Opinion
Case No. 1:99-CV-797
April 26, 2001
ORDER
In accordance with the Court's Opinion of this date;
IT IS HEREBY ORDERED that Continental Casualty Company's Motion to Reconsider the Court's Order of Dismissal (Dkt. No. 54) is DENIED.
IT IS FURTHER ORDERED that Continental Casualty Company's Motion to Strike Non-Party Zurich American Casualty Company's Opposition to Continental Casualty Company's Motion to Reconsider the Court's Order of Dismissal (Dkt. No. 68) is DENIED.
OPINION
This matter is before the Court on Continental Casualty Company's ("Continental") Motion to Reconsider and on Continental's Motion to Strike Non-Party Zurich American Casualty Company's ("Zurich American") Opposition to Continental's Motion to Reconsider. The Court denies both Motions.
Continental is seeking reconsideration of the Court's decision in Continental Cas. Co. v. Taco Bell Corp., 127 F. Supp.2d 986 (W.D.Mich. 2001), in which the Court dismissed Continental's claim against Taco Bell. Continental contends that the Court's decision is erroneously based on the belief that Cross-Defendant, Zurich Insurance Company ("Zurich"), is a California citizen.
FACTS
The facts of this case have been set forth in Continental Cas. Co. v. Taco Bell Corp., 127 F. Supp.2d 986, and need not be set forth in great detail here. This case arose from Wrench, L.L.C. v. Taco Bell Corp., 1:98-CV-45 (W.D.Mich.), wherein the plaintiff accused Taco Bell of wrongfully using its idea in a national advertising campaign.
During the time the wrongful use allegedly occurred, Taco Bell was insured under two different policies, each of which covered different periods of time. At one time, Taco Bell was insured by a policy underwritten by Continental and, at one time, by a policy underwritten by Zurich. Continental and Zurich brought separate actions seeking a declaratory judgment concerning Taco Bell's rights to a defense and indemnity in the Wrench action. Continental brought its action in this Court, and Zurich filed its action in the California state courts.
During the course of this case, Taco Bell was permitted to assert its claims against Zurich. Taco Bell alleged that Zurich was incorporated under the laws of New York and maintained a principal place of business in Illinois. Soon thereafter, Zurich brought a Motion to Dismiss Taco Bell's Cross-Claims because of the case pending in the California state court. This Court granted Zurich's Motion to Dismiss finding that Zurich was a necessary party whose joinder destroyed the Court's jurisdiction. Since then, Taco Bell has filed suit against both Continental and Zurich American in the Northern District of Illinois.
Continental now contends that Zurich is a company constituted under the laws of Switzerland, with its principal place of business in Zurich, Switzerland, and its joinder does not destroy the Court's jurisdiction.
Zurich American Insurance Company
In its Answer to Taco Bell's Cross-Complaint, Zurich asserted that Zurich American Insurance Company ("Zurich American") had assumed the assets and liabilities of Zurich. Zurich American is a New York corporation, with its principal place of business in Schaumburg, Illinois.
In its Opposition to Continental's Motion to Reconsider, Taco Bell admits that it erroneously sued Zurich American as Zurich. Zurich American is the actual party in this case, as evidenced by Taco Bell's allegation of Zurich American's state of incorporation and principal place of business in its Cross-Complaint. Moreover, it is Zurich American which has litigated this case, without objections from any party.
Legal Standard
According to Rule 7.4(a) of this Court's Local Civil Rules, the Court will not grant a motion for reconsideration if it merely presents the same issues ruled upon by the Court. Rule 7.4(a) also states that the movant of a motion for reconsideration must demonstrate palpable defect by which the Court and the parties have been misled, and that a different disposition of the case must result from a correction of the palpable defect.
ANALYSIS
Continental bases its argument that Zurich is a Swiss company on several cases. See e.g., St. Paul Fire Marine Ins. Co. v. Croker, Inc., 21 F. Supp.2d 537 (D.Md. 1998); Zurich Ins. Co. v. Smart Final Inc., 996 F. Supp. 979 (S.D.N.Y 1998).
The Court finds Continental's reliance on these cases misplaced. In the Smart case, Zurich was identified as a Swiss corporation but made no record as to its principal place of business because diversity was not an issue in that case. See generally Smart 996 F. Supp. 979. In the Croker case, Zurich argued it was the parent company of an United States underwriting company, and because of this, the worldwide headquarters of Zurich in Switzerland should be used in a jurisdictional analysis. Croker, 21 F. Supp.2d at 541. The court in Croker rejected Zurich's argument and determined jurisdiction by considering the state of incorporation for the specific underwriting company at issue and that underwriting company's principal place of business. Id.
Moreover, case law exists wherein Zurich argued that its principal place of business is Illinois. See Zurich Ins. Co. v. Uptowner Inns, Inc., 740 F. Supp. 404, 405 (S.D.W. Va. 1990) (plaintiff Zurich Insurance Company had filed declaratory judgment action in federal court, alleging that it was a Swiss corporation with its principal place of business in the State of Illinois); see also Zurich Ins. Co. v. Nissan Motor Corp., 1996 WESTLAW 277604 at * 1-*2 (E.D.La. May 23, 1996) (plaintiff Zurich Insurance Company had filed in Louisiana state court, alleging Illinois incorporation and principal place of business); Zurich Ins. Co. v. Principal Mut. Life Ins. Co., 1992 WL 309547 at *4 n. 1 (N.D.Ill. Oct. 20, 1992) (plaintiff Zurich Insurance Company filed declaratory judgment action in federal court alleging Illinois incorporation and principal place of business); Zurich Ins. Co. v. Celotex Corp., 1988 WL 107392 at * 1 *6 n. 2 (N.D.Ill. Oct. 11, 1988) (plaintiff Zurich Insurance Company had filed declaratory judgment action in Illinois state court, alleging Swiss incorporation and principal place of business in Illinois); Zurich Ins. Co. v. Raymark Indus., Inc., 672 F. Supp. 1102, 1103 (N.D.Ill. 1987) (plaintiff Zurich Insurance Company had filed in Illinois state court alleging it was an Illinois corporation with its principal place of business in Schaumburg, Illinois); Barr v. Zurich Ins. Co., 985 F. Supp. 701, 702 (S.D.Tex. 1997) (granting remand adverse to Zurich, court observes that defendant Zurich Insurance Company is "a foreign corporation with its principal place of business in Illinois"); Bradley Corp. v. Zurich Ins. Co., 984 F. Supp. 1193, 1195 (E.D.Wis. 1997) (diversity case in which plaintiff alleged defendant Zurich Insurance Company incorporated and had its principal place of business in Illinois).
Continental urges this Court to follow facts developed before another court. Continental also urges this Court to rely on documents filed by Zurich in other cases, wherein Zurich states it is a Swiss company. This Court will not base its decision on alleged facts presented to another court. Especially where such facts conflict with each other. Rather, this Court will make its decision based on the facts alleged in this specific case. In this case, the correct party is Zurich American. This is the party that has litigated in this case, and is the party that may be liable to Taco Bell. Furthermore, Taco Bell's Cross-Complaint clearly indicates that Taco Bell was suing Zurich American.
Of course, citizenship for diversity jurisdiction purposes is determined at the time a complaint is filed. See Grant County Deposit Bank v. McCampbell, 194 F.2d 469 (6th Cir. 1952). In this case, Taco Bell's Cross-Complaint against Zurich American was filed in May 2000, long after Zurich American assumed the assets and liabilities of Zurich in 1998. Even Continental's Complaint, which began this case, was filed in October 1999. Thus, at the time any Complaint in this case was filed, Zurich American was responsible for the policy at issue, and Zurich American was a citizen of New York and Illinois. Continental is also a citizen of Illinois, and joining Zurich American, another Illinois citizen, would destroy this Court's diversity jurisdiction. Zurich American, therefore, cannot be properly joined in this action as such joinder will destroy the Court's diversity jurisdiction. 28 U.S.C. § 1332(a)(1).
According to 28 U.S.C. § 1332(a)(1), diversity jurisdiction exists when the amount in controversy exceeds $75,000, and the action is between citizens of different states. In addition, a corporation is a citizen of the state in which it is incorporated and where it has its principal place of business. 28 U.S.C. § 1332(c)(1).
Furthermore, the Northern District of Illinois is a more appropriate forum to hear this case. As noted by this Court in its Opinion, Zurich American is a necessary and indispensable party to this action. Continental, 127 F. Supp.2d at 870-71. It also follows that Continental is a necessary party.
See id. Therefore, both necessary parties are citizens of Illinois. Illinois has a connection to the contract at issue and the parties of this case. It is not an abuse of this Court's discretion to deny an action for declaratory judgment by Continental when Continental has attempted to litigate without a necessary party, a more appropriate forum exists, and the more appropriate forum has been utilized. See Wilton v. Seven Falls Co., 515 U.S. 277, 282, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995).
A district court may have jurisdiction of a suit under the Federal Declaratory Judgments Act, 28 U.S.C. § 2201(a), but that same court is under no compulsion to exercise that jurisdiction. See Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
Continental is accurate in its statement that this case has been pending since October 1999. Continental seems to be implying that these parties should have their case heard and justice rendered. The Court readily agrees. These parties should have their case heard. It should not be heard, however, in this Court, which has no connection to the case. It is true that this Court based its dismissal of Continental's Complaint on a mistaken belief regarding Zurich's citizenship. This kind of mistake appears to rise to the level of "palpable" as mentioned in this Court's Local Rules. The facts of this case have been further explained to the Court, but this does not change the correctness of the Court's previous decision. Because of this, Continental cannot show that a different disposition of the case must result from a correction of this palpable mistake.
For the foregoing reasons, the Court denies Continental's Motion for Reconsideration.
Continental's Motion to Strike Zurich American's Opposition to its Motion
Continental also asks the Court to strike Zurich American's Opposition to its Motion because Zurich American is not a party to this case, and the Court did not request an answer from Zurich American.
Although the Court did not request an answer from Zurich American and Local Civil Rule 7.4(b) states that no answer to a motion for reconsideration will be allowed unless requested by the Court, the Court will not strike Zurich American's answer. The Court would have requested an answer from Zurich American once it began to read Continental's Motion. Zurich American's anticipation of this does not merit striking the answer. In addition, the Court has determined that Zurich American is a party to this case. Thus, the Court denies Continental's Motion to Strike.
An Order consistent with this Opinion will follow.