City Of New York v. Travelers Property Casualty Company of America
- Alison Nathan
- 1:19-cv-02125
- U.S. District Court · Southern District of New York
- 7
In City of New York v. Travelers Property Casualty Co. of America, Judge Nathan dismissed three related insurance cases without prejudice for lack of jurisdiction and denied summary judgment as moot.
The City of New York, the Central Park Conservancy, Inc. in one of the actions, Travelers Property Casualty Company of America, and Travelers Indemnity Company. The complaints were dismissed without prejudice, with leave to amend, and the pending summary judgment motion was denied as moot.
What happened
City of New York and, in one case, the Central Park Conservancy, Inc. brought three related cases against Travelers entities, seeking declarations that Travelers had duties to defend them in state tort actions and reimbursement for defense costs.
The plaintiffs relied on federal jurisdiction based on the parties being from different states and argued that potential insurance payments should count toward the required amount in dispute. Travelers challenged whether that amount exceeded $75,000.
Judge Alison J. Nathan ruled that the complaints sought decisions about duties to defend, not duties to indemnify, so potential indemnity payments could not be counted based only on their possible later effect. The court dismissed all three complaints without prejudice for lack of jurisdiction, granted leave to amend, and denied the pending summary judgment motion as moot.
The detailed version
- City Of New York v. Travelers Property Casualty Company of America · No. 1:19-cv-02125
- Alison Nathan
- Jan. 16, 2020
Background
These three related insurance declaratory-judgment actions were brought by the City of New York and, in one action, the Central Park Conservancy, Inc. The first action sought a declaration that Travelers Property Casualty Company of America had a duty to defend the plaintiff in a tort action pending in New York Supreme Court. The other two actions were brought against Travelers Indemnity Company and sought similar declarations concerning the City's defense in state tort actions. One of those actions initially involved five state tort cases; Travelers Indemnity later agreed to defend the City in three of them.
The parties had stipulated to limited discovery and planned to file cross-motions for summary judgment. After the plaintiffs filed their initial summary judgment motion, the defendants filed a motion for judgment on the pleadings challenging subject-matter jurisdiction.
Jurisdictional issue
The plaintiffs relied on diversity jurisdiction under 28 U.S.C. § 1332(a). That statute requires, among other things, that the amount in controversy exceed $75,000. The plaintiffs had the burden of showing a reasonable probability that the amount in controversy met that threshold in each action.
For claims seeking declaratory or injunctive relief, the amount in controversy is generally measured by the value of the subject of the lawsuit. The complaints sought declarations about Travelers' duty to defend and reimbursement for defense costs already incurred. They did not allege that the value of the defense obligations themselves exceeded $75,000, and the plaintiffs did not make that argument in their briefing.
Instead, the plaintiffs argued that potential indemnity payments should be included. They reasoned that a ruling about the duty to defend could affect whether Travelers would later have a duty to indemnify. The court rejected that reasoning because any effect on indemnity would result from the possible later use of the judgment through collateral estoppel, a rule that can prevent relitigation of an issue already decided. The amount in controversy is based on the dispute actually presented in the case, not on a possible collateral effect of the judgment.
The court distinguished the plaintiffs' principal authority because that case included an actual claim seeking a declaration about indemnity. Here, the complaints did not ask the court to decide any duty to indemnify. The court therefore did not decide whether a potential indemnity claim might be ripe for decision before the underlying state case ended.
Disposition
The court dismissed the complaints in all three actions without prejudice for lack of subject-matter jurisdiction and gave the plaintiffs leave to amend. The court also denied the pending summary judgment motion as moot. The plaintiffs were directed, within fourteen days of the order, either to file amended complaints or notify the court that they intended to discontinue the actions. The court did not reach the defendants' alternative argument that the first action was moot.
Judge Alison J. Nathan's order resolved docket entries 22 and 27 in case number 19-cv-2125.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.