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govinfo:USCOURTS-njd-2_20-cv-02080-0
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ARCH INSURANCE COMPANY (EUROPE)
LTD. N/K/A ARCH INSURANCE (UK) LTD.,
et al.,
Plaintiffs,
v.
THOMAS K. REILLY,
Defendant.
Civil Action No. 20-2080
OPINION
John Michael Vazquez, U.S.D.J.
Presently before the Court is Defendant Thomas K. Reilly’s motion to dismiss the
Amended Complaint. D.E. 27. Plaintiffs filed a brief in opposition, D.E. 28, to which Defendant
replied, D.E. 32. The Court reviewed the parties’ submissions 1 and decided the motion without
oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the reasons set forth
below, Defendant’s motion is GRANTED in part and DENIED in part.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Defendant is the former Ch ief Executive Officer of non- party Chemoil Energy Ltd.
(“Chemoil”).2 Am. Compl. ¶ 51-52. Chem oil is party to the Directors, Officers and Company
1 Defendant’s brief in support of his motion to dismiss (D.E. 24) will be referred to as “Def. Br.”;
Plaintiffs’ opposition (D.E. 28) will be referred to as “Plfs. Opp.”; and Defendant’s reply (D.E.
32) will be referred to as “Def. Reply.”
2 The factual background is taken from Plaintiffs’ Amended Complaint (“Am. Compl.”) (D.E. 22),
as well as the insurance policy at issue, which was attached as an exhibit to the pleading (D.E. 22-
1). “In reviewing a facial attack” to the Court’ s subject matter jurisdiction, “the court must only
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Liability Insurance Policy (the “Policy”), which is at issue here. Id., Ex. A. Plaintiffs plead that
Plaintiff DUAL Corporate Risks LTD. (“DUAL”) is the Managing General Agent (“MGA”) of
the Policy. As the MGA, DUAL issued the Poli cy to Chemoil, and is responsible for handling
claims under the Policy. Id. ¶¶ 35-36, 39, 47, 50. DUAL, however, does not make any coverage
determinations and has no financial obligations under the Policy. Id. ¶¶ 44, 48-49. While Plaintiffs
plead that DUAL is the MGA, they acknowledge that DUAL is listed as the insurer in the Policy.
Id. ¶ 45, Ex. A at 13.
The remaining Plaintiffs, Arch Insurance Company (Europe) Ltd. n/k/a Arch Insurance
(UK) Ltd. (“Arch”); Liberty Mutual Insuranc e SE (“Liberty”); Hiscox Underwriting Ltd.
(“Hiscox”); Barbican Corporate Member Limited (“Barbican”); and Endurance at Lloyd’s Limited
(UK) (“Endurance”), “are each insurance entities operating within the London insurance market.”
Id. ¶ 34. Plaintiffs refer to these parties collectively as the “Capacity Providers.” Id. ¶ 19. The
Capacity Providers each subscribed to underwrite a specific percentage of the underwritten risk of
the Policy. The percentages are set forth in a section of the Policy referred to as the “Written Line”
or the “Security Details.” Id. ¶¶ 40-42, Ex. A at 7. The Policy cl early states that each Capacity
Provider is only liable for the pr oportion of liability that it unde rwrote and that the Capacity
Providers’ liability is several, not joint. Id. ¶ 41, Ex. A at 5. Finally, Plaintiffs allege that the
Capacity Providers collectively ma ke coverage determinations or decisions to pay claims under
the Policy and communicate these decisions to DUAL. Id. ¶ 48.
consider the allegations of the complaint and doc uments referenced therein and attached thereto,
in the light most favorable to the plaintiff.” Gould Elecs. Inc. v. United States, 220 F.3d 169, 176
(3d Cir. 2000). When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all
well-pleaded facts in the complaint. Fowler v. UPMC Shadyside , 578 F.3d 203, 210 (3d Cir.
2009). Moreover, Federal Rule of Civil Procedure 10( c) provides that “a written instrument that
is an exhibit to a pleading is a part of the pleading for all purposes.” Fed. R. Civ. P. 10(c). Thus,
the Court considers the insurance policy at issue here in deciding the instant motion.
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Defendant Reilly resigned as CEO of Chem oil in 2014 and initiated an arbitration
proceeding against Chemoil regarding his right to severance payments. Id. ¶ 52. Reilly personally
paid for the arbitration and did not initially seek coverage under the Policy for the fees and costs
he incurred through the arbitration. Id. ¶¶ 53-54. Plaintiffs plead that Reilly did not seek coverage
because he knew his claims were not covered by the policy. Id. ¶ 54. Chemoil subsequently
asserted counterclaims against Reilly. As a result, in March 2017, Rei lly sought coverage for
defense and indemnification of the counterclaims. Id. ¶¶ 55-56. “Plaintiffs agreed that Reilly was
an insured under the Policy with respect to the Chemoil [c]ounterclaims only.” Id. ¶ 57. Thus, the
Capacity Providers, through DUAL, agreed to pay fees and costs incurred to defend Reilly against
the counterclaims, and Reilly continued to personally pay for the fees and costs associated with
his affirmative claims. Id. ¶ 61.
Reilly initially sought approximately $1.48 milli on dollars from Plaint iffs, claiming that
all his attorneys’ fees and costs were incurred through defense of the counterclaims. Id. ¶ 62. The
Capacity Providers, through DUAL, disagree d, and paid Reilly a pproximately $888,000. Id. ¶¶
63-64. DUAL allegedly told Reilly that this wa s an “interim payment” and that any further
payments would remain subject to negotiation between the parties. Id. ¶ 67. Reilly accepted the
$888,000 payment. Id. ¶ 66.
In January 2018, the arbitration panel rendered a decision that was “largely in favor of
Reilly” and “highly critical” of Chemoil’s conduct. Id. ¶ 68. In addition, the arbitration panel
permitted Reilly to make an application to r ecover all his legal fees and costs. Id. ¶ 71. Reilly
submitted a fee application seeking reimbursement of approximately $2.1 million, which included
fees and costs he incurred as to the affirmative claims and counterclaims. Id. ¶ 75. Plaintiffs allege
that Reilly’s fee application included the $888,000 payment from Plaintiffs. Id. ¶¶ 79-80.
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Reilly and Chemoil subsequently settled the fee claim for $1.2 million. Plaintiffs were
excluded from Reilly and Chemoil’s settlement negotiations. Id. ¶¶ 82-83, 89. The Capacity
Providers, again through DUAL, obj ected to any settlement without their input and consent, and
advised Reilly that pursuant to the Policy, he could not settle th e fee claim without the Capacity
Providers’ consent. Id. ¶¶ 84-86. The Capacity Providers also told Reilly that they did not consent
to the proposed settlement, but Reilly moved forward despite their objections. Id. ¶¶ 88-89.
Plaintiffs contend that the se ttlement deprived them of th eir rights under the Policy and
specifically, of their right to recoup the $888,000 payment to Reilly. Id. ¶¶ 90-91. Despite
Plaintiffs demands, Reilly has not reimbursed Plaintiffs for any portion of the $888,000 payment.
Id. ¶¶ 92-93.
During the parties’ discussions about Reilly’s settlement with Chemoil, Reilly brought suit
against DUAL seeking a declaratory judgment stating that he is not required to reimburse DUAL
under the Policy (the “Reilly Action”). D.E. 1, Civ. No. 18-16836 (D.N.J. Dec. 4, 2018). Reilly
also asserted claims for breach of contract and breach of the duty of good faith and fair dealing.
Id. DUAL asserted counterclaims for a declarator y judgment stating that, pursuant to the Policy,
Reilly was not entitled to coverage for any of hi s affirmative claims, in addition to counterclaims
for breach of contract, breach of the implied co venant of good faith and fair dealing, and unjust
enrichment.3 D.E. 9, Civ. No. 18-16836 (D.N.J. Jan. 11, 2019). The Capacity Providers then
initiated the instant matter, seeking to recove r the $888,000 payment. Specifically, the Capacity
Providers assert a declaratory judgment claim, breach of contract claims, and an unjust enrichment
claim. D.E. 1.
3 The parties subsequently filed amended pleadings in the Reilly Action that did not materially
change their claims. D.E. 13, Civ. No. 18-16836 (D.N.J. Feb. 1, 2019); D.E. 20, Civ. No. 18-
16836 (D.N.J. May 13, 2019).
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On June 9, 2020, DUAL and the Capacity Provid ers filed a letter in the Reilly Action
requesting that the two matter be consolidated. D.E. 75, Civ. No. 18-16836 (D.N.J. June 9, 2020).
On July 28, 2020, Judge Mannion consolidated the matters for discovery purposes. D.E. 76, Civ.
No. 18-16836 (D.N.J. July 28, 2020). In this ma tter, on March 20, 2021, the Capacity Providers
were granted leave to file an amended complaint that added DUAL as a Plaintiff. D.E. 97. Judge
Kiel also ordered that Reilly prosecute the claims asserted against DUAL in the Reilly Action by
way of a counterclaim (or third-pa rty claim if the Capacity Provi ders did not file an amended
pleading). Id. Finally, the Reilly Action was stayed pending further order of the Court. Id.
The Capacity Providers subsequently filed their Amended Complaint on March 22, 2021,
that, among other things, added DUAL as a Plaintiff. D.E. 22. Reilly then filed the instant motion
to dismiss the Amended Complaint. D.E. 27.
II. STANDARD OF REVIEW
Reilly asserts that this matter should be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(1), for lack of subject-matter jurisdiction, and Fe deral Rule of Civil Procedure
12(b)(6), for failure to state a claim upon which relief can be granted.
To decide a Rule 12(b)(1) motion to dismiss, a court must first determine whether the party
presents a facial or factual attack against a comp laint. A facial attack contests “subject matter
jurisdiction without dis puting the facts alleged in the comp laint, and it requi res the court to
‘consider the allegations of the complaint as true.’” Davis v. Wells Fargo, 824 F.3d 333, 346 (3d
Cir. 2016) (quoting Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Ci r. 2006)). A factual
attack challenges “the factual allegations underlying the complain t’s assertion of jurisdiction,
either through the filing of an answer or ‘otherwise presenting competing facts.’” Davis, 824 F.3d
at 346 (quoting Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014)). Here, in
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seeking dismissal for lack of s ubject-matter jurisdiction, the partie s rely solely on Plaintiffs’
allegations in the Complaint. Accordingly, Defendant presents a facial attack. As a result, like a
Rule 12(b)(6) motion to dismiss, “the Court must consider the allegations of the complaint as true.”
Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977).
For a complaint to survive dismissal under Rule 12(b)(6), it must contain sufficient factual
matter to state a claim that is plausible on its face. Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). A claim is facially plausible
“when the plaintiff pleads factual content that a llows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. Further, a plaintiff must “allege
sufficient facts to raise a reasonable expectation that discovery will uncover proof of her claims.”
Connelly v. Lane Const. Corp., 809 F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency of
a complaint, district courts must separate the factual and legal elements. Fowler v. UPMC
Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). Restatemen ts of the elements of a claim are
legal conclusions, and therefore, not entitled to a presumption of truth. Burtch v. Milberg Factors,
Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however, “must accept all of the complaint’s
well-pleaded facts as true.” Fowler, 578 F.3d at 210. Moreover, unde r Rule 10(c), “a copy of a
written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.” Fed.
R. Civ. P. 10(c).
III. ANALYSIS
A. Standing
The Constitution provides that “judicial Power” extends to “Cases” and “Controversies[.]”
U.S. Const. art. III, § 2. To meet the case-or-c ontroversy requirement, a plaintiff must show that
she has standing to sue. See Raines v. Byrd , 521 U.S. 811, 818 (1997) (citation omitted). To
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establish Article III standing, a plaintiff “must demonstrate ‘(1) an injury-in-fact, (2) a sufficient
causal connection between the injury and the conduct complained of, and (3) a likelihood that the
injury will be redressed by a favorable decision.”’ Finkelman v. Nat'l Football League, 810 F.3d
187, 193 (3d Cir. 2016) (quoting Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 358–59 (3d
Cir. 2015) (internal quotation marks omitted and punctuation modified)). An injury in fact requires
a plaintiff to show that she suffered “an invasion of a legally protected interest” that is “concrete
and particularized[.]” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
Defendant argues that DUAL has not suffe red an injury-in-fact based on DUAL’s
representations in the Reilly Action that only the Capacity Providers had a financial interest in the
Policy. Def. Br. at 13. Defenda nt further maintains that DUAL is bound by its representations
pursuant to the doctrine of collateral estoppel. Id. at 13 n.6. Collateral estoppel, or issue
preclusion, prevents a party fro m relitigating an issue that has already been decided. Peloro v.
United States, 488 F.3d 163, 174 (3d Cir. 2007). Issue pr eclusion applies when the following
requirements are satisfied: “(1) the issue must be identical; (2 ) the issue must have actually been
litigated in a prior proceeding; (3) the prior court must have issued a final judgment on the merits;
(4) the determination of the issue must have been essential to the prior judgment; and (5) the party
against whom collateral estoppel is asserted must have been a pa rty or in privity with a party to
the earlier proceeding.” Del. River Port Auth. v. Fraternal Order of Police, 290 F.3d 567, 573 (3d
Cir. 2002). Here, Defendant relies on representa tions that DUAL made in a letter to Judge
Mannion, specifically that DUAL is the MGA and not an insurer of the Policy. D.E. 15, at *2-3,
Civ. No. 18-16836 (D.N.J. Mar. 26, 2019). But this i ssue has not been litigated and there is no
final judgment in Reilly Action. In fact, the Re illy matter is presently stayed. D.E. 20.
Accordingly, issue preclusion does not apply.
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The Court, therefore, addresses Plaintiffs’ allegations in this matter to determine if DUAL
suffered an injury-in-fact. Defendant argues that Plaintiffs’ allegation that DUAL “is authorized”
to sue on behalf of the Capacity Providers does not give DUAL standing, and that because it is not
an insured, it has not suffered an injury-in-fact . Def. Br. at 14. Although Defendant relies on
DUAL’s prior representation that DUAL is mistakenl y identified as the insurer in the Policy, the
Court must take Plaintiffs’ allegation s as true in deciding this motion. See Fowler, 578 F.3d at
210. Because Plaintiffs included the Policy as an exhibit to the Amended Complaint, the Policy
itself is part of the pleadings. Fed. R. Civ. P. 10(c).
In the Amended Complaint, Plaintiffs plead that the Policy identifies DUAL as the insurer.
Am. Compl. ¶ 45. This is reflected in the Policy. Id., Ex. A at 13. Therefore, as alleged, DUAL
is a party to the Policy. It is axiomatic that a party to a contract has standing to enforce the terms
of the contract. In re Volkswagen Timi ng Chain Prod. Liab. Litig. , No. 16-2765, 2017 WL
1902160, at *8 (D.N.J. May 8, 2017) (“Basic contract la w requires parties to be in privity with
each other in order for them to enforce the terms of a contract.”); see also Fireman’s Fund Ins. Co.
v. 360 Steel Erectors, Inc. , No. 16-2782, 2018 WL 1069418, at *3 (D.N.J. Feb. 26, 2018)
(concluding that at a minimum, the plaintiff had standing to enforce an agreement to which it was
a party). As discussed, Plaintiffs’ pleadings identify DUAL as a party to the Policy as the insurer.
Based on these allegations, DUAL has Article III standing.
4
4 The Court notes that Plaintiffs’ allegations appe ar inconsistent, especially considering DUAL’s
representation in the Reilly Action that DUAL was mistakenly identified as the insurer. Although
Plaintiffs plead that DUAL is the insurer and it is listed as the insurer in the Policy, Plaintiffs also
plead that DUAL is pursuing clai ms on behalf of the Capacity Providers and that DUAL has no
financial obligations under the Policy. Am. Compl. ¶¶ 44, 50. This, however, is an issue that can
be addressed through discovery, and if appropriate, the parties can amend their pleadings at a later
date. DUAL and the Capacity Providers, however, ar e all named Plaintiffs in this matter. As a
result, there is no risk, like in many of the cases cited by the parties, that the Court will not be able
to afford complete relief to the prevailing party or that an entity is somehow evading its obligations
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In addition, because Plaintiffs plead that DUAL is the insurer in the Policy, DUAL appears
to be a real party in interest pursuant to Federal Rule of Civil Procedure 17(a). Rule 17(a) provides
that “[a]n action must be prosecute d in the name of the real party in interest,” but provides a list
of individuals who may sue in their own name “without joining the person for whose benefit the
action is brought.” Fed. R. Civ. P. 17(a). Rele vant here, courts recognize that without offending
Rule 17(a), an agent that is not personally harmed may sue for damages incurred by its principal.
See Int’l Transport Mgmt. Corp. v. Brooks Fitch Apparel Grp., LLC , No. 11-1921, 2018 WL
1960440, at *5-6 (D.N.J. Apr. 26, 2018) (concluding th at ocean transport intermediary was the
real party in interest for claims seeking to recover damages that were actually incurred by an
affiliate); see also Glob. Aerospace, Inc. v. Platinum Jet Mgmt., LLC, 488 F. App’x 338, 340 (11th
Cir. 2012) (explaining that pursuant to Rule 17(a), “[a]n agent ‘w ho acted as an agent during the
course of [a] transaction involved in the litigation, may sue for damages suffered by the principal.’”
(quoting Corp. of the President of the Church of Jesus Christ of Latter Day Saints v. Envtl. Prot.
Comm’n of Hillsborough Co. , 837 F. Supp. 413, 415 (M.D. Fla. 1993 ))). Thus, even if DUAL
was not named as the insured in the Policy, it appears that DUAL has standing based on Plaintiffs’
allegations that DUAL is the MGA for the Capacity Providers and has authority to pursue claims
on their behalf. Defendant’s arguments to the contrary are distinguishable and ignore the realities
of Lloyd’s insurance model, as discussed below.
Turning to the Capacity Providers, Defendant seeks to dismiss the claims asserted by the
Capacity Providers for lack of standing because they fail to expressly identify themselves as
under the Policy. Thus, Defendant’s insinuations that Plaintiffs are somehow gaming the system
appear overstated.
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contracting parties to the Policy. Even if they had, Defendant argues that such allegations conflict
with the Policy. Def. Br. at 17-18. The Court disagrees.
Plaintiffs allege that the Capacity Providers bear the financial risks and obligations under
the Policy, Am. Compl. ¶ 7, and make all coverage and payment decisions, id. ¶¶ 48-49. Moreover,
the Capacity Providers allegedly “provide the financial capacity and assume all financial risks and
obligations under the Policy.” Id. ¶ 19. The Capacity Providers’ exposure to risk is also reflected
in the Policy itself. In the section entitled “Secu rity Details,” the Policy provides that “[a]
(re)insurer is liable only for the proportion of li ability it has underwritten,” and the proportion of
liability “is shown next to its stamp and is referred to as its ‘written line.’” Id., Ex. A at 5. After
this explanation and within the Security Details section, appears the following:
Id., Ex. A at 7. Plaintiffs also set forth these specific percentages in the Amended Complaint. Id.,
¶ 42. Thus, the Amended Complaint and Policy ar e not inconsistent and demonstrate that the
Capacity Providers have a financia l interest in this matter. The language in the Security Details
section about the proportion of ri sk also further demonstrates th at the Capacity Providers are
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insurers of the Policy. See Lowsley-Williams v. N. River Ins. Co. , 884 F. Supp. 166, 167 (D.N.J.
1995) (“The holders of policies reinsured by Lloyd’s Names thus ente r into contractual
relationships with the specific Names who have subscribed to the policies for the portion of the
risk that each Name has agreed to underwrite.”); CNX Gas Co., L.L.C. v. Lloyd’s of London , 410
F. Supp. 3d 746, 749 (W.D. Pa. 2019) (explaining th at under the Lloyd’s insu rance model, there
is a contractual relationship between the insured and individual Names, who are Lloyd’s members
that underwrite shares of an insurance policy and that each Name is only liable for its proportional
share).
5 Consequently, the Policy establishes that the Capacity Providers also have standing.
Defendant maintains th at the Capacity Providers are DUAL’s reinsurers because the Policy
uses the word “(re)insurer.” Defendant continues that any reinsurance contracts are separate and
distinct contracts, such that the Capacity Providers do not have standing to assert claims related to
the Policy at issue here. Def. Br. at 18. Although the Policy uses the word “(re)insurer,” Defendant
ignores Plaintiffs’ allegations. There are no allegations discussing a separate contract or indicating
that the Capacity Providers are reinsurers in the Amended Complaint. Rather, the Policy itself
demonstrates that it is a claims-made insuran ce policy for Chemoil Energy Limited and that the
Capacity Providers underwrote a specific percentage of the risk. Am. Compl., Ex. A at 11. Even
if Defendant is correct that DUAL is the insure r and the Capacity Provide rs are reinsurers, the
written line in the Policy sets forth the Capa city Providers’ purported re insurance obligations.
5 Plaintiffs plead that within the London insurance market, where there are often numerous entities
subscribing to a single policy, the Capacity Providers retained DUAL to act on their behalf. Am.
Compl. ¶ 46. Although not alleged in the Amende d Complaint, the Court notes for context that
Plaintiffs argue in their opposition brief that an agent simplified communications for the insured
because it “obviated the need for Reilly to s imultaneously communicate with five separate
insurance entities.” Plfs. Opp. at 14.
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Thus, even under this argument, the Policy still es tablishes that the Capacity Providers have a
financial interest and thus have standing.
In sum, the Court concludes that Plaintiffs have standing to a ssert claims in this matter.
Defendant’s motion is denied on these grounds.
B. Diversity Jurisdiction
Next, Defendant argues that this matter must be dismissed for lack of subject-matter
jurisdiction because the Amended Co mplaint fails to clearly set fort h citizenship of the Capacity
Providers. Def. Br. at 19-20. Plai ntiffs allege that this Court ha s diversity jurisdiction over this
matter, pursuant to 28 U.S.C. § 1332, for the cl aims of Arch, Libert y, Hiscox and DUAL. Am.
Compl. ¶¶ 23, 27. Plaintiffs fu rther allege that the Court ha s supplemental jurisdiction under 28
U.S.C. § 1367(a), over th e remaining claims. Id. ¶ 30. Federal district courts have diversity
jurisdiction, under Section 1332, wher e “the matter in controversy exceeds the sum or value of
$75,000” and the parties are completely diverse. 28 U.S.C. § 1332(a); Caterpillar Inc. v. Lewis,
519 U.S. 61, 68 (1996). For cases that involve multiple plaintiffs or defendants, complete diversity
means that “no plaintiff [is] a citizen of the same state as any defendant.” Zambelli Fireworks
Mfg. Co., Inc. v. Wood, 592 F.3d 412, 419 (3d Cir. 2010).
1. Diversity of Citizenship
Before addressing the merits, a brief expl anation of the London insurance model is
necessary. In the model, individuals or “names” pool resources and underwrite policies as groups.
As discussed above, names are only responsible for their proportional share. Chem. Leaman Tank
Lines, Inc. v. Aetna Cas. & Sur. Co. , 177 F.3d 210, 221 (3d Cir. 1999). “[T]o increase the
efficiency of underwriting risks and to combine the resources of numerous individuals, names form
groups called syndicates. However, syndicates are not legal entities.” Id. But syndicates can
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appoint an “Active Underwriter” who “has the authority to bi nd all the individuals in the
syndicate.” Id. at 222.
There is a circuit split as to whose citizenship is relevant for diversity jurisdiction purposes
under the Lloyd’s model. The Third Circuit has not yet addressed the issue. CNX Gas Co., L.L.C.,
410 F. Supp. 3d at 754-55. But the majority view of the circuit courts is that a court should consider
the citizenship of every name, not that of the syndicate or the Active Underwriter. Id. (explaining
that the Second, Seventh and Eleventh Circuits “form the majority regime” on this issue). District
courts within the Third Circuit also appear to follow the majority approach. Id. at 755 (collecting
cases). In this instance, the parties also follow the majority approach. Def. Br. at 19; Plfs. Opp.
at 18. Seeing no clear reason to deviate, the Court applies the majority position.
Accordingly, for the Court to properly ascertain whether the parties are completely diverse,
Plaintiffs must sufficiently pl ead the citizenship of each Name that subscribed to the Policy.
Lowsley-Williams, 884 F. Supp. at 172 (“Because citizenship is determined for a Lloyd’s syndicate
by the sum of the citizenship of all participating Names, the plaintiff must have pled the citizenship
of each name participating in the North River reinsurance contracts in order for this Court to have
diversity jurisdiction.”). And for diversity jurisdiction to ex ist, Defendant must be completely
diverse from each Name. Certain Underwriters at Lloyd’s, London, Subscribing to Policy No.
AMT008174 v. VMA Constr., LLC, No. 17-5626, 2018 WL 314815, at *3 (D.N.J. Jan. 5, 2018).
Plaintiffs fail to plead sufficient facts to esta blish that there is complete diversity. At the
outset, Plaintiffs plead that Defendant was a re sident of Connecticut. Am. Compl. ¶ 21. While
not raised by Defendant, stating that a party is a “resident” rather than a citizen or domiciliary of
a state is “jurisdictionally inadequate.” McNair v. Synapse Grp., Inc., 672 F.3d 213, 219 n.4 (3d
Cir. 2012). Turning to Plaintiffs, Plaintiffs pleads that Arch is incorporated under the laws of
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England and has its principal place of business in London. Am. Compl. ¶ 13. Similarly, Plaintiffs
plead that Liberty is incorporated in and has its principal place of business in Luxembourg. Id. ¶
14. These allegations are sufficien t for determining the citizenship of Arch and Liberty. Next,
Plaintiffs allege that Hiscox is incorporated under the laws of England and Wales, and that its
principal place of business is in London. Id. ¶ 15. The Policy, however, indicates that Hiscox is
part of Syndicate 3624 at Lloyd’s. Id., Ex. A at 7. Plaintiffs provide no further information about
any other member of this Syndicate. Thus, this allegation is insufficient because it fail to identify
the other members, along with th eir citizenship, of Syndicate 3624. Finally, Plaintiffs plead that
Barbican FI Consortium 2013 (identified in the Policy as BFP Consorti um 9582 at Lloyd’s) is
comprised of Lloyd’s Syndicate 1955 and Lloyd’s Syndicate 5151. Id. ¶ 16. Barbican is the sole
member of Syndicate 1995, id. ¶ 17, but Plaintiffs simply plead that Endurance manages Lloyd’s
Syndicate 5151, id. ¶ 18. Again, Plaintiffs’ Amended Complaint does not include allegations about
the members of Lloyd’s Syndicate 5151. Plaintiffs, therefore, fail to provide enough information
for the Court to confirm whether Defendant is co mpletely diverse from Pl aintiffs. Because the
Court cannot ascertain if there is complete diversity of citizenship, Defendant’s motion to dismiss
is granted on these grounds.
In their opposition brief, however, Plaintiffs argue that Hiscox is the sole Name of Lloyd’s
Syndicate 3624 and Endurance is the so le Name of Lloyd’s Syndicate 5151. 6 Plfs. Opp. at 18.
These allegations do not appear in the Amended Complaint but would allow the Court to conclude
that the parties were co mpletely diverse. Plaintiffs cannot amend their pleading through a brief.
Commonwealth of Pa. ex rel. Zimmerman v. PepsiCo, Inc. , 836 F.2d 173, 181 (3d Cir. 1988) (“It
6 By definition, a syndicate is a group, so the C ourt is not clear as to how a single entity can
comprise a syndicate.
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is axiomatic that the complaint may not be am ended by the briefs in opposition to a motion to
dismiss.”) (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir.1984)).
But it appears that Plaintiffs can remedy thes e deficiencies through an amended pleading.
Consequently, the Court grants Pl aintiffs leave to file an ame nded pleading that includes these
additional allegations. Because it is granting Plaintiffs leave to amend, the Court will address
Defendant’s remaining arguments for dismissal.
2. Amount in Controversy
Defendant maintains that the Amended Compla int must be dismissed because Barbican
and Endurance are indispensable parties that cannot be joined. Def. Br. at 20-21. Defendant argues
that because Barbican and Endurance are part of an insurance collective, they must independently
satisfy the amount of controvers y requirement. Defendant con tinues that because together,
Barbican and Endurance only claim a 5% stake of the $888,0000, they do not meet the amount in
controversy threshold. Id.
To make this argument, Defe ndant relies on case law that lik ens a Lloyd’s syndicate to a
limited partnership for the pur pose of ascertaining citizensh ip of diversity purposes. Id. at 21
(citing Carden v. Arkoma Assocs., 494 U.S. 185, 188-95 (1990); Lowsley-Williams, 884 F. Supp.
at 169-72). These cases, howev er, do not address the amount in controversy requirement.
Defendant also cites Lloyd’s v. Gailes, No. 16-77, 2016 WL 3033741, at *3-4 (N.D. Miss. May
26, 2016). In Gailes, the court determined that the jurisdictional requirement must be satisfied as
to each name. Id. at *4. But Gailes is not binding on this Court, and neither party points the Court
to any persuasive auth ority from the Third Circuit that a ddresses the amount in controversy
requirement under the Lloyd’s business model. Acco rdingly, the Court applies the general rule
that although distinct claims from separate plaintiffs cannot be aggregated, the amount in
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controversy requirement is satisfied if a single plaintiff’s claims against the defendant are valued
at more than $75,000. Werwinski v. Ford Motor Co. , 286 F.3d 661, 666 (3d Cir. 2002). Here,
Liberty funded 41% of the Policy, such that it could conceivably recover approximately $364,000
from the $888,000 that DUAL, through the Capacity Prov iders, made to Defendant. Plaintiffs,
therefore, satisfy the amount in controvers y requirement. And the Court may exercise
supplemental jurisdiction over the other Plaintiff’s claims pursuant to 28 U.S.C. § 1337. See Exxon
Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (2005).7
C. Failure to State a Claim
Finally, Defendant seek to di smiss the Amended Complaint pursuant to Rule 12(b)(6).
Def. Br. at 23-27. At the outset, the Court notes that the Policy contains a choice of law provision
stating that the Policy “shall be governed by and construed in accordance with the law of England
& Wales.” Am. Compl., Ex. A. at 2. In addition, in the Amended Complaint, Plaintiffs plead that
they intend for the laws of England and Wales to apply to Counts One, Two, and Three. Am.
Compl. ¶ 38 n.1. Plaintiffs, however, otherwise rely on New Jersey law. Defendant does not
address the choice of law issue in his reply brief. Moreover, Defendant cites to New Jersey case
law in his opening brief, even though he resides in Connecticut, and Plaintiffs are not based in the
7 The parties dispute whether Barbican and Endur ance are properly joined under Federal Rule of
Civil Procedure 19 or 20. See Def. Br. at 20-22 (arguing that Barbican and Endurance are required
parties under Rule 19); Plfs. Opp. at 19-21 (mai ntaining that Barbican and Endurance may be
permissibly joined under Rule 20). The Court will not address this issue because it is immaterial.
Barbican and Endurance are already Plaintiffs in the Amended Complaint, this Court has
supplemental jurisdiction over their claims pursuant to 28 U.S.C. § 1367, and Defendant does not
contend that keeping either entity in this litigation destroys diversity jurisdiction. Defendant seems
to confuse joinder with jurisdiction. See Def. Br. at 21-22 (arguing that because Barbican and
Endurance are indispensable parties, they may not invoke supplemental jurisdiction under Section
1367). But Rule 19 “address[es] party joinder, not federal-court subject- matter jurisdiction.”
Lincoln Prop. Co. v. Roche , 546 U.S. 81, 90 (2005). Whether supplemental jurisdiction exists
pursuant to Section 1367 is a separate issue.
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United States. See, e.g., Def. Br. at 23. Thus, the Court has doubts that New Jersey law will apply
to Plaintiffs’ substantive claims. But because the parties predominately rely on New Jersey law
and do not address the choice of law issue in substance, the Court will also rely on New Jersey law
in assessing Plaintiffs’ claims for purposes of deciding this motion.
Defendant contends that Plaintiffs’ breach of contract claims, including the breach of the
implied covenant of fair dealing claim, must be dismissed because Plaintiffs fail to plead that they
were parties to the Policy. Def. Br. at 23-24. To state a claim for breach of contract under New
Jersey law, a party must allege, among other things , that “the parties entered into a contract.”
Pollack v. Quick Quality Rests., Inc., 172 A.3d 568, 576 (N.J. App. Div. 2017) (citing Globe Motor
Co. v. Igdalev, 139 A.3d 57, 64 (N.J. 2016)); see also Comly v. First Camden , 36 A.2d 591, 593
(N.J. Sup. Ct. 1944) (“However, it may be said that as a general rule an action on a contract cannot
be maintained against a person who is not a party to it.”). In addition, “in the absence of a contract,
there can be no breach of an implied cove nant of good faith and fair dealing.” Noye v. Hoffman-
La Roche Inc., 570 A.2d 12, 14 (N.J. App. Div. 1990); see also FDIC v. Bathgate , 27 F.3d 850,
876 (3d Cir. 1994) (stating that th e circuit did not believe that the New Jersey Supreme Court
would support “the proposition that non-parties to a contract can be held liable for a breach of a
contractual duty of good faith and fair dealing”) (emphasis in original). As pled, Plaintiffs are all
parties to the Policy. As discussed, DUAL is na med as the Insurer and the Capacity Providers’
proportion of liability is clearly set forth in the Policy. As noted, the Cour t disagrees with
Defendant’s argument that DUAL is estopped from retracting its representation in the Reilly
Action that it is not the Insurer. Accordingly, because Plaintiffs sufficiently plead that they are
parties to the Policy, Defendant’s motion is denied as to Plaintiffs’ breach of contract claims.
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Defendant also seeks to dismiss Plaintiffs’ declaratory judgment and unjust enrichment
claims for the same reasons, arguing that Plaintiffs do not have any rights under the Policy. Def.
Br. at 25-27. Again, the Court disagrees. Consequently, Defendant’s motion is also denied as to
the unjust enrichment and declaratory judgment claims.
IV. CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss (D.E. 27) is GRANTED in part
and DENIED in part. Defendant’s motion is GRANTED as to Plaintiffs’ failure to sufficiently
plead diversity jurisdiction. Plaintiffs, however, are granted leave to file an amended pleading that
remedies the identified deficiencies. Plaintiffs’ amended pleading must be filed within thirty (30)
days of the date of this Opinion and the accompanying Order. If Plaintiffs fail to file an appropriate
amended pleading within this time, this matter will be dismissed for lack of subject-matter
jurisdiction. Defendant’s motion is otherwise DENIED. An appropriate Order accompanies this
Opinion.
Dated: October 8, 2021
__________________________
John Michael Vazquez, U.S.D.J.
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