Lloyd’s syndicates treated like limited partnerships

Although the Fourth Circuit has not addressed whether a Lloyd’s syndicate is more like a trust or a limited partnership, this court follows the approach adopted by five circuits, which treats the syndicates like limited partnerships. As such, defendants were required to state the citizenship of each member name to determine diversity jurisdiction.

Background

In 2018, plaintiff , a cash management company based in Henrico, obtained primary coverage for its comprehensive crime insurance through Chubb European Group Limited and first excess comprehensive insurance coverage through Certain Underwriters at Lloyd’s, London Subscribing to Policy No. B091/L11831111 for the period between April 1, 2018, and April 1, 2019.

During the 2018 coverage period, plaintiff discovered that one of its employees, Roiland Gotiangco, defrauded plaintiff by modifying, corrupting and erasing confidential data in plaintiff’s systems dating back as far as 2016. As a result of this scheme, plaintiff alleges that Gotiangco fraudulently transferred $1,220,078.27, leading to a federal investigation and subsequent indictment for wire fraud and identity theft.

Plaintiff claims that Chubb and underwriters have failed to properly compensate plaintiff for its losses attributed to Gotiango’s fraud. Plaintiff brings two claims of breach of contract. Defendants contend that there is diversity jurisdiction because plaintiff is diverse from all defendants and the amount in controversy exceeds $75,000. This matter is before the court on plaintiff’s motion for remand. 

Analysis

In light of the unique nature of Lloyd’s operations, a circuit split developed regarding whether “a Lloyd’s syndicate is more like a trust or a limited partnership – in other words, whether only the representative name’s citizenship is relevant (the trust model), or whether the citizenship of all of the names must be considered (the limited partnership model).” The Fourth Circuit has yet to address this question. This court will follow the approach adopted by five circuits and treat Lloyd’s syndicates like limited partnerships. Defendants are required to state the citizenship of each member name in the syndicate to determine diversity jurisdiction.

Defendants consist of numerous foreign entities based in France or the United Kingdom. Almost all defendants consist of numerous Lloyd’s syndicates comprised of member names structured as U.K. private limited companies. Defendants allege in the notice of removal that those names are all organized under the laws of the United Kingdom with their principal places of business in the United Kingdom. 

The parties dispute whether a private limited company should be treated as a corporation or if the citizenship of all the members or stakeholders must be alleged for diversity purposes. Following the lead of many sister courts, the court finds that a U.K. private limited company is an analog to an American corporation. Thus, defendants need only to demonstrate the place of incorporation and principal place of business for each name. However, if the court were to apply the Seventh Circuit’s test, as plaintiff argues this court must, a U.K. private limited company would still be considered similar to an American corporation for diversity jurisdiction.

Conspicuously absent from plaintiffs’ briefing is any evidence that any of defendants’ member names is missing or that any name is American. Accordingly, the court finds that defendants have listed all the names underwriting plaintiff’s policy. Moreover, as stated in the notice of removal, plaintiff is diverse from defendants.

 Finally the court finds the amount in controversy is satisfied for the underwriters because each name is responsible for more than $75,000. Accordingly, the court has subject matter jurisdiction.

Plaintiff’s motion to remand denied.

The Brink’s Company v. Chubb European Group Limited, Case No. 3:20-cv-520, Nov. 20, 2020. EDVA at Richmond (Hudson). VLW 020-3-575. 16 pp.