Anham USA Inc. v. Afghan Global

Background

Anham USA, Inc. and Anham FZCO alleged that they purchased political-violence insurance for a large warehouse in Afghanistan. USI Insurance Services acted as the primary broker and used Tysers Insurance Brokers as a sub-broker. The policies identified Certain Underwriters of Lloyd’s, London as insurers or underwriters, while Afghan Global Insurance, Ltd. allegedly served as the local fronting company.

After Taliban forces took control of the warehouse’s province in August 2021, Anham submitted a proof of loss seeking the policies’ combined $41 million limits. The Lloyd’s underwriters ultimately declined coverage and asserted, among other things, that they had no direct contractual relationship with Anham. Anham’s Amended Complaint asserted breach-of-contract claims against the Lloyd’s underwriters and Afghan Global, negligence claims against the broker defendants, and fraud and civil-conspiracy claims involving the defendants.

USI moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint adequately states a claim, or alternatively sought a stay. Tysers moved to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1), as well as on other grounds, or alternatively sought a stay. The court addressed jurisdiction first because a federal court must establish its authority to hear a case before deciding other issues.

Subject-Matter Jurisdiction

Anham did not assert a federal-law claim, so the court considered whether diversity jurisdiction supplied a basis for the case. Diversity jurisdiction generally requires complete diversity—that is, no plaintiff may share state citizenship with any defendant—and an amount in controversy exceeding $75,000.

The court held that Anham had not adequately pleaded the citizenship of the Lloyd’s underwriters. Lloyd’s is an unincorporated insurance marketplace whose syndicates have no separate legal identity. The syndicates consist of individual underwriters called Names, and each Name is separately responsible for its share of a loss. For diversity purposes, the citizenship of each relevant Name must be considered.

Anham alleged only that none of the Lloyd’s subscribers or Names was a citizen or resident of Virginia. The court held that this negative, conclusory allegation did not identify the Names or affirmatively state their citizenship. A letter from counsel for the Lloyd’s underwriters also did not establish the necessary citizenship information, and the policies’ identification of lead Names did not provide the citizenship of those lead Names or the remaining Names.

The court also held that Anham had not established the amount-in-controversy requirement as to the Lloyd’s Names. Although the policies provided up to $41 million in coverage, each Name’s liability was several rather than joint. Therefore, the jurisdictional amount had to be established separately for each Name, and Anham had not alleged that every Name’s individual share exceeded $75,000. The court concluded that it lacked subject-matter jurisdiction on both the citizenship and amount-in-controversy grounds.

Rule 21 and Disposition

Anham suggested that it could preserve diversity jurisdiction by dropping any nondiverse Names under Federal Rule of Civil Procedure 21. The court identified several obstacles: Anham apparently did not know which Names were nondiverse, lacked information about each Name’s amount in controversy, and might need to retain the underwriters as indispensable parties. The court also noted that an anti-suit injunction issued by a court in the United Kingdom appeared to restrict steps in the United States case, including dropping Names or amending the complaint.

The court therefore delayed dismissal until July 24, 2024, to allow Anham to make a Rule 21 motion if it could do so. Unless Anham made that motion by the deadline, the order provided that Tysers’s motion to dismiss for lack of subject-matter jurisdiction would be granted, USI’s motion to dismiss would be denied as moot, and the Amended Complaint would be dismissed without prejudice. Judge Seibel did not decide the defendants’ remaining dismissal arguments or their requests for a stay.