IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

MARIE TOOLE and )

CHRIS TOOLE, )

)

Plaintiffs, )

)

v. ) CIVIL ACTION NO.

) 2:06cv652-MHT

MATTHEW CHUPP, et al., ) (WO)

)

Defendants. )

OPINION AND ORDER

In this case, which was removed from an Alabama

state court to federal court based on complete

diversity-of-citizenship jurisdiction, 28 U.S.C.

§ 1332(a), two issues are presented on a motion to

remand. The first is whether the state citizenship of

a defendant uninsured motorist carrier that has 'opted

out' pursuant to Alabama law should be considered in

determining whether this court has removal

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 1 of 15
1. As statutorily defined, “uninsured motorist”

includes “underinsured motorist.” 1975 Ala. Code

§ 32-7-23(b).

2

jurisdiction.1

 The second is whether the jurisdictional

amount requirement is met. For reasons that follow,

this court concludes that it should not consider the

carrier's citizenship and that the jurisdictional

amount is met. As a result, this case will not be

remanded to state court.

I.

Plaintiffs Marie Toole and Chis Toole brought this

lawsuit in state court against defendants Matthew

Chupp, Don Bramlett, and ALFA Insurance Company. This

lawsuit arises out of a vehicular collision in which

Marie Toole and Chupp were the drivers. Relying on

Alabama law, Marie Toole asserts negligence,

wantonness, and recklessness claims against Chupp and a

negligent entrustment claim against Bramlett, the owner

of the vehicle Chupp was driving; Chris Toole has a

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 2 of 15
3

loss-of-consortium claim against Chupp and Bramlett;

and both the Tooles have an uninsured motorist claim

against ALFA, their uninsured motorist carrier. 

1975 Ala. Code § 32-7-23 provides protection for

“persons ... who are legally entitled to recover

damages from owners or operators of uninsured motor

vehicles because of bodily injury, sickness or disease,

including death, resulting therefrom.” Under Alabama

law, a plaintiff is allowed either to join as a party

defendant her own liability insurer in a suit against

the uninsured motorist or merely to give it notice of

the filing of the lawsuit and of the possibility of a

claim under the uninsured motorist coverage at the

conclusion of the trial. Lowe v Nationwide Ins. Co.,

521 So.2d 1309, 1310 (Ala. 1988). If named as a party,

the insurer can elect either to participate in the

litigation or ‘opt out’ and, while still a named

defendant, sit on the sidelines; if not joined but

merely given notice, it can either intervene or to stay

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 3 of 15
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out of the case. Id. ALFA elected to opt out of the

Tooles’ lawsuit.

All three defendants then removed this lawsuit to

federal court based on complete diversity jurisdiction.

The Tooles are citizens of Alabama; Chupp and Bramlet

are citizens of Georgia, and ALFA is a citizen of

Alabama. The defendants acknowledge that complete

diversity is lacking where any party on one side of a

lawsuit is from the same State as any party on the

other side. Strawbridge v. Curtiss, 7 U.S. 267 (1806).

They contend, however, that, although the Tooles and

ALFA are all Alabama citizens, there is still complete

diversity because ALFA has opted out of this litigation

and thus is a nominal party whose citizenship can be

ignored for jurisdictional purposes. The Tooles

contend that ALFA’s presence destroys diversity. 

“[A] federal court must disregard nominal or formal

parties and rest jurisdiction only upon the citizenship

of real parties to the controversy.” Navarro Savings

Ass’n v. Lee, 446 U.S. 458, 461 (1980). Therefore, the

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 4 of 15
2. According to Broyles, Tennessee law then provided

in pertinent part:

“Service of Process-Actions by

Insurers-John Doe Warrants-Arbitration.-

(continued...)

5

critical question is whether ALFA is a real party to

the controversy presented by this case or is simply a

nominal one.

In Broyles v. Bayless, 878 F.2d 1400 (1989), the

Eleventh Circuit Court of Appeals confronted a similar

issue. There, a Tennessee plaintiff sued a Georgia

defendant in a Georgia federal court, basing

jurisdiction on complete diversity and asserting claims

arising of a car accident in Tennessee; the Tennessee

plaintiff also served a copy of his lawsuit on his

Tennessee uninsured motorist carrier, and, as allowed

by Tennessee law, that carrier participated in the

Georgia federal court, including filing a motion to

dismiss which contended that the court lacked diversity

jurisdiction because the carrier and the plaintiff were

from the same State.2

 The trial court agreed and

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 5 of 15
2. (...continued)

(a) Any insured intending to rely on the

coverage required by this part shall, if

any action is instituted against the

owner and operator of an uninsured motor

vehicle, serve a copy of the process

upon the insurance company issuing the

policy in the manner proscribed by law,

as though such insurance company were a

party defendant; such company shall

thereafter have the right to file

pleadings and take other action

allowable by law in the name of the

owner and operator of the uninsured

motor vehicle or in its own name;

provided, however, that nothing in this

subsection shall prevent such owner or

operator from employing counsel of his

own choice; provided further, that the

evidence of service of process upon the

insurance carrier shall not be made part

of the record.”

878 F.2d at 1402-1403 (quoting T.C.A. § 56-7-1206).

6

dismissed the lawsuit. On appeal, the Eleventh Circuit

stated the question as, “Should a federal court

consider the residence of an uninsured motorist

carrier, served with process pursuant to Tennessee's

uninsured motorist statute, when determining diversity

for federal jurisdiction purposes?” Broyles, 878 F.2d

at 1401.

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 6 of 15
3. According to Broyles, “Tennessee courts have held

that “‘The whole intent and purpose of the uninsured

motorist act, is, in essence to provide protection by

making the insurance carrier stand as the insurer of the

uninsured motorist, with two necessary consequences. (1)

The suit has to be brought against the uninsured

motorist, with the fact of insurance excluded as a

possible prejudicing factor, as in any other such case;

and (2) the insurance company is bound by the judgment

rendered in that suit, to the extent of its limits, where

it is afforded the statutory opportunity to defend the

uninsured motorist.’” Broyles, 878 F.2d at 1403 (quoting

Glover v. Tennessee Farmers Mutual Ins. Co., 225 Tenn.

306, 313, 468 S.W.2d 727, 730 (1971)). “Furthermore,”

according to Broyles, “Tennessee's uninsured motorist

statute does not allow direct actions to be brought

against the uninsured motorist carrier for another

party's negligence.” Id. “Apparently, Tennessee

contemplates that the uninsured motorist carrier will

stand in the same position as the defendant's own

insurance company would stand if the defendant had one

(or in the same position as the defendant's insurance

company, which has insufficient policy limits, actually

(continued...)

7

In answering this question, the Broyles court

observed that, “Because the Tennessee courts place the

uninsured motorist carrier in the same position as that

of the tortfeasor's own insurer, [the uninsured

motorist carrier’s] status as a party turns on the same

principles as are generally applied in liability

insurance law.” Broyles, 878 F.2d at 1403.3

 The court

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 7 of 15
3. (...continued)

stands).” Id.

8

then discussed and applied these general principles of

liability insurance law. 

First, the Broyles court observed that, “In

general, a real party in interest is a party that has a

real and substantial stake in the litigation and who

exercises substantial control over the litigation.”

Broyles, 878 F.2d at 1403. “The definition of a 'real

party in interest,' however, breaks down,” the court

continued, “in the area of insurance law because of the

courts' historic treatment of insurance companies in

tort litigation.” Id. at 1403-1404. The court stated

that, “Although liability insurance companies often

have a real and substantial stake in their insured's

litigation, they are usually not treated as parties to

an action involving their insured ... even though the

company has a contractual obligation to pay for the

litigation and/or to pay any judgment rendered.” Id.

at 1404. “[I]in the typical scenario, insurance

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 8 of 15
9

companies defend the insured ‘in cognito’ so as to

preserve [their] anonymity and remain undetected by the

jury.” Id. The court then concluded that, “It makes

little sense to allow the company to proceed ‘in

cognito’ and yet consider its phantom presence in

determining diversity.” Id. at 1405.

To these general principles of liability insurance

law, the Broyles court outlined three exceptions that

focused on the company’s visibility in and control over

the tort suit: “[(1) where the insurance companies]

have become subrogated to the rights of their insured

after payment of the loss, [(2)] are defending actions

brought directly against them, or [(3)], for some

reason, they must assume primary and visible control of

the litigation.” Id. at 1404. The Broyles court then

held that, because none of the above exceptions applied

to the case at hand, the uninsured motorist carrier was

a nominal party and thus the trial court had diversity

jurisdiction. Id. at 1405-1406.

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 9 of 15
4. While it appears that, unlike the Tennessee law,

see supra note 3, Alabama law provides for an action in

which the uninsured motorist carrier may be sued

independently from the tortfeasor, see Ex Parte State

Farm Mut. Auto Ins. Co., 893 So.2d 1111, 1115 (Ala. 2004)

(under the underinsured motorist act, “[t]he plaintiff is

not required to first obtain a judgment against the

uninsured/underinsured motorist”), this fact is of no

consequence here, where the Tooles do not bring such an

action. The court in Broyles found that, where the

insurance company had, and apparently exercised, its

option to defend, but took a “backseat” to the alleged

tortfeasors’ counsel, it was only a nominal party. It

(continued...)

10

The above general observations (that is, the

general principles and the exceptions to them) apply

with equal force to Alabama’s liability insurance law,

for Alabama, like Tennessee, sets forth a scheme that

allows insurance companies to defend the insured ‘in

cognito’ by requiring the insured to give notice to the

insurer and allowing the insurer the option of

participating in the litigation. While the Tennessee

and Alabama insurance schemes may differ in some ways,

they are sufficiently the same that the above

principles and exceptions, as they are articulated in

Broyles, to apply to Alabama.4

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 10 of 15
4. (...continued)

cannot be that an insurance company that opts out

completely is more “visible” or has more “control” than

the insurance company in Broyles.

11

Therefore, the question for this court is whether

any of the above three exceptions apply to the Tooles’

case, and the answer is that none does. ALFA is not

enforcing this action through subrogation; nor is it

“defend[ing] itself against a ‘direct action,’”

Broyles, 878 F.2d at 1404, that is, “one in which ‘the

liability sought to be imposed could be imposed against

the insured,’” id. at 1404 n. 1 (quoting Fortson v. St.

Paul Fire and Marine Insurance Company, 751 F.2d 1157,

1159 (11th Cir. 1985)), or one over “its own acts and

omissions.” Id. Instead, it is apparent from the

record in this case (in particular, the representations

made by counsel for all parties at oral argument on

September 13, 2006) that the Tooles named ALFA as a

defendant for the sole purpose, as required by Alabama

law, of putting its insurer on notice of the pendency

litigation and giving the insurer the opportunity to

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 11 of 15
12

participate or opt out. Now that ALFA has opted out

(and even has made explicit in its notice of opt out

that it “agrees to be bound by the verdict of the jury

and agrees to pay any judgement in accordance with its

policy of insurance”), the Tooles and ALFA simply have

no dispute between them at this time.

Also, ALFA is not assuming control of, or seeking

to control, the litigation; indeed, the company has

opted out of the litigation, agreeing to abide by the

outcome of any jury trial. Thus, as in Broyles, the

liability of the insurance company is entirely

“contingent and indirect,” 878 F.2d at 1404, in the

sense that Chupp and Bramlett will litigate entirely

the issue of fault, upon which any issue concerning

ALFA’s policy is contingent. See Quick v. State Farm

Mut. Auto Ins. Co., 429 So.2d 1033, 1035 (Ala. 1983)

(in order to establish liability against underinsured

motor carrier, plaintiff “must be able to establish

fault on the part of the uninsured motorist, which

gives rise to damages, and must be able to prove the

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 12 of 15
13

extent of those damages.”) (internal quotations and

citations omitted). Moreover, Chupp and Bramlett have

secured their own counsel and retained complete control

over the action.

Therefore, ALFA’s involvement here is insufficient

to take it outside the general rule that “[liability

insurance companies] are usually not treated as parties

to an action involving their insured.” Broyles, 878

F.2d at 1404. 

This result is also consistent with the

Congressional intent behind 28 U.S.C. § 1332(c), which

provides that, “in any direct action against the

insurer ... to which action the insured is not joined

as a party defendant, such insurer shall be deemed a

citizen of the State of which the insured is a

citizen.” Section 1332(c) was passed in response to

situations where, in direct-action States, the injured

party would elect to sue a diverse insurance company

alone, without joining the nondiverse insured, in order

to create diversity jurisdiction. Broyles, 878 F.2d at

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 13 of 15
14

1404 n. 1. Conversely, a plaintiff should not be able

to defeat diversity jurisdiction by adding an uninsured

motorist carrier that is playing only a nominal role. 

II.

Finally, the court finds that the three defendants

have shown “by a preponderance of the evidence that the

amount in controversy more likely than not exceeds $

75,000.” Alexander v. Captain D.’s, LLC, 437 F.Supp.

2d 1320, 1320 (M.D. Al. 2006) (Thompson, J.) (internal

citations and quotations omitted). This standard

applies where, as here, the amount in controversy is

not clear on the face of the complaint. Id. Although

ALFA submits no depositions, the Tooles’ complaint

alleges that Chupp and Bramlett are underinsured,

although they are insured for $ 100,000; Marie Toole

alleges substantial bodily harm, including harm that

required surgery, and will cause lifelong pain and

suffering; and, perhaps most importantly, counsel for

the Tooles acknowledged at oral argument on September

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 14 of 15
13, 2006, that he could see a jury “bringing back more

than seventy-five thousand.” It thus appears “more

likely than not,” Williams v. Best Buy Co., Inc., 269

F.3d 1316, 1320 (11th Cir. 2001), that the amount in

controversy is met. 

Accordingly, it is ORDERED that plaintiffs Marie

Toole and Chris Toole's motion to remand (Doc. No. 6)

is denied.

DONE, this the 19th day of September, 2006.

 /s/ Myron H. Thompson 

 UNITED STATES DISTRICT JUDGE

Case 2:06-cv-00652-MHT-WC Document 13 Filed 09/19/2006 Page 15 of 15
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov

Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00.

CIVIL APPEALS JURISDICTION CHECKLIST

1. Appealable Orders: Courts of Appeals have jurisdiction conferred and strictly limited by

statute:

(a) Appeals from final orders pursuant to 28 U.S.C. § 1291: Only final orders and

judgments of district courts, or final orders of bankruptcy courts which have been

appealed to and fully resolved by a district court under 28 U.S.C.§ 158, generally are

appealable. A final decision is one that “ends the litigation on the merits and leaves

nothing for the court to do but execute the judgment.” Pitney Bowes, Inc. v. Mestre,

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district court judge. 28 U.S.C. § 636(c).

(b) In cases involving multiple parties or multiple claims, a judgment as to fewer than

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certified the judgment for immediate review under Fed.R.Civ.P. 54(b). Williams v.

Bishop, 732 F.2d 885, 885- 86 (11th Cir. 1984). A judg ment which resolves all

issues except matters, such as attorneys’ fees and costs, that are collateral to the

merits, is immediately appealable. Budinich v. Becton Dickinson & Co., 486

U.S.196, 201, 108 S.Ct. 1717, 1721-22, 100 L .Ed.2d 178 (1988); LaChance v.

Duffy’s Draft House, Inc., 146 F.3d 832, 837 (11th Cir. 1998).

(c) Appeals pursuant to 28 U.S.C. § 1292(a): Appeals are permitted from orders

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(d) Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: The certification

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(e) Appeals pursuant to judicially created exceptions to the finality rule: Limited

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Atlantic Fed. Sav. & Loan Ass’n v. Blythe Eastman Paine Webber, Inc., 890 F.2d

371, 376 (11th Cir. 1989); Gillespie v. United States Steel Corp., 379 U.S. 148, 157,

85 S.Ct. 308, 312, 13 L.Ed.2d 199 (1964).

 Rev.: 4/04

Case 2:06-cv-00652-MHT-WC Document 13-2 Filed 09/19/2006 Page 1 of 2
2. Time for Filing: The timely filing of a notice of appeal is mandatory and jurisdictional.

Rinaldo v. Corbett, 256 F.3d 1276, 1278 (11th Cir. 2001). In civil cases, Fed.R.App.P. 4(a)

and (c) set the following time limits:

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Case 2:06-cv-00652-MHT-WC Document 13-2 Filed 09/19/2006 Page 2 of 2