United States District Court, S.D. Alabama, Southern Division
JOSHUA P. MYRICK, etc., Plaintiff,
EVANSTON INSURANCE CO., etc., Defendant.
WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE
action is before the Court on the plaintiff’s motion to
remand. (Doc. 10). The defendant has filed a response, (Doc.
14), the plaintiff declined to file a reply, (Doc. 13), and
the motion is ripe for resolution. After careful
consideration, the Court concludes the motion is due to be
plaintiff brought suit in Alabama state court against Mega
Construction (“Mega”) for the wrongful death of
the plaintiff’s decedent. The plaintiff there obtained
a $1.5 million consent judgment. The plaintiff then procured
process of garnishment and served same on the defendant
herein as Mega’s liability insurer. The defendant
timely removed on the basis of diversity.
is no question that the decedent was a citizen of Alabama and
that the plaintiff, as his personal representative, shares
that citizenship for purposes of assessing diversity
jurisdiction. 28 U.S.C. § 1332(c)(2). There is also no
question that the defendant is an Illinois corporation with
its principal place of business in that state, such that it
is a citizen of Illinois for diversity purposes. Id.
§ 1332(c)(1). The plaintiff, however, argues that this
is a “direct action” within the meaning of
Section 1332(c)(1); that Mega is a citizen of Alabama; and
that the defendant is thus also deemed a citizen of Alabama
pursuant to Section 1332(c)(1)(A), destroying complete
diversity and depriving the Court of subject matter
jurisdiction. The defendant concedes Mega’s citizenship
but denies that Mega’s citizenship is properly
attributed to it.
purposes of diversity jurisdiction (including removal),
“in any direct action against the insurer of a policy
or contract of liability insurance, … to which action
the insured is not joined as a party-defendant, such insurer
shall be deemed a citizen of … every State and foreign
state of which the insured is a citizen ….” 28
U.S.C. § 1332(c)(1)(A).
have uniformly defined the term ‘direct action’
as used in this section as those cases in which a party
suffering injuries or damages for which another is legally
responsible is entitled to bring suit against the
other’s liability insurer without joining the insured
or first obtaining a judgment against him.”
Fortson v. St. Paul Fire and Marine Insurance Co.,
751 F.2d 1157, 1159 (11th Cir. 1985) (emphasis
added, internal quotes omitted). The highlighted portion of
this statement is dicta, because Fortson
did not involve such a fact situation.
Eleventh Circuit expressed Fortson’s
formulation as holding in Kong v. Allied Professional
Insurance Co., 750 F.3d 1295 (11th Cir.
2014). The plaintiff in Kong obtained a consent
judgment against her alleged tortfeasor and then sued the
tortfeasor’s insurer in state court. When the insurer
removed, the plaintiff unsuccessfully moved to remand on the
grounds that hers was a direct action. Id. at
1298-99. The Kong panel noted that Fortson,
other courts, and leading treatises all agree that a suit
against an insurer brought only after obtaining judgment
against the insured as required by state law is not a direct
action. Id. at 1300. It then reviewed the
legislative history of Section 1332(c)(1)(A) and concluded
that its purpose – “to prevent plaintiffs from
manipulating federal jurisdiction in order to seek the
shelter of a more favorable forum” – “does
not occur … if a state requires its tort plaintiffs to
first join or obtain judgment against the insured as a
prerequisite to suing an insurer.” Id. Because
Florida law required a tort plaintiff to obtain a settlement
or verdict against the insured before suing the insurer, the
plaintiff’s claim “does not fall within §
1332(c)’s direct-action exemption.” Id.
at 1301. In short, “an action is … not a direct
action if a plaintiff must first join or obtain judgment
against the insured as a prerequisite for suing an
insurer.” Id. at 1301 n.2.
hold that unless the cause of action against the insurance
company is of such a nature that the liability sought to be
imposed could be imposed against the insured, the action is
not a direct action.” Fortson, 751 F.2d at
1159. This portion of Fortson is, as it declares, a
holding. A claim brought to recover insurance
proceeds to satisfy a judgment already entered against the
insured seeks to impose a liability (payment of insurance
proceeds) that could not be imposed against the insured.
City of Vestavia Hills v. General Fidelity Insurance
Co., 676 F.3d 1310, 1315 (11th Cir. 2012)
(“Similar to the plaintiff in Fortson, [the
plaintiff] could not have brought this action against [the
insured], as the single count relates to insurance and [the
plaintiff] has already obtained judgment against [the
insured], ” and “we are bound by the holding in
are thus at least two circumstances under which a plaintiff
may sue a tortfeasor’s liability insurer, but not the
tortfeasor/insured, without creating a “direct
action” within the contemplation of Section 1332(c)(1):
(1) when the claim against the insurer could not have been
brought against the insured; and (2) when, pursuant to a
state law requirement, the plaintiff has already obtained
judgment against the insured. Kong, 750 F.3d at 1301
n.2. When the suit is against the insurer to recover
insurance proceeds to satisfy an existing judgment against
the insured, both circumstances exist. City of Vestavia
Hills, 676 F.3d at 1315.
of the governing rules requires identification of the
authority by which the plaintiff obtained process of
garnishment; if state law required the plaintiff to obtain
judgment against Mega before obtaining process of garnishment
against the defendant (as the plaintiff did), Kong
and City of Vestavia Hills are satisfied and this is
not a direct action.
plaintiff says he obtained process of garnishment pursuant to
Alabama Code §§ 27-23-1 and -2. (Doc. 10 at 2).
“This Court has interpreted § 27-23-1 and §
27-23-2 to preclude an injured party from bringing an action
against an insurer before the injured party has recovered a
final judgment against the insured.” Knox v.
Western World Insurance Co., 893 So.2d 321, 324 (Ala.
2004) (describing Maness v. Alabama Farm Bureau Mutual
Casualty Insurance Co., 416 So.2d 979 (Ala. 1982)).
“[T]he clear wording of § 27-23-1 and §
27-23-2 … precludes the [plaintiffs] from asserting a
direct action against [the insurer] before a final judgment
is rendered against [the insured].” Id. at
325. Thus, “[a]n action brought under Alabama Code