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Safeco Insurance Co. of Illinois v. Estate of Concepcion Matute

United States District Court, S.D. Alabama, Southern Division

July 18, 2019

SAFECO INSURANCE COMPANY OF ILLINOIS PLAINTIFF
v.
ESTATE OF CONCEPCION MATUTE, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER GRANTING UNIVERSITY OF SOUTH ALABAMA'S MOTION TO DISMISS AND SAFECO'S MOTION TO TRANSFER VENUE

          LOUIS GUIROLA, JR. UNITED STATES DISTRICT JUDGE

         BEFORE THE COURT are the [145] Motion to Dismiss for Lack of Jurisdiction filed by the defendant University of South Alabama (“USA”) and the [152] Motion to Change Venue filed by the plaintiff, Safeco Insurance Company of Illinois, in this interpleader action. The parties have finished briefing the Motions. After reviewing the submissions of the parties, the record in this matter, and the applicable law, the Court finds that both motions should be granted.

         BACKGROUND

         On February 10, 2016, Arthur Campbell was involved in a motor vehicle collision with five other vehicles near the intersection of Highway 49 South and Mississippi Highway 53 in Harrison County, Mississippi. The accident allegedly caused the deaths of three persons - Concepcion Matute, Rosalinda Matute, and Julisa Matute. Several others claim they suffered injuries in the accident. These individuals and the estates of the decedents claim that Campbell's negligence caused the accident.

         At the time of the accident, Campbell and his wife were insured by an automobile liability policy issued by Safeco. The policy limits are $50, 000 per person and $100, 000 per accident. Faced with numerous claims that exceeded the policy limits, Safeco filed this interpleader action and deposited $100, 000 into the Court registry. The defendants to the interpleader action included the Estates of the three decedents, the persons who allegedly suffered injuries in the accident, and several medical providers and insurers who claimed to have liens.

         Upon Safeco's Motion, the Court entered an [93] Order discharging Safeco from liability and dismissing Safeco with prejudice as a party to this interpleader action. Several defendants were also dismissed from the action. After numerous lengthy negotiations, the remaining parties reached a tentative settlement, pending Chancery Court approval of the settlement in the various estates and guardianship proceedings. However, USA Medical Center had previously filed a probate claim in the Chancery Court of Harrison County in the Estate of Julisa Matute, seeking to recover payment for its treatment of Julisa Matute's accident-related injuries. The Chancery Court found that USA was not entitled to any recovery from the settlement proceeds and USA appealed.

         Soon afterwards, Arthur Campbell filed a Motion to join USA as a defendant to this interpleader action. Campbell noted that USA had threatened to sue Safeco, himself, and others in Alabama. This Court granted the Motion. The Court also granted Safeco's request to be reinstated as a party to this interpleader action and permitted Safeco to amend its Complaint to name USA as a defendant.

         USA filed the present Motion to Dismiss for Lack of Jurisdiction on the basis of sovereign immunity. Safeco then filed the present Motion to Transfer Venue to Alabama. USA has not opposed the Motion to Transfer Venue, but several defendants, including the Estates of Julisa, Rosalinda, and Concepcion Matute, opposed the transfer of venue.

         DISCUSSION

         I. SOVEREIGN IMMUNITY

         The Eleventh Amendment of the United States Constitution provides,

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State. The Fifth Circuit has explained that “[t]he Eleventh Amendment bars citizens of a state from suing their own state or another state in federal court . . . .

Raj v. La. State Univ., 714 F.3d 322, 328 (5th Cir. 2013). “The state need not be the named party in a federal lawsuit, for a state's Eleventh Amendment immunity extends to any state agency or entity deemed an ‘alter ego' or ‘arm' of the state.” Perez v. Region 20 Educ. Serv. Ctr., 307 F.3d 318, 326 (5th Cir. 2002). Similarly, the Alabama Constitution provides that “the State of Alabama shall never be made a defendant in any court of law or equity.” Ala. Const. Art. I, § 14.

         USA Medical Center is a hospital operated by the University of South Alabama, a state university. See generally Sarradett v. Univ. of S. Ala. Med. Ctr., 484 So.2d 426 (Ala. 1986). The Alabama Supreme Court has held that “[t]he operation of a hospital by a State university falls within the realm of sovereign immunity.” Health Care Auth. v. Davis, 158 So.3d 397, 427 (Ala. 2013). ...


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