AmGuard Insurance Co. v. SG Patel and Sons II LLC, No. 20-1246 (4th Cir. 2021)Annotate this Case
At issue in this appeal is whether the district court had subject matter jurisdiction over an interpleader action commenced by a liability insurance company, whose policy was exposed to conflicting and excess claims. In this case, AmGuard, a Pennsylvania corporation with its principal place of business in Pennsylvania, commenced this action in the nature of an interpleader and for a declaratory judgment against its insured and the claimants to the proceeds of its policy, all of whom were South Carolina citizens.
The Fourth Circuit reversed the district court's dismissal of the action based on lack of subject matter jurisdiction. The court explained that, because AmGuard disputed the amount that the claimants maintained was available under AmGuard's policy, having acknowledged coverage for only a lesser amount, it was a "claimant" adverse to the other claimants to the proceeds of the policy. Therefore, the diverse citizenship between AmGuard and the South Carolina claimants provided the district court with the minimal diversity needed for jurisdiction under 28 U.S.C. 1335. Furthermore, 28 U.S.C. 1332 also provided the district court with jurisdiction to resolve AmGuard's declaratory judgment claim, yet the district court dismissed the entire action without addressing why it did not have jurisdiction under section 1332. The court concluded that this error also required reversal. The court remanded for further proceedings.