United States District Court, N.D. Texas, Dallas Division
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON SUBSCRIBING TO POLICY NO. B1230AP03924A17
PROPERTY RISK SERVICES MANAGEMENT II, and JAMES MORGAN, LTD.
MEMORANDUM OPINION AND ORDER
GREN SCHOLER UNITED STATES DISTRICT JUDGE
Order addresses Defendant James Morgan, Ltd.'s
("Defendant") Motion to Join Subscribers [ECF No.
6]. For the following reasons, the Court denies the Motion
but orders Plaintiffs Certain Underwriters at Lloyd's,
London subscribing severally to Policy No. B1230AP03924A17
("Plaintiffs") to file an amended complaint to
allege the citizenship of Cyrene Capital Limited or another
member or investor-i.e., a "Name"-to the Policy.
action involves a disagreement regarding the appointment of a
neutral umpire in an arbitration arising under a commercial
property insurance policy (the "Policy"). Compl.
¶¶ 1, 8. Defendant is a Texas limited partnership
and, together with Property Risk Services Management, II, is
an insured under the Policy issued by Plaintiffs. See
Id. Ex. A; Answer ¶ 1. Plaintiffs are the
underwriters of Lloyd's of London who "subscribe
severally to the Policy issued to" Defendant and
Property Risk, Services Management, II. See Compl.
¶ 3. Lloyd's of London, in turn, "is not an
insurance company but rather a self-regulating entity which
operates and controls an insurance market," and whose
members, like Plaintiffs, "buy and sell . . .
insurance risk" and "collectively make up
Lloyd's." Corfield v. Ball. Glen Hill LP,
355 F.3d 853, 857-58 (5th Cir. 2003) (citations omitted). The
members or investors of Lloyd's
are called "Names" and they are the individuals and
corporations who finance the insurance market and ultimately
insure risks. Names are underwriters of Lloyd's insurance
and they invest in a percentage of the policy risk in the
hope of making return on their investment. . . . Each Name is
exposed to unlimited personal liability for his proportionate
share of the loss on a particular policy that the Name has
subscribed to as an underwriter. Typically[, ] hundreds of
Names will subscribe to a single policy, and the liability
among the Names is several, not joint.
Most Names or investors do not actively participate in the
insurance market on a day to day basis. Rather, the business
of insuring risk at Lloyd's is carried on by groups of
Names called "Syndicates." In order to increase the
efficiency of underwriting risks, a group of Names will, for
a given operating year, form a "Syndicate" [that]
will in turn subscribe to policies on behalf of all Names in
the Syndicate. A typical Lloyd's policy has multiple
Syndicates which collectively are responsible for 100 percent
of the coverage provided by a policy. The Syndicates
themselves have been said to have no independent legal
identity. Thus, a Syndicate is a creature of administrative
convenience through which individual investors can subscribe
to a Lloyd's policy. A Syndicate bears no liability for
the risk on a Lloyd's policy. Rather, all liability is
born by the individual Names who belong to the various
Syndicates that have subscribed to a policy.. . .
In sum, while an insured receives a Lloyd's
"policy" of insurance, what he has in fact received
are numerous contractual commitments from each Name who has
agreed to subscribe to the risk. The Names are jointly and
severally obligated to the insured for the percentage of the
risk each has agreed to assume. The insured does not have to
sue each name individually however to collect on their
individual promises because the typical Lloyd's policy
contains a clause providing that "any [Name] can appear
as representative of all [Names]." Thus, when litigation
ensues over a Lloyd's policy, the only named Lloyd's
party appearing in the litigation is usually the lead
underwriter on the policy.
Id. at 858-59 (citations omitted). Plaintiffs
identified the following Names and Syndicates to the Policy:
A 20% portion of the Policy is subscribed to by Syndicate
1969, which is not a citizen or resident of Texas or any
other state within the United States. Cyrene Capital Limited
[("Cyrene")] is a corporate member and capital
provider for Syndicate 1969 and is a subsidiary of Cyrene
Investments Limited, which is organized and maintains its
principal place of business in the United Kingdom, a
participating country to the Convention. Furthermore, as to
the portions of the risk assumed by other Underwriters under
the Policy, certain of these parties too are citizens of
countries other than the United States which also participate
in the Convention.
Plaintiffs tendered payment to Defendant to cover hail damage
to a commercial building, Defendant institute an arbitration
proceeding underlying the present action, alleging that the
payment was grossly inadequate, See Compl,
¶¶ 9-14; Answer ¶¶ 8-9. The parties have
agreed to arbitrate the dispute pursuant to the Policy's
arbitration provision and each have selected an arbitrator.
See Compl. ¶ 15; Answer ¶¶ 9-10. The
arbitrators, however, have been unable to reach an agreement
as to the selection of a neutral umpire for the arbitration.
See Compl. ¶ 16. Plaintiffs filed the present
action for the appointment of an umpire, see Id.
¶¶ 17-22, and Defendant does not oppose the relief
Plaintiffs request, provided that the Court does not appoint
as an umpire an individual proposed by the parties.
See Answer ¶ 12.
the Court could appoint an umpire, however, Defendant filed
the pending Motion to require Plaintiffs to join "all
subscribers to the . .. [P]olicy." Mot. 3. According to
Defendant, joinder is necessary to ensure that the Court has
subject matter jurisdiction over the dispute and to ensure
that the subscribers are bound by the arbitration process.
See Br. in Supp. of Mot. to Join Subscribers
("Br.") 4-6. Plaintiffs filed their Opposition and
Defendant filed its Reply.