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State Auto Property and Casualty Insurance Company v. Kincaid

May 18, 2010

STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY, PLAINTIFF,
v.
PAUL KINCAID, INDIVIDUALLY AND D/B/A THE HAIR CLINIC, A PARTNERSHIP, AND STEVE COLLINS, INDIVIDUALLY AND D/B/A THE HAIR CLINIC, A PARTNERSHIP, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott United States District Judge

OPINION

JEANNE E. SCOTT, U.S. District Judge

This cause is before the Court on the Motion to Dismiss or Stay in the Alternative (Motion to Dismiss) (d/e 33) filed by Defendant Steven R. Collins, individually and doing business as The Hair Clinic. Plaintiff State Auto Property and Casualty Insurance Company (State Auto) has filed Plaintiff's Response to Motion to Dismiss or Stay (Response) (d/e 39). Also before the Court is Defendant Collins' Motion to Remand to State Court (Motion to Remand) (d/e 34) and Plaintiff's Response to Motion to Remand (d/e 38).

These matters are fully briefed and ripe for adjudication. For the reasons described below, the Motion to Dismiss is granted in part, and the Motion to Remand is denied.

FACTS

According to the Complaint for Declaratory Judgment (Complaint) (d/e 1), Plaintiff State Auto is an Iowa insurance corporation with its principal place of business in Columbus, Ohio. State Auto is licensed to conduct business in the State of Illinois. Defendants Paul Kincaid and Steven R. Collins are Illinois residents and State Auto insureds. Defendant The Hair Clinic is Defendants Kincaid's and Collins' partnership, and is also a State Auto insured. Defendant Kincaid is an inmate at the U.S. Penitentiary in Marion, Illinois, and Defendant Collins resides in Litchfield, Illinois.*fn1

Starting on October 8, 1999, Plaintiff issued insurance policy SOP9612605 (the Policy) to Kincaid and Collins doing business as The Hair Clinic. Defendants purchased this policy through an insurance agent, Simpson Insurance Services, Inc. (Simpson). Simpson is an Illinois corporation. Defendants renewed this policy annually through October 8, 2008.

On May 4, 2009, John Doe, previously a party to this action, filed a lawsuit in the Circuit Court of Montgomery County, Illinois, (State Court Case) against Kincaid, Collins, and The Hair Clinic, among others. Complaint, Ex. J, Complaint in Montgomery County Case No. 09 L 10. Doe alleges that from 2000 into 2006, Kincaid repeatedly sexually assaulted, battered, and intentionally inflicted emotional distress on Doe while Doe performed work at The Hair Clinic. Doe also brings claims against Kincaid, Collins, and The Hair Clinic for negligence, negligent hiring, and negligent supervision/retention. Additionally, Doe is suing Collins for fraudulent conveyance.

Plaintiff is currently defending Defendants Collins and The Hair Clinic in the State Court Case, and filed this declaratory judgment action, seeking a judgment that it does not have an obligation to defend them.

ANALYSIS

I. MOTION TO DISMISS

Defendant Collins presents several arguments for dismissal. The first seems to be that the Court lacks subject matter jurisdiction because Simpson is an indispensable party, and State Auto intentionally failed to join Simpson because doing so would have destroyed diversity jurisdiction. See Fed. R. Civ. P. 19(1); 28 U.S.C. § 1332.

This argument is without merit. Simpson is merely the insurance agent through which Defendants purchased the Policy, and as such is not an indispensable party. Collins presents no facts supporting his assertion that the Court "cannot accord complete relief among existing parties" in Simpson's absence. See Fed. R. Civ. P. 19(a)(1)(A). The fact that Collins purchased the Policy through Simpson is irrelevant. State Auto is an Iowa corporation with its principal place of business in Columbus, Ohio. The parties here are diverse, and the Court has subject matter jurisdiction over this lawsuit.

Collins next seems to argue that the case should be dismissed because his counsel in the State Court Case, Brown & James, P.C., was secured by State Auto, and has represented State Auto in other matters. Collins argues for dismissal based on this alleged "serious conflict of interest which may have compromised the Defendant." Motion to Dismiss, ΒΆ 13. However, State Auto provided Collins with the opportunity to engage counsel of his own choosing in the State Court Case, with said counsel to be paid by State Auto. Response, Ex. A, Affidavit of Robert Marc Chemers, Ex. 1, Reservation of Rights Letter to Collins Dated June 4, 2009. Collins chose not to do ...


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