United States District Court, W.D. Kentucky, Louisville
Charles R. Simpson III, Senior Judge.
matter is before the Court on two motions. Defendant Carless
Swain moves this Court to dismiss the complaint for
declaratory judgment by Plaintiff West Bend Mutual Insurance
Company (“West Bend”), ECF No. 11. West Bend
responded, ECF No. 14. Swain replied, ECF No. 18. Swain has
also filed a supplemental pleading in support of her motion
to dismiss, ECF No. 28.
West Bend moves this Court for leave to file its first
amended complaint, ECF No. 22. Defendant Carless Swain
responded, objecting to the motion, ECF No. 23. West Bend
replied, ECF No. 24. Because these motions include common
issues of fact and law, the Court will address them in the
same memorandum opinion and order. For the reasons below, the
Court will grant Swain's motion to dismiss West
Bend's declaratory judgment complaint. The Court will
deny West Bend's motion for leave to file its first
declaratory judgment action, West Bend seeks a declaration
that it has no obligation to indemnify Defendant K&Q,
Inc. d/b/a Lil' Kings and Queens Development Center
(“K&Q, Inc.”) in an underlying state court
case. Compl. ¶ 30, ECF No. 1. The state court case arose
on May 5, 2016 when Swain filed suit against K&Q, Inc. in
the Jefferson County, Kentucky Circuit Court. St. Ct. Compl.
1, ECF No. 1-2. Swain then filed an amended complaint adding
the Estate of LS as a plaintiff and adding Jacquelin O.
Thomas as a defendant. First Am. St. Ct. Compl. 1, ECF No.
11-5. Swain also filed a second amended complaint adding West
Bend, Raven Allen, and Sha'Vonda Hicks as defendants.
Second Am. St. Ct. Compl. 1, ECF No. 22-3.
underlying case, Swain alleges that on April 18, 2016, her
two-year-old son, LS, was in the custody of K&Q, Inc.,
Thomas, Allen, and Hicks (collectively, “State Court
Defendants”). Second Am. St. Ct. Compl. ¶ 5, ECF
No. 22-3. While under their care, LS was left in a vehicle
and died of hyperthermia. Id. ¶¶ 9, 11-12.
Swain alleges that the State Court Defendants were negligent
in caring for LS. Id. ¶ 14. West Bend was added
as a defendant because it had issued a business owner's
liability insurance policy (“the Policy”) to
K&Q, Inc., which was in effect when LS died. Policy 3,
ECF No. 1-1.
Bend filed suit in this Court on August 18, 2016, seeking a
declaratory judgment against Swain and K&Q, Inc. Compl.
1, ECF No. 1. West Bend seeks a declaration “that no
insurance coverage is available under the Policy for the
claims asserted in the Underlying Litigation” and
“that West Bend has no obligation under the Policy to
defend or indemnify” K&Q, Inc. Id. ¶
30. West Bend bases its claim on the presence of a specific
exclusion in the Policy for “‘bodily injury'
. . . arising out of the ownership, maintenance, use or
entrustment to others of any . . . ‘auto' . . .
owned or operated by or rented or loaned to any
insured.” Policy 82- 84, ECF No. 1-1.
initiation of the instant action, Swain and the Estate of LS
filed a third party complaint for declaratory judgment in the
Jefferson Circuit Court against West Bend. Third Party St.
Ct. Compl. 1, ECF No. 11-6. This third party complaint seeks
a declaratory judgment that West Bend “owes insurance
coverage and a duty to indemnify for the actions” of
the state court defendants. West Bend moved to dismiss the
third party complaint. St. Ct. Order 1, ECF No. 28-1. On
March 3, 2017, the Jefferson Circuit Court denied West
Bend's motion to dismiss the third party complaint.
Federal Rule of Civil Procedure 15(a)(2), a party may amend a
pleading only if the Court grants leave to amend or if the
opposing party consents. This Court “should freely
grant leave to amend when justice so requires.”
Fed.R.Civ.P. 15(a)(2). Whether to grant leave to amend lies
within this Court's discretion. See Duggins v. Steak
‘N Shake, Inc., 195 F.3d 828, 833 (6th Cir. 1999).
Bend seeks to add the following defendants to this case: the
estate of Defendant Swain's minor child, Jacquelin
Thomas, Raven Allen, and Sha'Vonda Hicks. Mot. Amend 3,
ECF No. 22. West Bend also seeks to add two alternative
claims for relief: (1) that “no coverage is owed as to
any liability on the part of Jacquelin Thomas as Ms. Thomas
was not providing services as a child care provider with
respect to Defendant Swain's minor child, ” and (2)
that “no coverage is owed as a result of another
exclusion contained within the Policy which states that the
Policy does not apply to ‘bodily injury […]
arising out of […] [t]he violation of any statute, or
governmental rule or regulation.'” Id.
Swain urges this Court to deny West Bend's motion to
amend the complaint because, even amended, the complaint
would not survive her motion to dismiss this case. Resp. Mot.
Amend, ECF No. 23. She argues in her motion to dismiss that
(1) the complaint fails to adequately allege subject matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1),
(2) West Bend failed to join several necessary and
indispensable parties under Federal Rule of Civil Procedure
12(b)(7), and (3) this Court should abstain from exercising
jurisdiction. Mot. Dismiss 1, ECF No. 11.
Subject Matter Jurisdiction
moves to dismiss West Bend's complaint under Federal Rule
of Civil Procedure 12(b)(1) for lack of subject matter
jurisdiction. Id. She asserts that West Bend has not
established diversity jurisdiction. Id. Under 28
U.S.C. § 1332(a), this Court has original diversity
jurisdiction when the suit is between “citizens of
different states” and “where the matter in
controversy exceeds the sum or value of $75, 000, exclusive
of interests and costs.” Corporations are “deemed
to be a citizen of every State . . . by which it has been
incorporated and of the State . . . where it has its
principal place of business.” 28 U.S.C. § 1332(c).
But “an unincorporated association, such as a labor
union or a partnership, has no separate legal identity so its
citizenship, at least for the purposes of diversity
jurisdiction, is the citizenship of each of its
members.” Certain Interested Underwriters at
Lloyd's, London, England v. Layne, 26 F.3d 39, 41
(6th Cir. 1994) (citations omitted). The plaintiff has the
burden of establishing diversity jurisdiction. Id.;
See also Fed. R. Civ. P. 8(a).
Court finds that West Bend properly pleads diversity of
citizenship. West Bend asserts that it “is a Wisconsin
insurance company whose principal place of business is
located at 1900 South 18th Avenue, West Bend, Wisconsin,
53095, which is authorized to transact, and does transact,
business within the Commonwealth of Kentucky. For
jurisdictional purposes, West Bend is a citizen of the State
of Wisconsin.” Prop. Am. Compl. ¶ 1, ECF No. 22-4.
West Bend also asserts the addresses of all Defendants, and
asserts that none of them are residents of Wisconsin.
Id. ¶¶ 3-10.
argues that the complaint must be dismissed because
“West Bend did not identify its corporate status or
support its claimed citizenship.” Mem. Supp. Mot.
Dismiss 3, ECF No. 11-4. Similarly, she argues that West
Bend's motion to file an amended complaint must be denied
because “West Bend has failed to provide any admissible
evidence to support its counsel's assertion that [it] is
a corporation under Wisconsin law.” Resp. Mot. Amend 3,
ECF No. 23.
asserts that, in determining whether a company is
incorporated, the Court should look at how the state in which
it resides treats it. Mem. Supp. Mot. Dismiss 3, ECF No.
11-4. She is correct in that whether an entity is
incorporated for purposes of diversity is determined by the
law of the state in which the entity resides. See Brocki
v. Am. Express Co., 279 F.2d 785, 786 (6th Cir. 1960).
Swain argues that Wisconsin does not consider West Bend to be
a corporation because when she searched for “West Bend
Mutual Insurance Company” in Wisconsin's corporate
records, the results turned up no such corporation.
Id. West Bend responds that in Wisconsin, mutual
insurance companies are treated as corporations. Resp. Opp.
Mot. Dismiss 3, ECF No. 14 (citing W.S.A. §§
611.01, 611.12). West Bend points out that, under Wisconsin
law, a mutual insurance company is required to register with
the commissioner of insurance of Wisconsin. Id.
(citing W.S.A. §§ 611.01, 611.12). In its response
to Defendant Swain's motion to dismiss, West Bend
attached a document entitled “Company
Demographics” from the National Association of
Insurance Commissioners. Ex. 1, ECF No. 14-1. This document
states that West Bend's “State of
Incorporation” is Wisconsin. Id. Therefore,
under Wisconsin law, West Bend is a corporation for purposes
of diversity jurisdiction.
Bend also properly pleads the amount in controversy
requirement. West Bend asserts that it issued a policy to
K&Q, Inc. that “limits businessowners-liability
claims to $1, 000, 000 per occurrence and $2, 000, 000 in
aggregate.” Prop. Am. Comp. ¶ 11, ECF No. 22-4.
Thus, West Bend asserts that the amount in controversy
exceeds $75, 000 because “it includes the $1, 000, 000
per-occurrence coverage limits of the Policy and any costs of
defending Swain's suit.” Id. ¶ 13.
Therefore, this Court has subject matter jurisdiction based
on diversity of citizenship.
Necessary and Indispensable Parties
motion to dismiss, Swain argues that West Bend's
complaint should be dismissed because it has failed to join
the Estate of LS and Jacquelin O. Thomas. Mem. Supp. Mot.
Dismiss 4, ECF No. 11-4. Federal Rule of Civil Procedure
12(b)(7) allows a party to move to dismiss for “failure