State Farm Fire and Casualty Company v. Johnson et al
MEMORANDUM OPINION AND ORDER GRANTING 6 MOTION to Dismiss, as further set out in order; DENYING as moot the 8 MOTION to Accept Payment into court. Signed by Honorable Judge W. Harold Albritton, III on 4/28/16. (djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
STATE FARM FIRE AND CASUALTY
) Case No. 2:16cv139-WHA
HENRY JOHNSON and MATTIE JOHNSON, ) (wo)
MEMORANDUM OPINION AND ORDER
I. FACTS AND PROCEDURAL HISTORY
This cause is before the court on a Motion to Dismiss (Doc. #6), filed by the Defendants,
Henry Johnson and Mattie Johnson (“the Johnsons”), and a Motion to Accept Payment into
Court (Doc. #8), filed by the Plaintiff State Farm Fire and Casualty Company (“State Farm”).
This case arises out of fire damage to the Johnsons’ home, which was insured by State
Farm. The Johnsons submitted a claim for the damage caused by the fire. State Farm initially
estimated the replacement cost at $29,551.43 and tendered payment of $26,946.67, after
depreciation. (Doc. #6-2). State Farm re-inspected the residence after the Johnsons protested
the amount of the estimate, and State Farm updated the estimate of the replacement cost to
$87,615.73. (Doc. #1 at ¶14).1 The Johnsons invoked the appraisal clause of their policy,2 and
In its calculations, discussed below, State Farm uses the figure of $87,072.23. The difference,
which State Farm says is inconsequential, (Doc. #11 at p. 3 & n.1), is approximately $500 and is
the difference between the estimated amount and the payment tendered, which takes into account
2 The policy provides that if the insurer and insured fail to agree on the amount of loss, either
State Farm and the Johnsons each selected appraisers. The appraisers did not reach agreement.
State Farm’s appraiser submitted an estimate of an additional $20,377.04. (Doc. #6-4). The
appraisals were submitted to an umpire. The umpire and the appraiser selected by the Johnsons
entered an Appraisal Award of $146,750 for the dwelling coverage and $29,862 for Additional
Living Expenses, as provided for in the policy, for a total Appraisal Award of $176,612.00.
State Farm contends that the Appraisal Award is improper because it included portions of
the residence which State Farm did not agree were damaged by fire, and the Appraisal Award
included Additional Living Expenses, which were not supposed to be part of the appraisal. State
Farm filed a Complaint for Declaratory Judgment in this court on February 29, 2016. State Farm
seeks a declaration that the Appraisal Award entered by the umpire and one of the appraisers in
this case is void and of no effect and that State Farm has no obligation to pay the Defendants
pursuant to the Appraisal Award.
State Farm’s Motion to Accept Payment into Court asks the court to accept payment of
$59,677.77. According to State Farm, it has paid the Johnsons $87,072.23 toward dwelling
coverage and contests the Appraisal Award of $146,750 for that coverage. State Farm seeks to
pay to the court the difference between the Appraisal Award and what has been paid to avoid
being accused of holding the money to make interest on it. State Farm states that if it prevails in
this case, it will seek a return of the money.
For reasons to be discussed, the Motion to Dismiss is due to be GRANTED and the
can demand the amount of loss be set by appraisal, and if the amount cannot be agreed to by the
two appraisers selected, the differences will be submitted to the umpire and a written agreement
signed by any two of the three shall set the amount of the loss. (Doc. #6-1 at p.18).
Motion to Accept Payment into Court is due to be DENIED as moot.
MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
A Rule 12(b)(1) motion challenges the district court=s subject matter jurisdiction and
takes one of two forms: a Afacial attack@ or a Afactual attack.@ A Afacial attack@ on the complaint
requires the court to assess whether the plaintiff has alleged a sufficient basis for subject matter
jurisdiction. Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990). A Afactual attack,@ on
the other hand, challenges the existence of subject matter jurisdiction based on matters outside
the pleadings. Lawrence, 919 F.2d at 1529. Under a factual attack, the court may hear
conflicting evidence and decide the factual issues that determine jurisdiction. Colonial Pipeline
Co. v. Collins, 921 F.2d 1237, 1243 (11th Cir. 1991). The burden of proof on a Rule 12(b)(1)
motion is on the party averring jurisdiction. Thomson v. Gaskill, 315 U.S. 442, 446 (1942).
Under 28 U.S.C. §1332(a), diversity jurisdiction is conferred on district courts in civil
actions between citizens of different states where the matter in controversy exceeds $75,000,
exclusive of interest and costs. There is no dispute that the parties in this case have diverse
citizenship. The Johnsons, however, dispute that the requisite amount is in controversy.
The party seeking to invoke federal jurisdiction bears the burden of proving by a
preponderance of the evidence that the claim on which it bases jurisdiction meets the
jurisdictional minimum. Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807
(11th Cir. 2003). When a plaintiff seeks injunctive or declaratory relief, the amount in
controversy is the monetary value of the object of the litigation from the plaintiff’s perspective.
The Johnsons initially sought dismissal of the Complaint for Declaratory Judgment for
lack of subject matter jurisdiction on the ground that the money State Farm seeks to pay into
court is less than the $75,000 in controversy required for diversity subject matter jurisdiction.
State Farm clarified, however, that the $59,677.77 it seeks to pay into court is only the amount of
the Appraisal Award that covers the dwelling loss, but that State Farm also challenges the aspect
of the Appraisal Award which includes the Additional Living Expenses amount of $29,862.
State Farm argues, therefore, that when the additional $29,862 is considered, the amount in
controversy is greater than $75,000.
In reply, the Johnsons point out that State Farm’s appraiser submitted an appraisal of
$20,377.04 through the agreed-to appraisal process. (Doc. #6-4). State Farm had previously
updated its estimate of the replacement cost to $87,615.73. (Doc. #1 at ¶14). The Johnsons
argue, therefore, that State Farm has agreed to an amount for the loss of the structure as follows:
$87,615.73 and an additional $20,377.04 which is $107,992.77.
State Farm does not appear to include the $20,377.04 submitted by State Farm’s
appraiser in its calculations, focusing instead on the amount already tendered to the Johnsons. It
appears to this court, however, that consideration of that amount is appropriate. See Gordon v.
Amica Mut. Ins. Co., No. 3:03cv1134, 2005 WL 123851 (D. Conn. Jan. 20, 2005) (denying an
insurance company’s motion to dismiss for lack of subject matter jurisdiction and considering
the amount of money already paid and the value placed on the loss by an appraisal firm hired by
the insurance company). State Farm’s burden is to demonstrate the value of the object of the
litigation from its perspective, which, in this case, would be the value to it if the Appraisal
Award were set aside. See Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807
(11th Cir. 2003).
Considering the sum that State Farm agreed to in its updated estimate and the amount
submitted by its appraiser, $107,992.77, the difference between that number and the total
Appraisal Award of $176,612.00, which includes Additional Living Expenses, is $68,619.23, or
less than the requisite jurisdictional amount. Alternatively, considering the amount State Farm
says that it has tendered as payment to date, $87,072.23 plus the $20,377.04 appraiser amount,
which totals $107,449.27, results in an amount in controversy of $69,162.73, which is also an
amount below $75,000.3
The court must conclude, therefore, that State Farm has not met its burden to establish
subject matter jurisdiction in this case.
Calculation with the estimated amount
87,615.73 (estimated loss)
+20,377.04 (State Farm appraisal)
107,992.77 (amount of loss for structure)
176,612.00 (Appraisal Award for structure and Additional Living Expenses)
68,619.23 (in controversy)
Calculation with the tendered amount
87,072.23 (tendered amount for loss)
20,377.04 (State Farm appraisal)
107,449.27 (amount of loss for structure)
176,612.00 (Appraisal Award for structure and Additional Living Expenses)
69,162.73 (in controversy)
Within the Johnsons’ Reply Brief is a request for an award of costs and attorneys’ fees
for opposing this suit. The Johnsons cite no legal basis for such an award, and the court declines
to impose it as a sanction.
For the reasons discussed, the court concludes that the requisite amount is not in
controversy, and the court lacks subject matter jurisdiction. The Motion to Dismiss (Doc. #6) is
hereby ORDERED GRANTED and a separate Judgment will be entered dismissing the case
without prejudice for lack of subject matter jurisdiction.
The Motion to Accept Payment into Court (Doc. #8) is DENIED as moot.
Done this 28th day of April, 2016.
_/s/ W. Harold Albritton
W. HAROLD ALBRITTON
SENIOR UNITED STATES DISTRICT JUDGE
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