2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 4-8-2009 

# C ath y B ro oks -M c C ollu v

. S t ate F arm Ins C o P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 08-2716

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2009

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2009 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " C ath y B r oo k s -M c C o llu v

. S t at e F arm In s C o " (2009). 2009 D e cisio n s . P ape r 1564. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2009/1564NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

___________ N o. 08- 2716

___________ C A T H Y D . B R O O K S - MC C O L L U M, A ppel l ant

v. S T AT E F AR M I NS UR ANC E CO M P ANY

___________________________ A p p ea l Fro m the U n it ed S tat es D istri ct C o u rt F o r th e D istri ct of

D elaw are ( D . C . C i vi l N o. 04- cv- 00419) D istri ct Ju d g e: H o n o rab le Jo sep h J. F arn an , Jr.

_____________________________ Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

A pr i l 3, 2009 B efor e: R E N D E L L , FU E N T E S and N Y G A A R D , C i r cui tJ udges

( Fi l ed A pr i l 08, 2009)

_________ OPI NI ON O F THE COURT

_________ P E R C UR I AM C athyD . B r ooks - M cC ol l um appea l s pr o s e fr om the D i s tr i ctC our t ’ s or der gr ant i ng St at e Farm I ns ur ance C om pany ’ s m ot i on fors um m aryj udgm entand deny i ng her ow n. F or the fo l l ow i ng reas on s, w e w i l l vacate and rem and for further proceedings.2 I. B ro o k s-M c C o llu m w a s, a n d c laim s s til l to b e , a D ire c to r o f th e B o a rd o f

E m e ra ld R idg e S erv ices C o rpo rati o n , a c o m p an ythat p rov ides m ainten an ce serv ices f o r a D el aw ar e r eal es t at e deve l opm entcal l ed Em er al d R i dge. T hi s l aw s ui ti s the l at es tof at least si x stat e a n d fe d era l suit s tha t she h as f il ed fo ll o w ing a d ispu te w ith o ther m em b ers of the B oar d, w hi ch appa r ent l ybegan w hen the B oar d r efus ed t o r ei m bur s e her$185. 00 th a t s h e h a d p a id o u t o f h e r o w n p o c k e t f

o r p o w e r w a s h in g e x p e n s e s . Fol l ow i ng thati nci dent , B r ooks - M cC ol l um r es i gned fr om the B oar d butl at er p u rp o rte d to “ re sc in d ” h e r re sig n a tio n . S h e a lso f iled a law su it i n D e law a re sta te c o u rt, cont endi ng thats he w as the s ol e pr oper l y - el ect ed mem berof the B oar d and s eeki ng, i nt er al i a, a det erm i nat i on of the pr operm ember s hi p of the B oar d, r ei m bur s ementof the $185. 00 s he had pa i d, and “i ndemni fi cat i on” fr om the B oar d forherl egal expens es . T he st atus of thatl i t i gati on i s unclearfrom the record bu t , w hil e i trem ai ned pen ding, B rooksM cC ol l um fi l ed a c om pl ai nti n t he D i s tr i ctC our tagai ns tE m er al d R i dge, i t s B oar d and ind ividu al B o ard m em b ers, seek ing esse n ti all ythe s am e re li ef. T h e D istri ct C o u rt di s m i s s ed thatcompl ai ntforl ack of s ubj ectm att erj ur i s di ct i on, and w e af fi r m ed, e x p la in in g w h yB ro o k s -M c C o llu m ’s a lle g a tio n s d id n o t s ta te a c o lo ra b le f e d e ra l c la im . S ee B roo k s-M cC o ll u m , 1 6 6 F ed . A p p x . 6 1 8 , 6 1 9 -20 (3d C ir . 2 0 0 6 ). In th e m e a n tim e , B ro o k s-M c C o llu m h a d f iled th e c o m p lain t at iss u e h e re . T h is c o m p lain t n a m e s a s th e so le d e f e n d a n t S tate F a rm , w h ich iss u e d a b u sin e ss liab ili tyB ro o k s-M c C o llu m p u rp o rte d to b rin g h e r su it, a n d p u rp o rts to a p p e a l, bo th in d iv id u a lly 1 and on beha l f of Em er al d R i dge. B r ooks - M cC ol l um , how ever , m aynotr epr es ent E m era ld R idg e p ro se . S ee S im b raw , Inc . v . U n it ed S tat es, 36 7 F . 2 d 3 7 3 , 3 7 4 (3d C ir . 1 9 6 6 ). 3 i ns ur ance pol i cyt o E m er al d R i dge and t ender ed ther eundera def ens e t o E m er al d R i dge and the i ndi vi dual B oar d m ember s i n the s t at e courtl i t i gat i on. B r ooks - M cC ol l um al l eges th a t S tate F a rm is (1 ) o b lig a ted u n d e r th e p o licyto p a yh e r le g a l f e e s a s w e ll an d (2 ) liab le as a “j oi ntt or t fea s or ” for“enc our agi ng and ai di ng and fundi ng” var i ous al l egedl y - i l l egal a c tio n s b yth e B o a rd m e m b e rs , in c lu d in g th e v a n d a lis m o f h e r v e h ic le . B yor derent er ed M ay13, 2008, the D i s tr i ctC our tgr ant ed St at e Farm ’ s m ot i on for s um m aryj udgm entaft erconcl udi ng thatSt at e Farm w as ent i t l ed t o j udgm entas a mat t er of D el aw ar e s t at e l aw on both cl ai m s . I n part i cul ar , the D i s tr i ctC our tdet erm i ned thatt he St at e Farm pol i cypr ovi des i ndemni fi cat i on onl yforl i abi l i tyi m pos ed on Em er al d R i dge and i t s B oar d, and pr ovi des no benef i t s t o an i ns ur ed aga i ns tw hom no act i on has been br ought . T he D i s tr i ctC our tal s o concl uded thatB r ooks - M cC ol l um pr es ent ed no evi dence o f S ta te F a rm ’s in v o lv e m e n t in th e v a n d a lis m o f h e r v e h ic le o r a n yo th e r i lle g a l a c tio n . B r ooks - M cC ol l um appea l s , and w e have j ur i s di ct i on under28 U . S. C . § 1291. 1 II. O r di nar i l y , w e w oul d exer ci s e pl enaryr evi ew overthe D i s tr i ctC our t ’ s rul i ng on the part i es ’ m ot i ons fors um m aryj udgm ent . See Prudent i al I ns . C o. of A m . v. H ovi s , 553 F. 3d 258, 262 ( 3d C i r . 2009) . T hi s cas e, how ever , r ai s es a thr es hol d i s s ue r egar di ng t heD es pi t e herci t at i on of var i ous fede r al cr i m i nal and others t atut es , B r ooks - M cC ol l um 2 m akes no col or abl e al l egat i on thatSt at e Farm has vi ol at ed anyfede r al l aw . N ordoes s he m a k e a n yc o lo ra b le a lleg a tio n th a t S tate F a rm is a sta te a c to r. In ste a d , as w e e x p lain e d in herpr evi ous appea l , s he as s ert s onl y“qui nt es s ent i al s t at e l aw caus es of ac t i on, ” and “[h] erci t at i on of var i ous cons t i tut i onal and fe der al s t atut orypr ovi s i ons does not tr ans form thes e s t at e l aw cl ai m s i nt o caus es of ac t i on ‘ ar i s i ng under ’ the C ons t i tut i on or fede r al l aw . ” B r ooks - M cC ol l um , 166 Fed. A ppx. at619. 4 D i s tr i ctC our t ’ s j ur i s di ct i on, w hi ch w e ar e obl i gat ed t o addr es s s ua s pont e. See E m p lo y e rs In s . o f

W a u s a u v . C ro w n C o rk & S e a l C o ., 9 0 5 F .2 d 4 2 , 4 5 (3 d C ir . 1 9 9 0 ). (“ ‘[ E ]v e ryf

e d e ra l ap p e llate c o u rt h a s a sp e c ial o b lig a tio n to sa tisf yitse lf n o t o n lyo f

its ow n j ur i s di ct i on, butal s o t hatof the l ow ercourt s i n a ca us e underr evi ew . ’ ”) ( ci t at i on om i t t ed) . T he D i s tr i ctC our tdi d notexpl ai n the bas i s fori t s exer ci s e of j ur i s di ct i on, and th e r e c o r d d o e s n o ta l l o w u s t o d e t e r m i n e w h e th e rj u r i s d i c t i o n w a s p r e s e n t . A c c o r d i n g l y, w e mustvaca t e and r emand. See i d. at47. I n hercompl ai nt , B r ooks - M cC ol l um al l eged thatthe D i s tr i ctC our thad fe der al q u e stio n ju risd ictio n u n d e r a v a rie tyo f f e d e ra l sta tu tes . T h e D istric t C o u rt, h o w e v e r, d id notdi s cern anyfede r al cl ai m i n B r ooks - M cC ol l um ’ s compl ai nt , and nei therdo w e. 2 In ste a d , itp ro p e rlyd isc e rn e d a n d a d d re ss e d o n lyth e tw o sta te- law c laim s a g a in st S tate Far m i dent i fi ed above . B eca us e B r ooks - M cC ol l um pr oper l yas s ert ed onl ythos e s t at e- l aw cl ai m s , the onl ypot ent i al bas i s forj ur i s di ct i on i n the D i s tr i ctC our tw as di ver s i tyof ci t i zens hi p under28 U . S. C . § 1332( a) . B r ooks - M cC ol l um al l eged di ver s i tyj ur i s di ct i on in h e r c o m p lain t, bu t sh e a lleg e d n e ith e r S tate F a rm ’s c iti z e n sh ip n o r h e r o w n . In its ans w er , St at e Farm deni ed thatthe D i s tr i ctC our thad j ur i s di ct i on and pl eade d l ack ofS tate F a rm a lso a rg u e s th a t B ro o k s-M c C o llu m h a s n o t alle g e d th a t th e a m o u n t in 3 contr over s yexce eds $75, 000, buti tcannotbe s ai d t o a “l egal cert ai nty ” fr om her compl ai ntthats he s eeks l es s than thatamount . D ar dovi t ch v. H al t zman, 190 F. 3d 125, 1 3 5 (3d C ir . 1 9 9 9 ). 5 juri sd ict ion as a n af

firm ati v e d ef

en se, th o u g h ittoo n eg lected to p lead eith er p arty ’s ci t i zenship. T he D i stri ctC ou rtdid not det erm i ne the part i es’ ci t i zenship or ot herw i se addr es s w hetheri thad di ver s i tyj ur i s di ct i on. N ordi d the part i es r ai s e anyi s s ue of j ur i s di ct i on on appea l ( St at e Farm as s ert ed mer el ythat“[i ] ti s bel i eved thatPl ai nt i ff co n tend s” th at th e D istri ct C o u rth ad fe d era l qu esti o n juri sd ict ion ). N ev erthe less, in li g h t of o u r ob li g ati o n to inq u ir e into the D istri ct C o u rt ’s j ur i s di ct i on s ua s pont e, w e di r ect ed the part i es t o fi l e s uppl ement al br i efs on thi s i s s ue, w hi ch theyhave now done. B r ooks - M cC ol l um ar gues thatthe D i s tr i ctC our thad di ver s i tyj ur i s di ct i on beca us e St at e Farm “r es i des ” i n and i s s ued the i ns ur ance pol i cyout of M ary l and and ha s i t s hom e off i ce i n I l l i noi s . She does notal l ege he row n ci t i zens hi p, w hi ch i s uncl ear( cert ai n of herfi l i ngs bearboth a M ary l and addr es s and di ffe r ent D e la w a re a d d re s s e s ), b u t h e r c itiz e n s h ip “ a t th e tim e th e c o m p la in t w a s f ile d ” c o n tr o ls . M i dl ant i c N at . B ank v. H ans en, 48 F. 3d 693, 696 ( 3d C i r . 1995) . St at e Farm ar gues t hat the D i s tr i ctC our tdi d nothave di ver s i tyj ur i s di ct i on. I tm akes no r epr es ent at i on re g a rd in g its c iti z e n sh ip , b u t ita rg u e s th a t th e re is n o d iv e rsityb e c a u se its c iti z e n sh ip is d e e me d th e s a me a s Br o o k s - M c Co l l u m’ s f o rp u rp o s e s o f

th i s typ e o f

s u i tu n d e r2 8 U. S . C. § 1 3 3 2 (c)(1). 36

T h a t p ro v isio n , h o w e v e r, d o e s n o t ap p lyto th is typ e o f su it. T h e p ro v isio n re a d s in re lev a n t p a rt: “in a n yd ire c t ac tio n a g a in st th e in su re r o f a p o licyo r c o n tra c t o f

liab ili ty i ns ur ance . . . t o w hi ch ac t i on the i ns ur ed i s notj oi ned as a party - defe ndant , s uch i ns ur er s hal l be dee m ed a c i t i zen of the St at e of w hi ch the i ns ur ed i s a ci t i zen, as w el l as ” the in s u re r’ s p la c e o f

in c o rp o ra tio n a n d p ri n c ip a l p la c e o f b u s in e s s . 2 8 U .S .C . § 1 3 3 2 (c )( 1 ). St at e Farm ar gues thatthi s pr ovi s i on appl i es beca us e B r ooks - M cC ol l um br oughther a c tio n d ire c tlya g a in st it w ith o u t n a m in g th e “ in su re d ” (i.e., E m e ra ld R id g e a n d its cover ed di r ect or s ) as defe ndant s . L eavi ng as i de the i s s ue of w hetherB r ooks - M cC ol l um h e rse lf o r th e a lleg e d ly“ ill e g iti m a te” m e m b e rsh ip o f E m e ra ld R id g e a re p ro p e rly c o n sid e re d th e “ in su re d ” u n d e r th is p o licy , w h ich th e D istric t C o u rt d id n o t d e c id e , this a c tio n is n o t th e k in d o f “ d ir e c t a c tio n ” c o n te m p la te d b yth e s ta tu te . “[A ] ‘ di r ectact i on, ’ as thatt erm i s us ed i n § 1332( c) , does notexi s t‘ unl es s the caus e of a ct i on agai ns tthe i ns ur ance companyi s of s uch a na tur e thatthe l i abi l i tys ought t o be i m pos ed coul d be i m pos ed aga i ns tthe i ns ur ed, ’ ” and i tdoes noti ncl ude s ui t s byan in s u re d a g a in s t h is o r h e r o w n in s u re r. M c G lin c h e yv . H a rt f o rd A c c id e n t & In d e m . C o ., 8 6 6 F .2 d 6 5 1 , 6 5 3 (3 d C ir . 1 9 8 9 ) ( c ita tio n o m itte d ). S e e a ls o R o s a v . A lls ta te In s . C o ., 9 8 1 F . 2 d 6 6 9 , 6 7 4 -75 (2d C ir . 1 9 9 2 ) (ex p lai n ing rati o n ale u n d erly ing this pro v isi o n ). In this case , B roo k s-M cC o ll u m see k s d am ag es f o r S tat e F arm ’s ow n all eg ed li ab il ityto h er, no tfor anyl i abil i tythat coul d b e i m po sed aga i nstE m eral d R i dg e or i t s di rect ors. T hu s, thi s pr ovi s i on does notappl y , and St at e Farm ’ s ci t i zens hi p fordi ver s i typurpos es turns7

in s te a d o n its s ta te o f

in c o rp o ra tio n a n d p ri n c ip a l p la c e o f b u s in e s s . S e e 2 8 U .S .C . § 1332( c) ( 1) . T he pl eadi ngs cont ai n no al l egat i on i n thatr egar d, and ther e i s nothi ng i n t he r e c o r d b e f

o r e u s th a two u l d a l l o w u s t o d e t e r mi n e S t a t e F a r m’ s c i t i z e n s h i p e v e n i f we w e re in c lin e d to a d d re ss th a t issu e in th e f irst in sta n c e . S e e M e n n e n C o . v . A tlan tic M u t. I ns . C o. , 147 F. 3d 287, 293- 94 ( 3d C i r . 1998) ( “s ubj ectm att erj ur i s di ct i on depends upon fa cts o f re co rd” ); E m p loy ers In s. o f W au sau , 9 0 5 F . 2 d at 47 & n . 5 (rem an d ing w h ere rec o rd in su ff

ici en t t o d eterm ine, i n ter ali a, cit izen sh ip o f p arti es f o r div ersityp u rpo ses). A ccor di ngl y , beca us e w e ca nnotdet erm i ne fr om the r ecor d w hetherthe D i s tr i ct C o u rt h a d su b

jec t m a tter ju risd ictio n o v e r th is d isp u te, w e a re c o n stra in e d to v a c a te its or derent er i ng s um m aryj udgm enti n favorof St at e Farm and r emand forthe D i s tr i ct C our tt o det erm i ne w hetheri thas di ver s i tyj ur i s di ct i on and t o conducts uch pr ocee di ngs a s m a yb e n e c e ss a ryin th a t re g a rd . In lig h t o f th is d isp o sitio n , w e d o n o t re a c h th e m e rits of the D i s tr i ctC our t ’ s rul i ng. W e not e, how ever , thatw e have no r eas on t o bel i eve that plenaryrevi ew of thatrul i ng w ou l d lead us t o a d i fferentcon cl usi on . B rooksM cC ol l um ’ s “mot i on t o r evi ew l ow ercourt [’ ] s or deron l egal fee s and courtcos t s ” and m ot i on t o s tr i ke St at e Farm ’ s s uppl ement al appendi x ar e deni ed.