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Arlington Cmty. Fed. Credit Union v. Berkley Reg'l Ins. Co.

United States District Court, E.D. Virginia, Alexandria Division

October 30, 2014

ARLINGTON COMMUNITY FEDERAL CREDIT UNION, Plaintiff,
v.
BERKLEY REGIONAL INSURANCE COMPANY, Defendant

For Arlington Community Federal Credit Union, Plaintiff: Richard Johan Conrod, Jr., LEAD ATTORNEY, Kaufman & Canoles PC, Norfolk, VA; Lauren Tallent Rogers, Kaufman & Canoles PC (Norfolk), Norfolk, VA.

For Berkley Regional Insurance Company, Defendant: Kelly Marie Lippincott, LEAD ATTORNEY, Carr Maloney PC (DC), Washington, DC.

Page 590

MEMORANDUM OPINION

T. S. Ellis, III, United States District Judge.

In this removed diversity insurance coverage dispute, the threshold issue is the propriety of the removal on diversity jurisdiction grounds. Specifically, two questions are raised:

(1) whether plaintiff, a federally chartered corporation, which is not covered by 28 U.S.C. § 1332, is " localized" in Virginia and thus a Virginia citizen for diversity of citizenship purposes where, as here, plaintiff has its principal place of business in Virginia, all of its branch offices are in Virginia, and the vast majority of its business operations are in Virginia; and, if so,
(2) whether a removal notice adequately states jurisdictional grounds for removal where, as here, defendant's removal notice cites as the grounds for removal (i) diversity of citizenship and (ii) plaintiff's principal place of business in Virginia, but does not specify that plaintiff is localized in Virginia, or allege facts relating to the application of the localization doctrine.

For the reasons stated from the bench and elucidated here, diversity jurisdiction is present in this case, the notice of removal is adequate, and, in any event, defendant, in these circumstances, may properly be permitted to amend its notice of removal to add factual allegations in support of diversity jurisdiction as its basis or ground for removal.

I.

Plaintiff Arlington Community Federal Credit Union (" ACFCU" ) is a federal credit union engaged, inter alia, in the business of offering its members various financial

Page 591

services, including savings accounts and mortgage loans. It is undisputed that ACFCU's principal place of business is in Arlington, Virginia and that all of ACFCU's branch offices are in Virginia. Also undisputed is that approximately 78% of ACFCU's members list Virginia as their state of residence, and that Virginia members account for 86% of ACFCU's total deposit account balance and 79% of ACFCU's total loan balance.

Defendant Berkley Regional Insurance Company (" Berkley" ) is a Delaware corporation engaged in the business of insurance. Berkley issued an insurance policy to ACFCU, titled Financial Institution Bond for Credit Unions, Bond No. CUB 6002662-11 (hereinafter the " Policy" ).

The Policy, by its terms, provides coverage for various losses and also excludes coverage in certain circumstances. Specifically pertinent here is the policy provision which provides coverage for:

(O)(1) Loss resulting directly from fraudulent instruction through E-mail, Telefacsmile or Telephonic means received by the Insured from a person who purports to be the Accountholder, the Accountholder's authorized representative or an employee but is not the Accountholder, [or] the Accountholder's authorized representative or an Employee, provided:
(a) the Insured performed a Callback Verification with respect to the instruction, or
(b) the Insured followed a commercially reasonable security procedure set forth in a written funds transfer agreement, signed by the Accountholder or the Accountholder's authorized ...

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