Free Reply to Response to Motion - District Court of Delaware - Delaware

Case 1:04-cv—00865-G|\/IS Document 12 Filed 04/22/2005 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
CAPITOL CLEANERS AND :
LAUNDERERS, INC. a : C. A. N0. O4-0865—(GMS)
Delaware Corporation : g
Prarmrrr, 2
v. :
CNA INSURANCE COMPANIES, INC., JURY TRIAL DEMANDED
CNA INSURANCE GROUP, INC. and :
TRANSCONTINENTAL INSURANCE :
COMPANY, a CNA COMPANY :
Defendants.
PLAINTIFF’S REPLY TO DEFENDANT TRANSCONTINENTAL INSURANCE
COMPANY’S RESPONSE TO PLAINTIFF’S MOTION TO VACATE
MARCH 24, 2005 ORDER AND TO REMAND OR,
IN THE ALTERNATIVE, TO REARGUE
Plaintiff, Capitol Cleaners and Launderers, Inc., a Delaware Corporation E
("Capitol" or "Plaintift"), hereby replies to Defendant Transcontinental Insurance
Company’s Response to Plaintiffs Motion to Vacate this Honorable Court’s March 24, I
2005 Order pursuant to D. Del. LR 7.1.2 and to Remand this Matter to State Court
Pursuant to 28 U.S.C. § 1447(c), or in the alternative, to Reargue Pursuant to D. Del. LR
7.1.5. ("Plaintiff’ s Motion"). In support of its reply, Plaintiff states the following:
l. Defendant, Transcontinental Insurance Company ("Tra.nscontinental")
states that the CNA Entities "do not exist” or are "no longer in existence." As shown in
Plaintiff s Motion, however, the Secretary of State now has accepted service on behalf of {
the CNA Entities, thus mooting the Court’s reason for dismissing these entities.
2. Notwithstanding this statement by Transcontinental, moreover, Plaintiff I
has found no record of a certificate of dissolution tiled with the Delaware Secretary of F

Case 1 :04-cv—00865-GIVIS Document 12 Filed 04/22/2005 Page 2 of 4 .
State for either CNA Insurance Companies, Inc. or CNA Insurance Group, Inc., a
requirement of 8 QQ Q § 275(d) and 8 Del, Q § 103 ("a certificate of dissolution shall
be executed, acknowledged and filed") (emphasis added). See @ 8 QQ, Q § 277 ,
("No corporation shall be dissolved . . . under this chapter until all franchise taxes due to ;
or assessable by the State including all franchise taxes due . . . have been paid by the (
corporation"). These two companies, although inactive, thus have not been dissolved
because a certificate of dissolution has never been filed. I
3. Furthermore, the CNA Entities cannot be dissolved until their outstanding
franchise taxes have been paid in full, which has not occurred. 8 @. Q §§ 275(d), 277,
and 278 set forth the proper procedure for dissolution of Delaware entities. In the case of P
non-payment of franchise taxes, although the corporation may not be able to operate for
the purpose for which it was organized, its existence remains perpetual and the corporate
entity is prohibited from dissolving until such taxes are paid. Because the CNA Entities
have not complied with these requirements of Delaware law, as a matter of law they
remain in existence. Because they still continue as legal entities, diversity jurisdiction
cannot exist. g In re Citadel, 423 A.2d 500, 502 (Del. Ch. 1980); Shanghai Power Co.
v. Delaware Trust Co., 316 A.2d 589 (Del. Ch. 1974).
4. Transcontinental also argues that even if` the CNA Entities do exist, they I
nonetheless are not related to this insurance coverage dispute. The CNA Entities, q
however, as shown in previously filed exhibits, placed their name on insurance policies at
issue in this matter. CNA has held itself out as being involved in this dispute by placing
its mark, on the policies sold to the Plaintiff. Transcontinental’s claim that these entities

Case 1 :04-cv—00865-GIVIS Document 12 Filed 04/22/2005 Page 3 of 4 .
are not involved in this insurance coverage dispute thus is an issue of fact that cannot be
determined at this stage of the litigation.
5. The Court dismissed the CNA Entities for lack of service of process. .
These parties now have been properly served. As a result, Plaintiff respectfully requests
that the Court withdraw its Order. Further, perfecting service of process on the CNA
Entities deprives this Court of subject matter jurisdiction because complete diversity
among the parties has been destroyed. Thus, this matter should be remanded to the State A
court for final adjudication in conjunction with the already pending State Court Action
against Plaintiffs other insurers.
WHEREFORE, for the above reasons, Plaintiff respectfully requests that the I
Court (1) vacate its Order dismissing the CNA entities from this action; and (2) remand
this matter to State court. In the alternative, Plaintiff respectfully requests reargument of
these issues.
Dated: April 22, 2005
McCARTER & ENGLISH, LLP
/s/Jennifer M. Zelvin I
Michael P. Kelly (DE ID # 2296)
Jennifer M. Zelvin (DE ID # 4325) .
919 N. Market St., Suite 1800 _
Wilmington, Delaware 19801
(302) 984-6300
Attorneys for Plaintiff

Case 1 :04-cv—00865-GIVIS Document 12 Filed 04/22/2005 Page 4 of 4 .
CERTIFICATE OF SERVICE
I Jennifer M. Zelvin, Esq. hereby certify that on the 22th day of April, 2005, two copies of
the attached Plaintyfs Reply to Defendant Transcontinental Insurance Company ’s Response _,
to Plaintyfs Motion to Vacate March 24, 2005 Order and to Remand or, in the Alternative, to
Reargue were served by hand delivery upon: I
Daniel A. Griffith, Esq.
Marshall, Dennehey, Warner, Coleman & Goggin .
1220 N. Market Street Q
5th Floor
P. O. Box 8888 I
Wilmington, DE 19899
Under penalty of perjury, I declare that the foregoing is true and correct. S
DATED: April 22, 2005 C
/s/Jennifer M. Zelvin
Jennifer M. Zelvin, Esq. (Del. # 4325)
wu; 104651.01