject policy, and 

their citizenship so as to enable the Court to determine the 

existence of complete diversity. See Underwriters at Lloyd’s,

London, 613 F.3d. at 1092 (“Ultimately, “a remand [is] clearly . 

. required in this suit as currently constituted, since the 

record does not disclose the identity, let alone the 

citizenship, of the Names involved in the case...”); Advanced 

Sleep Center, Inc. v. Certain Underwriters at Lloyds London, 

2015 U.S. Dist. LEXIS 87878 at *7 (E.D. La., July 7, 2015)(“[A]s 

a result of [Lloyd’s of London] distinct operating model, “when 

determining diversity of citizenship of the parties in a case 

involving Lloyd’s of London, all the ‘names’ must be taken into 

consideration.””); Ayuso v. Certain Underwrites at Lloyd’s of 

London, 2013 U.S. Dist. LEXIS 129347 at *12 (E.D. Mo., Sept. 11, 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 7 of 10
8

2013)(“The record is simply insufficient to satisfy defendant 

Lloyd’s obligation to show subject matter jurisdiction based 

upon diversity of citizenship of each individual ultimately 

financially responsible person or entity that makes up the 

identified syndicate.”). Accordingly, Chaucer has failed to 

carry its burden of demonstrating diversity of citizenship; 

thus, the undersigned recommends that Plaintiff’s motion to 

remand be granted, and that this action be remanded to the 

Circuit Court of Hale County.

Plaintiff requests that this Court impose costs and fees 

upon Defendants pursuant to 28 U.S.C. § 1447(c), which provides 

that "[a]n order remanding the case may require payment of just 

costs and any actual expenses, including attorney fees, incurred 

as a result of the removal." The purpose of § 1447(c) is not to 

punish defendants for improper removal, but to compensate 

plaintiffs for expenses associated with obtaining a remand 

order. Publix Supermarkets, Inc. v. United Food & Commercial 

Workers Int'l Union, AFL-CIO & CLC, 900 F. Supp. 419, 422 (M.D. 

Fla. 1995). Thus, attorney's fees may be awarded even in the 

absence of a showing of bad faith. Id. at 421. 

In Martin v. Franklin Capital Corp., 546 U.S. 132, 126 S. 

Ct. 704, 163 L. Ed. 2d 547 (2005), the Supreme Court held that:

the standard for awarding fees should turn on the 

reasonableness of the removal. Absent unusual 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 8 of 10
9

circumstances, courts may award attorney's fees under 

§ 1447(c) only where the removing party lacked an 

objectively reasonable basis for seeking removal. 

Conversely, when an objectively reasonable basis 

exists, fees should be denied. In applying this rule, 

district courts retain discretion to consider whether 

unusual circumstances warrant a departure from the 

rule in a given case.

Id. at 141 (internal citations omitted). Upon review, the 

Court finds that Defendant's removal was not objectively 

unreasonable. Accordingly, the undersigned recommends that 

Plaintiff's request for fees be denied.

III. Conclusion

For the reasons set forth above, the undersigned finds that 

Plaintiff’s Motion to Remand be granted, that Plaintiff’s Motion 

for Costs be denied, and that this action be remanded to the 

Circuit Court of Hale County.

The attached sheet contains important information regarding 

objections to the report and recommendation of the Magistrate 

Judge.

Notice of Right to File Objection

A copy of this report and recommendation shall be served on 

all parties in the manner provided by law. Any party who objects 

to this recommendation or anything in it must, within fourteen 

(14) days of the date of service of this document, file specific 

written objections with the Clerk of this Court. See 28 U.S.C. §

636(b)(1); FED.R.Civ.P. 72(b); S.D. ALA. GenLR 72(c). The 

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 9 of 10
10

Parties should note that under Eleventh Circuit Rule 3-1, “[a] 

party failing to object to a magistrate judge’s findings or 

recommendations contained in a report and recommendation in 

accordance with the provisions of 28 U.S.C. § 636(b)(1) waives 

the right to challenge on appeal the district court’s order 

based on unobjected-to factual and legal conclusions if the 

party was informed of the time period for objecting and the 

consequences on appeal for failing to object. In the absence of 

a proper objection, however, the court may review on appeal for 

plain error if necessary in the interest of justice.” 11th Cir. 

R. 3-1. In order to be specific, an objection must identify the 

specific finding or recommendation to which objection is made, 

state the basis for the objection, and specify the place in the 

Magistrate Judge’s report and recommendation where the disputed 

determination is found. An objection that merely incorporates by 

reference or refers to the briefing before the Magistrate Judge 

is not specific. 

DONE this 14th day of October, 2016.

 /s/ SONJA F. BIVINS _

 UNITED STATES MAGISTRATE JUDGE

Case 1:16-cv-00392-KD-B Document 13 Filed 10/14/16 Page 10 of 10