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The Hanover Insurance Co., As Subrogee of Moline School District No. 40 v. Brandt Construction Co

December 21, 2011

THE HANOVER INSURANCE CO., AS SUBROGEE OF MOLINE SCHOOL DISTRICT NO. 40, PLAINTIFF,
v.
BRANDT CONSTRUCTION CO., DEFENDANT.



The opinion of the court was delivered by: Sara Darrow United States District Judge

E-FILED

Wednesday, 21 December, 2011 10:32:02 AM

Clerk, U.S. District Court, ILCD

ORDER

I. INTRODUCTION

This action was filed by Hanover Insurance Co. ("Hanover") against Brandt Construction Co. ("Brandt") seeking damages allegedly incurred when a school in Moline School District No. 40 ("Moline") was flooded on July 5, 2007. Hanover alleges jurisdiction in this Court on the basis of diversity pursuant to 28 U.S.C. § 1332. Presently before the Court is Brandt's Motion to Dismiss or, in the Alternative, Motion for More Definite Statement. (Brandt's Mot., ECF No. 8.)

Based on the presently asserted facts and for the reasons set forth below, the Court finds that Moline appears to be a real party in interest to the case and should be a named party-plaintiff. Since Brandt and Moline are both citizens of the state of Illinois, Moline's inclusion destroys the diversity-based subject matter jurisdiction of this Court. The Court therefore GRANTS Brandt's request for dismissal. However, the Court finds that Hanover may be able to remedy the apparent jurisdictional flaw. Accordingly, the Court GRANTS Hanover leave to file an amended complaint that complies with this Order by January 11, 2012. Brandt's alternative request for a more definite statement is deemed moot.

II. BACKGROUND

Hanover, a Massachusetts corporation with its principal place of business in Massachussetts, filed the present action on its own behalf and is the only named Plaintiff. The Complaint imprecisely alleges that Hanover insured Moline, of Illinois, and "was obligated to and did, in fact, pay over $300,000 to or on behalf of Moline" for the flooding damage. (Compl. ¶ 15.) By making the "over $300,000" payment, Hanover contends that it has been "subrogated to all rights, claims and causes of action that [Moline] may have against Defendant Brandt," an Illinois corporation with its principal place of business in Illinois, and who Hanover alleges negligently caused the flooding. (Compl. ¶ 16.)

The Complaint also imprecisely requests damages "in an amount exceeding three hundred thousand dollars ($300,000)." (Compl. at 5.) From the vague assertions, the Complaint is unclear whether Hanover is seeking damages in an amount in excess of what it actually paid Moline under the insurance policy-i.e., whether Hanover is seeking damages in excess of the subrogated amount.

Brandt responded to the Complaint with a Rule 12 motion seeking dismissal or, in the alternative, a more definite statement regarding damages. Specifically, Brandt argues that "Plaintiff should be required to allege whether a deductible was paid and whether the damages sought or could be sought are in excess of the amount paid by Plaintiff." (Brandt's Mot. ¶ 8, ECF No. 8.) Brandt claims that specificity regarding damages is necessary because if a deductible was paid by Moline or if damages that are sought or could be sought by Hanover are in excess of the amount paid to Moline, then Moline is a real party in interest and must be included as a Plaintiff in the action. (See Brandt's Mem. of Law in Supp. of Mot. at 3-4, ECF No. 9.) Moline's inclusion, however, would destroy diversity as Moline and Brandt are both citizens of the state of Illinois. Brandt therefore concludes that the Court must dismiss the Complaint for lack of diversity-based subject matter jurisdiction.

Hanover opposes the motion on two separate grounds and provides additional specificity regarding the damages it is seeking from Brandt. (See Hanover's Resp. to Mot. to Dismiss, ECF No. 11.) First, Hanover contends that Moline has no interest in the action. (Id. at 3-4.) According to the opposition, Hanover paid Moline $346,317.77 under the insurance policy, an amount equal to Moline's total damages ($371,317.77) less a $25,000 deductible. (See Id. Ex. A.) The opposition further admits that Hanover intends to seek damages in excess of the amount it paid to Moline, including damages for the $25,000 deductible incurred by Moline. Hanover argues that it is entitled to damages beyond those it paid to Moline, including the deductible, based on an assertion that Moline assigned all of its rights to any interest in the present suit to Hanover. To support this position, Hanover submitted a document entitled "Release and Subrogation Receipt." (Id. Ex. B.) Hanover contends that the "Release and Subrogation Receipt" results in a complete forfeiture by Moline of any independent rights it may otherwise have had to seek damages from Brandt, including forfeiting its right to seek damages from Brandt for the $25,000 deductible.

Second, Hanover argues that Brandt's motion is technically deficient. (See id. at 5.) On this count, Hanover argues that it would be improper for the Court to join Moline to this case on the sole basis that it is a "real party in interest" under Rule 17. Rather, Hanover alleges that any consideration of Moline's inclusion as a party-plaintiff must ...


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