1District Judge for the Northern District of California, sitting by designation. 

United States Court of Appeals,

Fifth Circuit.

No. 95-20308.

AETNA CASUALTY & SURETY CO., Ety Co., American Nuclear, Insurers, Plaintiffs-Counter

Defendants-Appellees

v.

ISO-TEX, INC., Defendant-Counter Claimant-Appellant,

and

DILLON INSURANCE, Management, Inc., Intervenor Defendant-Counter Plaintiff.

Feb. 21, 1996.

Appeal from the United States District Court for the Southern District of Texas.

Before HIGGINBOTHAM and DUHÉ, Circuit Judges, and SCHWARZER, District Judge.1

SCHWARZER, District Judge:

Aetna Casualty&SuretyCompany("Aetna") brought this action for itself and other members

of American Nuclear Insurers("ANI") for a declaration of noncoverage under a policy issued to IsoTex, Inc. ("Iso-Tex"). The district court granted the declaratory relief sought and, no appeal having

been taken from that decision, the declaratory judgment is final. Iso-Tex also filed a counterclaim

against Aetna, asserting variousstate law claims arising out ofthe issuance ofthe policy. The district

court granted summary judgment for Aetna and that judgment is on appeal before us. Because the

district court's judgment disposed of all claims in the litigation, we have jurisdiction of the appeal

under 28 U.S.C. § 1291.

 SUBJECT MATTER JURISDICTION

At the threshold we must address the question whether the district court had subject matter

jurisdiction. The failure of the parties to urge objections to diversity of citizenship does not relieve

the appellate court of the duty to ascertain whether the lower court could properly take jurisdiction.

See Ziegler v. Champion Mortgage Co., 913 F.2d 228, 229 (5th Cir.1990). Iso-Tex is a Texas
 

2

"There is a "rough symmetry' between the "real party in interest' standard of Rule 17(a) and

the rule that diversity jurisdiction depends upon the citizenship of real parties to the controversy. 

But the two rules serve different purposes and need not produce identical outcomes in all cases." 

Id. at 463 n. 9, 100 S.Ct. at 1783 n. 9. 

 

3By stipulation of the parties, the district court dismissed without prejudice Aetna's motion to

certify a class, pending the appeal. In the absence of a ruling on certification, our examination of

jurisdiction rests on the allegations of the pleadings. See In Re Abbott Laboratories, 51 F.3d 524,

525 n. 1 (5th Cir.1995), reh'g en banc denied, 65 F.3d 33 (5th Cir.1995). 

corporation with its principal place of businessin Texas. Aetna is a Connecticut corporation with its

principal place of business in Connecticut. The complaint alleges that Aetna is a subscriber on the

risk of the policy at issue. Thus, for purposes of diversity jurisdiction, Aetna is a "real and substantial

part[y] to the controversy," and jurisdiction exists over that controversy. See Navarro Savings Assn.

v. Lee, 446 U.S. 458, 460, 100 S.Ct. 1779, 1781, 64 L.Ed.2d 425 (1980)2.

Diversitywould be destroyed, however, ifANI were named as a party. As an unincorporated

association, at least one of whose membersis a Texas corporation with its principal place of business

in Texas, ANI is treated as a citizen of Texas. Carden v. Arkoma Assoc., 494 U.S. 185, 110 S.Ct.

1015, 108 L.Ed.2d 157 (1990). But since the action was brought by Aetna "as a member of [ANI]

... for itself and all other members ofsuch association" ANI is not a party nor are its members. With

respect to the members, Aetna appearsin a representative capacity. Fed.R.Civ.P. 23.2 permits "[a]n

action [to be] brought by ... members of an unincorporated association as a class by naming certain

members asrepresentative parties...." Fed.R.Civ.P. 23.2. In the posture of the pleadings, the position

of the members of ANI for jurisdictional purposes is analogous to that of unnamed class members:

their citizenship is disregarded. Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 364-66, 41

S.Ct. 338, 341-42, 65 L.Ed. 673 (1921); Calagaz v. Calhoon, 309 F.2d 248 (5th Cir.1962).3

 FACTS

Iso-Tex is engaged in handling, transporting, storing and disposing of biomedical nuclear

waste from clinics, hospitals and universities. Its business does not ordinarily involve waste from

nuclearreactors. Iso-Tex purchased from ANI a "Nuclear Energy Liability Insurance—Supplier's and

Transporter's Po licy." Coverage under this type of policy is limited to the nuclear fuel cycle: the

enrichment of uranium, nuclear fuel fabrication, generation of nuclear energy, reprocessing of spent
fuel, and disposal of waste from the nuclear fuel cycle. To that end, the policy provides that ANI

would pay

A. all sums which the insured shall become legally obligated to pay as damages because of bodily

injury or property damage caused by the nuclear energy hazard, and the companies shall

defend anysuit against the insured alleging such bodilyinjuryor propertydamage and seeking

damages which are payable under the term of this policy:

The policy does not apply

(h) to bodily injury or property damage arising out of

 . . . . .

(6) any radioactive isotope while away from any nuclear facility....

Further, the policy applies only to "waste material ... resulting from the operation ... of any nuclear

facility...."

The genesis of thislitigation stemsfrom claimsfor personal injuries against Iso-Tex allegedly

caused by exposure to radioactive materialsstored on property owned by Iso-Tex. These claims led

to Vitale v. Iso-Tex, Inc., No. 90C1901 (Tex.Dist.Ct., Brazoria Cty.) (1990), in which a $7,000,000

default judgment was entered against Iso-Tex. ANI denied coverage and this dispute followed. In

granting summary judgment, the district court held that the policy does not provide coverage for the

Vitale lawsuit, and that ruling is not being appealed. Iso-Tex contends, however, that under state law

Aetna is estopped from denying coverage by reason of bad faith and misrepresentations.

In granting summary judgment for Aetna on Iso-Tex'sstate law claims, the district court first

rejected its argument that because the ANI policy did not cover the Vitale law suit, it had been sold

a worthless policy. The court distinguished Celestino v. Mid-American Indem. Ins. Co., 883 S.W.2d

310 (Tex.App.—Corpus Christi 1994, writ denied) on the ground that the policy issued there could

under Texas law never provide coverage for any risk. The ANI policy, in contrast, at least provided

Iso-Tex with a defense against claims alleging injuries caused by a nuclear energy hazard. ANI has

no responsibility for Iso-Tex's purchase of a policy that it might not need. The court further held that

Iso-Tex had offered no evidence of misrepresentation by Aetna or ANI. "Issuance of a policy did not

constitute a representation of anything other than the fact that a nuclear liability policy wasin effect."

Aetna Casualty & Surety Company v. Iso-Tex, Inc., Civ. No. H-91-3157 at 16 (D.Tex., Filed Apr.
12, 1995). Having found no genuine issue of material fact, the court held Aetna entitled to judgment

as a matter of law.

Our review of the summary judgment is de novo. Norman v. Apache Corp., 19 F.3d 1017,

1021 (5th Cir.1994). We find no error in the district court's ruling and AFFIRM.