Maryland Casualty v. Flynn, et al.

2008 DNH 206

• Court: District Court, D. New Hampshire
• Decided: December 3, 2008
• Docket: 08-CV-082-SM
• Status: Published

Opinion

Maryland Casualty v . Flynn, et a l . 08-CV-082-SM 12/03/08 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Maryland Casualty Company, Plaintiff

v. Civil N o . 08-cv-82-SM Opinion N o . 2008 DNH 206 Georgia Flynn d/b/a Circle of Learning Day Care; et a l . , Defendants

O R D E R

Maryland Casualty Company brought this interpleader action

for laudable reasons. It wrote two insurance policies for

Georgia Flynn, doing business as Circle of Learning Day Care in

Nashua, New Hampshire, which provided coverage for “abuse and

molestation which first occurs during the policy period.” “Abuse

and molestation” did occur during the policy period. A number of

children were victimized by an employee of Flynn’s business and

some have brought suit in state court. Other victims have not

brought suit, and still other children who might have been

victimized (but have not yet been identified) may or may not

bring claims in the future.

Because the aggregate coverage limit of the policies is

$600,000 (less costs of defense and other “claim expenses”), and

because Maryland Casualty agrees that more than that amount will be required to pay all legitimate abuse claims made against the

policies, and because it wishes to maximize the amount available

to compensate the victims (by minimizing defense costs) as well

as insure fair and equitable distribution of the policy proceeds

among all those who were victimized, it seeks to interplead the

proceeds and have the court administer distribution among the

multiple claimants to that fund. Toward that end, Maryland

Casualty filed this action, naming as defendants its insured and

known claimants, as well as John and Jane Doe defendants,

representing yet unidentified potential claimants. The court

allowed Maryland Casualty until January 2 , 2009, to identify and

serve the Doe Defendants.

The company has now filed a motion seeking to add some one

hundred and fifty or so named defendants, each of whom is a child

who was enrolled at the day care center during the time the now-

convicted abuser worked there. Some of the originally named

defendants object to the motion, on good grounds. Primarily,

they point out that Maryland Casualty does not assert that the

named children were abused in any way, but merely that they

happened to be enrolled at the day care during the time the

abuser worked there. Serving the parents of these children with

the complaint in this case, without some reasonable basis to

2 think their child was victimized and that a claim on the fund

might be made by them, would likely prove more than a little

alarming, and perhaps unnecessarily s o . A better, more sensitive

means of ascertaining whether children enrolled during the

critical period have a potential claim can be readily imagined.

But, the motion raises a more fundamental issue related to

this court’s subject matter jurisdiction. The complaint rests

federal jurisdiction upon the provisions of 28 U.S.C. §§ 1335

(interpleader) and 1332 (diversity of citizenship). Federal

jurisdiction over an interpleader action is premised on diversity

of citizenship, although complete diversity is not required.

State Farm Fire & Casualty C o . v . Tashire, 386 U.S. 523, 530

(1967). The existence of diversity in an interpleader action is

determined without regard to the plaintiff-stakeholder’s

citizenship. Rather, there is sufficient diversity to support

federal jurisdiction if claims are adverse to the fund (here they

a r e ) , and adverse to each other (here they a r e ) , and at least two

of the claimants to the fund are citizens of different states

(here that is not, or does not appear to b e , the case). Id.

The complaint, even considering the proposed addition of

numerous defendant-claimants, suggests the absence of federal

3 interpleader jurisdiction. All of the named claimants are said

to be citizens of New Hampshire, or no citizenship is asserted.

Conclusion

The motion to add and serve additional parties-defendant is

denied, but without prejudice. On or before January 2 , 2009, the

parties shall show cause why this complaint should not be

dismissed for want of interpleader jurisdiction. See generally,

Star Ins. C o . v . Cedar Valley Express, LLC, 273 F. Supp. 2d 38

(D.D.C. 2002); American Family Mut. Ins. C o . v . Roche, 830

F. Supp. 1241 (E.D. Wis. 1993). Metropolitan Property and

Casualty Ins. C o . v . Shan Trac, Inc., 324 F.3d 20 (1st Cir.

2003).

SO ORDERED.

Steven J. McAuliffe :hief Judge

December 3 , 2008

cc: Dennis C . Hogan, Esq. Peter E . Hutchins, Esq. Lee C . Nyquist, Esq. Cyrus F. Rilee, III, Esq. Mark M . Rufo, Esq. Lawrence A . Vogelman, Esq. Ralph R. Woodman, Jr., Esq.