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Click here for the full text of this decision FACTS:In this declaratory judgment action, the plaintiff, Liberty Corporate Capital Ltd., appeals from the district court’s grant of the defendant’s, Dallas Glen Hills LP’s, motion to dismiss for lack of subject matter jurisdiction. The appeal presents an issue of first impression in regarding how the citizenship of a Lloyd’s of London underwriter suing on its own behalf is to be determined for diversity purposes. The district court concluded that the citizenship of every underwriter subscribing to a Lloyd’s policy must be considered when determining whether complete diversity exists. HOLDING:Reversed and remanded. While an insured receives a Lloyd’s “policy” of insurance, what he has in fact received are numerous contractual commitments from each Name who has agreed to subscribe to the risk. The Names are jointly and severally obligated to the insured for the percentage of the risk each has agreed to assume. The insured does not have to sue each Name individually however to collect on their individual promises because the typical Lloyd’s policy contains a clause providing that “any [Name] can appear as representative of all [Names].” Thus, when litigation ensues over a Lloyd’s policy, the only named Lloyd’s party appearing in the litigation is usually the lead underwriter on the policy. The standard Lloyd’s policy states “that in any suit instituted against any one of [the Names] upon this contract, [all the Names] will abide by the final decision of such Court or of any Appellate Court in the event of an appeal.” Thus, each Name is contractually bound on an individual basis to the insured to adhere to any adverse judgment reached in the suit notwithstanding that only one Name participates in the litigation as a named party. Thus, a Syndicate, being only a grouping of Names, has no contractual relationship with the insured. In the instant case, Syndicate 190 is a single-Name Syndicate with Liberty as its sole Name and underwriting member. Liberty is the lead underwriter on the Policy and insures 32.79 percent of the risk, which is more than the risk insured by any other Name on the Policy. Liberty is a British corporation with its principal place of business in the United Kingdom. Thus, if only Liberty’s citizenship is relevant for jurisdictional purposes, then the parties are completely diverse because DGH is a citizen of Texas, Delaware and New York. If, however, the citizenship of every Name subscribing to the Policy is relevant for jurisdictional purposes, then the district court’s dismissal was proper as Liberty has not alleged the citizenship of all Names subscribing to the policy, and at least one Name is believed to be a citizen of Texas. In the current posture of the instant case, Liberty is suing only in its individual capacity as lead underwriter on the Policy. Thus, Liberty’s case is presented in the exact procedural posture suggested by the 2nd U.S. Circuit Court of Appeals in E.R. Squibb & Sons Inc. v. Accident & Casualty Insurance Co., 160 F.3d 925 (2d Cir. 1998) (Squibb I) and ultimately approved by the Second Circuit in E.R. Squibb & Sons Inc. v. Lloyd’s & Cos., 241 F.3d 154 (2d Cir. 2001) (Squibb II). In Squibb II, the district court concluded that British law and the contracts at issue would permit the suit to proceed against a Name in his individual capacity. The court went on to conclude that the other Names were dispensable parties because all Names were contractually bound by the policies and by the rules of Lloyd’s to abide by any judgment rendered against the lead underwriter. Thus, dismissing the representative claims against the lead underwriter would have no practical effect on any other Name. Because the citizenship of the lone underwriter was diverse from every other opposing party, diversity jurisdiction was met. The court finds the Second Circuit’s approach to be based upon sound reasoning. At the outset, Liberty is without question a real and substantial party to the controversy. Liberty is a subscribing Name on the Policy and is therefore directly bound via contract to DGH, the insured. Liberty’s personal stake in the outcome is approximately $163,950. Therefore, this is not the situation where an agent with no personal stake in the controversy attempts to sue on behalf of his non-diverse principal in order to create diversity. Liberty faces actual liability for the risk it assumed and therefore is a real party to the controversy. Moreover, pretermitting the Lloyd’s issue, the district court would have diversity jurisdiction over Liberty’s individual claim against DGH. Liberty is a British citizen and DGH is a citizen of Texas, Delaware and New York. Thus, Liberty and DGH are completely diverse in citizenship. Further, Liberty’s potential liability on the Policy is $163,950, a sum well in excess of the jurisdictional amount. The severability of each Name’s liability to the insured lends further support to the conclusion that a Name can be sued individually. Having determined that an insured can sue a Name individually, it does not follow that the citizenship of the remaining Names on the Policy who are not parties to the case and are not before the court is relevant to determining whether the parties are completely diverse. The district court had subject matter jurisdiction over this claim because DGH is alleged to be a citizen of Texas, Delaware and New York, and Liberty is alleged to be a citizen of the United Kingdom. Liberty’s 32.79 percent of risk is approximately $163,950, an amount well in excess of the jurisdictional amount. The other subscribing Names are not parties before the court and their citizenship need not be considered when determining whether the parties are completely diverse. Thus, the district court erred in dismissing the action for lack of subject matter jurisdiction. OPINION:Zainey, J.; Garwood, Jones and Zainey, JJ.

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