United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
GILSTRAP UNITED STATES DISTRICT JUDGE
the Court is the Motion to Withdraw the Reference (Dkt. No.
1) filed by Defendant Hartford Lloyds Insurance Company
(“Hartford”). Having considered the Motion and
the Report and Recommendation (Dkt. No. 5) of Chief
Bankruptcy Judge Brenda Rhoades, the Court is of the opinion
that the Motion to Withdraw the Reference should be
outlined in the Report and Recommendation, North Dallas Lawn
Care & Landscape, Inc. (“North Dallas Lawn
Care”) filed a voluntary petition for reorganization
under Chapter 11 of Title 11 of the United States Code (the
“Bankruptcy Code”) on July 15, 2015. The
Bankruptcy Court confirmed North Dallas Lawn Care's Plan
of Reorganization on June 1, 2016. On July 20, 2016, after
plan confirmation, North Dallas Lawn Care, acting through the
Receiver appointed by the Bankruptcy Court, filed suit
against Hartford, alleging a claim for breach of contract
under Texas state law and a claim for turnover of property to
the estate pursuant to § 542 of the Bankruptcy Code. The
Court refers to such suit as the “Adversary
Proceeding.” On September 15, 2016, Hartford filed in
the Bankruptcy Court a Motion to Withdraw the Reference,
seeking to have the Adversary Proceeding heard by the
District Court rather than the Bankruptcy Court.
October 10, 2016, North Dallas Lawn Care filed an Amended
Complaint, which no longer includes a claim under § 542
of the Bankruptcy Code. (Dkt. No. 14 in 4:16-ap-4078.) Soon
after, the Bankruptcy Court entered an Agreed Order, signed
by both parties, confirming that North Dallas Lawn Care had
indeed abandoned its claim under § 542. (Dkt. No. 20 in
4:16-ap-4078.) On the same day, the Bankruptcy Judge issued
her Report and Recommendation, recommending that the
reference to the Bankruptcy Court be withdrawn in all
respects as to the Adversary Proceeding and that such
proceeding be tried by jury before the District Court. (Dkt.
No. 5; Dkt. No. 21 in 4:16-ap-4078.) The Report also notes
that at the hearing before the Bankruptcy Court, North Dallas
Lawn Care represented that it no longer opposes withdrawal of
the Adversary Proceeding to the District Court. (Dkt. No. 5
at 3.) As such, the Court will treat Defendant Hartford's
Motion as unopposed.
of the parties' agreement that this Adversary Proceeding
should proceed before the District Court, federal courts have
“an independent obligation to determine whether
subject-matter jurisdiction exists, even when no party
challenges it.” Hertz Corp. v. Friend, 559
U.S. 77, 94 (2010). Defendant Hartford first asserts that
this Court has jurisdiction under 28 U.S.C. § 1334(b).
Section 1334(b) provides district courts with “original
but not exclusive jurisdiction of all civil proceedings
arising under title 11, or arising in or related to cases
under title 11.” In the alternative, Hartford argues
that the District Court and, in turn, the Bankruptcy Court,
lack post-confirmation “related to” jurisdiction
over this matter, but that the District Court may nonetheless
adjudicate the case based on diversity jurisdiction. (Dkt.
No. 1 at 12-13.)
a concern that “related to” jurisdiction may not
exist in this case, the Court ordered Defendant to file a
declaration regarding its citizenship and the citizenship of
its underwriters. (Dkt. No. 6.) The Court further ordered
both parties to submit briefing addressing the presence or
absence of the Court's jurisdiction in light of the
submitted declaration. (Dkt. No. 6.)
their respective briefs filed pursuant to the Court's
Order, both parties argue that diversity jurisdiction exists
in this suit. (Dkt. Nos. 8 and 9.) The Court agrees. As such,
the Court need not address the scope of “related
to” jurisdiction as it applies to this case.
district court in a civil case has diversity jurisdiction
under 28 U.S.C. § 1332(a) where the amount in
controversy exceeds $75, 000 and the suit is between citizens
of different states.
Hartford Lloyd's Insurance Company is a particular type
of business entity created by Texas statute and referred to
as a “Lloyd's plan.” Tex. Ins. Code Ann.
§§ 941.001-.702 (West 2009). A Texas
“Lloyd's plan” is defined by statute as
“an entity engaged in the business of writing insurance
on the Lloyd's plan.” Tex. Ins. Code Ann. §
941.001 (West 2009). An “underwriter” of such a
plan is defined as “an individual, partnership, or
association of individuals that writes insurance on the
Lloyd's plan.” Tex. Ins. Code Ann. § 941.001
(West 2009). The “attorney in fact” of a
Lloyd's plan may execute insurance policies for the plan.
Tex. Ins. Code Ann. § 941.052 (West 2009).
the complete diversity of citizenship requirement, a Texas
Lloyd's plan is an unincorporated association, and its
citizenship is defined by the citizenship of its members.
Royal Ins. Co. of Am. v. Quinn-L Capital
Corp., 3 F.3d 877, 882 (5th Cir. 1993) (looking to the
citizenship of the members of a Lloyd's plan insurance
association to evaluate diversity jurisdiction). See also
Weston Plaza, LTD v. Hartford Lloyd's Ins. Co., No.
3:11-cv-1034, 2011 WL 4712239, at *2 (N.D. Tex. Sept. 1,
2011), report and recommendation adopted sub nom. Weston
Plaza, Ltd. v. Hartford Lloyd's Ins. Co., No.
3:11-cv-1034, 2011 WL 4731087 (N.D. Tex. Oct. 7, 2011)
(discussing the citizenship of Defendant Hartford Lloyd's
Insurance Company). The Fifth Circuit has held that the
membership of a Texas Lloyd's group consists solely of
the underwriters and does not include the attorney in fact.
Royal Ins. Co. of Am., 3 F.3d at 882. As such,
Defendant's citizenship is defined solely by the
citizenship of its underwriters.
accordance with this Court's Order, Defendant filed a
declaration from its corporate representative, Lisa Levin,
who serves as Defendant's Secretary and Attorney in Fact.
(Decl. of Lisa Levin, Dkt. No. 7-1 (“Levin
Decl.”).) As outlined in that declaration, Defendant is
a Texas Lloyd's corporation and is comprised of
individual underwriters acting by and through Defendant's
Attorney in Fact. (Levin Decl. ¶ 2.) Each underwriter is
a natural person, and Defendant has identified the names and
citizenship of each of those underwriters. (Levin Decl.
¶ 3-4.) The citizenship of the twelve underwriters
includes the State of Connecticut, the State of Washington,
and the Commonwealth of Massachusetts. (Levin Decl. ¶
4.) Thus, Defendant is not a citizen of the State of Texas.
See Royal Ins. Co. of Am, 3 F.3d at 882. Given that
North Dallas Lawn Care is a corporation organized under the
laws of Texas with its principal place of business in Texas
(see Dkt. No. 9 at 1), complete diversity of
citizenship exists among the parties.
the amount in controversy, Defendant notes that Plaintiffs
Complaint seeks at least $769, 000, which clearly exceeds the
amount in controversy necessary to establish diversity