United States District Court, S.D. Florida
ALTMAN UNITED STATES DISTRICT JUDGE
MATTER comes before the Court upon (1) the Motion to
Remand to State Court (“Motion to Remand”) [ECF
No. 49], filed by the Plaintiffs, Dream Builders of South
Florida Corporation (“Dream Builders”) and
Cristian Schmidt (“Schmidt”); and (2) the Motion
to Realign the Parties (“Motion to Realign”) [ECF
No. 50], filed by the Defendant, Mid-Continent Casualty
Company (“MCC”). Both motions have been fully
briefed. Having carefully considered the
parties' written submissions, the record, and the
applicable law, the Court hereby DENIES the
Motion to Realign and GRANTS the Motion to
action involves an insurance coverage dispute between Dream
Builders, a Florida construction corporation with its
principal place of business in Florida, and MCC, an
Ohio-based insurance corporation with its principal place of
business in Oklahoma. See Motion to Remand ¶ 3.
Dream Builders initially filed this declaratory judgment
action in state court, seeking a declaration, pursuant to
Florida Stat. Ch. 86, that MCC had a duty to defend and
indemnify it in a separate, state-court suit Cohen filed
against it. See MCC's Notice of Removal [ECF No.
1] ¶¶ 1-4. Because, at the time, the state
declaratory judgment action involved one Florida plaintiff
(Dream Builders) and a non-Florida defendant (MCC), MCC
removed the case to this Court on the basis of diversity
jurisdiction. See Id. ¶ 10.
removal, and after conferring with MCC, Dream Builders
amended its complaint to add two indispensable parties: (1)
Schmidt, who is a co-defendant in the underlying litigation,
as a Plaintiff; and (2) Cohen, the plaintiff in the
underlying suit, as a Defendant. See Second Amended
Complaint [ECF No. 46]. Because Dream Builders, Schmidt, and
Cohen are all Florida residents, the Plaintiffs then moved to
remand the case on the ground that the Amended Complaint
divested this Court of its diversity jurisdiction. See
generally Motion to Remand. In response, MCC filed a
motion asking the Court to realign the parties in a way that,
in its view, more accurately reflected their respective
interests. See generally Motion to Realign.
According to MCC, Cohen, the plaintiff in the underlying
state-court case, should likewise be a plaintiff-not a
defendant-here. Id. Because the relief the two
Motions seek-Dream Builders' Motion to Dismiss and
MCC's Motion to Realign-are thus intertwined, the Court
will adjudicate them both here.
district courts shall have original jurisdiction of all civil
actions where the matter in controversy exceeds the sum or
value of $75, 000, exclusive of interest and costs, and is
between . . . citizens of different states.”
See 28 U.S.C. § 1332(a)(1). Diversity
jurisdiction requires complete diversity: every plaintiff
must be diverse from each defendant. See Triggs v. John
Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th
Cir. 1998) (citation omitted).
burden of establishing federal jurisdiction falls on the
party attempting to invoke the jurisdiction of the federal
court. See McNutt v. Gen. Motors Acceptance Corp. of
Ind., 298 U.S. 178, 189 (1936). “Because removal
jurisdiction raises significant federalism concerns, federal
courts are directed to construe removal statutes
strictly.” Univ. of S. Alabama v. Am. Tobacco
Co., 168 F.3d 405, 411 (11th Cir. 1999) (citing
Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.
100, 108-09 (1941)). “Indeed, all doubts about
jurisdiction should be resolved in favor of remand to state
court.” Id. (citing Burns v. Windsor Ins.
Co., 31 F.3d 1092, 1095 (11th Cir. 1994)).
parties themselves cannot confer diversity jurisdiction upon
the federal courts by their own designation of plaintiffs and
defendants.” City of Vestavia Hills v. Gen. Fid.
Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012) (citing
City of Indianapolis v. Chase Nat'l Bank, 314
U.S. 63, 69 (1941)). “[T]he converse of this
principle-that parties cannot avoid diversity by their
designation of the parties-is also true.” Id.
Instead, federal courts must “look beyond the
pleadings, and arrange the parties according to their sides
in the dispute.” City of Indianapolis, 314
U.S. at 69 (cleaned up).
Plaintiffs' Motion to Remand is straightforward: because,
they say, there are now Florida citizens on both sides of
this case, this Court no longer has diversity
jurisdiction-and, accordingly, the case must be remanded.
See generally Motion to Remand. MCC, for its part,
argues that Cohen (a Florida resident) should be realigned as
a plaintiff, at which point, MCC notes, the Florida litigants
will all be on the same side of this dispute. Id.
This alignment, MCC says, will leave the Court's
diversity jurisdiction undisturbed. Id. Because, in
short, the Motion to Realign, if granted, would moot the
Motion for Remand, the Court will address it first.
argues that Cohen should be realigned as a plaintiff because
her interests are aligned with the Plaintiff-insureds, Dream
Builders and Schmidt-and not with MCC. See Id. at 2
(“Cohen's interests are aligned with Dream
Builders' and Schmidt's, as Cohen, Dream Builders,
and Schmidt all desire declarations from the Court that there
is insurance coverage available for Cohen's claims in the
Underlying Action.”). In support, MCC cites a number of
cases, including a published opinion from the Eleventh
Circuit, for the proposition that “‘the normal
alignment of parties in a suit seeking a declaratory judgment
of non-coverage is Insurer versus Insured and Injured
Party.'” City of Vestavia Hills, 676 F.3d
at 1314 (quoting Home Ins. Co. of Illinois v. Adco Oil
Co., 154 F.3d 739, 741 (7th Cir. 1998)); see
also Motion to Realign at 3 (citing cases).
who opposes realignment, contends that MCC “improperly
conflates the two issues that are central to this case”
by failing to acknowledge that, on the particular question of
realignment, there are salient differences between a
state-court plaintiff's interests in (1) a declaratory
judgment action in which the duty to indemnify is ripe and
(2) a similar action in which only the duty to defend is at
issue. Response Opposing Realignment at 1. In recent cases,
the Eleventh Circuit has said that the duty to indemnify is
typically not ripe until the state-court plaintiff wins the
underlying suit. And, as Cohen points out, the federal
district courts-including the district court whose judgment
was affirmed in Vestavia Hills-have regularly held
that, where the question of indemnification is not yet ripe,
a Court need not realign the parties in the way MCC requests.
See Id. at 8-12 (citing cases).
Court agrees with Cohen here. Although the federal courts are
admittedly split on this question-whether realignment is
appropriate where, as here, the underlying suit is
pending- federal courts across the country have
routinely accepted the following three propositions (which,
together, significantly undermine MCC's position): (1)
the parties' interests may differ meaningfully with
respect to the insurer's duty to defend on the
one hand and its concomitant duty to indemnify on
the other; (2) the duty to indemnify does not generally ripen
until the state-court plaintiff has obtained a favorable
judgment against the insured in the underlying state case;
and (3) realignment at the duty to defend stage may
not be appropriate-even where, hypothetically speaking, it
might one day become appropriate if the insurer's duty to
indemnify were to ripen. See, e.g.,
Sinclair v. Auto-Owners Ins. Co., 22 F.Supp.3d 1257,
1262 (N.D.Ga. 2014) (denying realignment and remanding where,
as here, the state-court plaintiff had not yet obtained a
judgment in underlying state action); Pearson v. Catlin
Specialty Ins. Co., No. CV 514-60, 2015 WL 1224104, at
*3 (S.D. Ga. Mar. 17, 2015) (denying realignment where the
state-court plaintiff had not yet obtained a favorable
judgment in the state action because the duty to defend was
the “primary and controlling matter in the
dispute”); Scheele v. Fortney, No.
14-81279-CV, 2014 WL 12478006, at *3 (S.D. Fla. Nov. 20,
2014) (denying realignment); Gulf Hauling & Const.,
Inc. v. QBE Ins. Corp., No. CA 2:13-00083-C, 2013 WL
2179278, at *8 (S.D. Ala. May 20, 2013) (declining to