Brewster v. GEICO General Insurance Company

Filing 20

MEMORANDUM OPINION Signed by Magistrate Judge John E Ott on 1/26/18. (SAC )

FILED
2018 Jan-26 PM 04:03
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SAMUEL CHARLES BREWSTER, JR.,
Plaintiff,
v.
GEICO GENERAL INSURANCE
COMPANY,
Defendant.

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Case Number:
2:17-cv-362-JEO

MEMORANDUM OPINION
Samuel Charles Brewster, Jr. (“Plaintiff”) filed this suit, invoking this
court’s diversity jurisdiction under 28 U.S.C. § 1332(a), asserting he is entitled to
underinsured motorist benefits from GEICO General Insurance Company
(“GEICO”).

(Doc. 1 1-7 (“Complaint”)).

GEICO filed a motion to dismiss

contending this court lacks subject matter jurisdiction.

(Doc. 7).

Plaintiff

responded by filing an opposition to GEICO’s motion. (Doc. 11). GEICO has
filed a reply to Plaintiff’s opposition. (Doc. 12). Upon consideration, the court2
concludes that it lacks subject matter jurisdiction and that the complaint must be
dismissed.
1

Citations herein to “Doc(s). __” are to the document numbers assigned by the clerk, as reflected
on the docket sheet, to the pleadings, motions, and other documents in the court file.
2

The parties have consented to an exercise of plenary jurisdiction by a magistrate judge pursuant
to 28 U.S.C. § 636(c). (Doc. 14).

I.

BACKGROUND
Plaintiff filed this action on March 7, 2017.

(Doc. 1).

The material

allegations of the pleading are as follows: On or about May 31, 2011, the vehicle
Plaintiff was driving was rear-ended at a red light by another driver (hereinafter
“Tortfeasor”). (Id. ¶ 5). At the time of the accident Plaintiff had a contract for
automobile insurance with GEICO which provided coverage for claims where a
tortfeasor was uninsured or underinsured. (Id. ¶ 4). This policy was in the amount
of $75,000. (Id. at ¶ 19). Tortfeasor also had automobile liability insurance at the
time of the accident in the amount of $100,000. (Id. at ¶¶ 8, 22). Following the
accident, Plaintiff filed suit against Tortfeasor.

(Id. at ¶ 12).

Plaintiff and

Tortfeasor ultimately settled the case for $55,000. (Doc. 1 ¶ 12). GEICO’s
position was that there was no uninsured motorist exposure stemming from the
accident. (Id. at ¶¶ 10-14).
Based on the foregoing allegations, Plaintiff asserts in his one-count
complaint that GEICO is liable under Alabama law for breach of contract in regard
to uninsured motorist benefits. In response to Plaintiff’s complaint, GEICO filed a
motion to dismiss on May 26, 2017. (Doc. 7). GEICO argues this court does not
have subject matter jurisdiction under 28 U.S.C. § 1332(a) because the amount in
controversy does not exceed $75,000. (Id at p. 2.). Specifically, GEICO argues
that because the full amount of potential underinsured motorist coverage under the
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policy is limited to $75,000, the amount in controversy cannot exceed the
jurisdictional limit.
On June 9, 2017, Plaintiff filed an opposition to GEICO’s motion to dismiss.
(Doc. 11). In his brief, Plaintiff argues he is not required to first exhaust liability
under the tortfeasor’s insurance policy before being able to collect under his own
uninsured motorist policy, though he admits that GEICO is entitled to a set-off in
the full amount of the tortfeasor’s liability coverage. (Id. at p. 3). Further, Plaintiff
contends that in calculating amount in controversy under 28 U.S.C. § 1332(a), the
court should consider what is actually in controversy as opposed to how much he is
likely to recover. (Id. at p. 4). He asserts that, because his damages are in excess
of $100,000, the fact that he can only recover $75,000 under his policy does
preclude the amount in controversy from being more than $75,000. (Id. at p. 4-6).
Following Plaintiff’s opposition to its motion to dismiss, GEICO filed a
response to Plaintiff’s opposition on June 16, 2017. (Doc. 12). GEICO admits that
Plaintiff could be entitled to underinsured motorist benefits despite settling for only
$55,000 of Tortfeasor’s $100,000 liability coverage and GEICO further agrees it
would be entitled to set-off the full amount of Tortfeasor’s liability coverage. (Id.
at ¶ 1). GEICO disputes, however, Plaintiff’s contention concerning the impact of
underlying policy limits and argues the cases he relies upon are not on point. (Id.
at ¶ 3). GEICO asserts that Tortfeasor’s coverage limit does not establish the
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amount in controversy and instead submits that what is at issue is Plaintiff’s
uninsured motorist claim which is limited to $75,000.00, one penny below the
jurisdictional limit.
II.

DISCUSSION
In order for a district court to have jurisdiction under the diversity statute, a

plaintiff must establish that the amount in controversy “exceeds the sum or value
of $75,000, exclusive of interest and costs . . . .” 28 U.S.C. 1332(a). In actions
seeking enforcement of an insurance policy, the amount available under the policy
may be relevant to the amount in controversy. See Koester v. State Farm Mut. Ins.,
Co., 2012 WL 5265783, at *4 (N.D. Ala. Oct. 22, 2012). However, where the facts
alleged in a complaint cannot legally support a judgment in excess of the
jurisdictional amount, a court cannot have jurisdiction even if the damages asserted
exceed that amount. Payne v. State Farm Mut. Auto Ins. Co., 266 F.2d 63, 64-65
(5th Cir. 1959).3
In Payne, the old Fifth Circuit affirmed a lower court’s dismissal of a case
on the ground that the amount in controversy was not met. Payne, 266 F.2d at 64.
The plaintiff, the father of a nine-year-old boy who was hit by a car, brought suit
against State Farm. Id. The plaintiff claimed $50,865.68 worth of damages for his
son’s personal injuries and medical expenses. Id. The insurance policy limited
3

Decisions of the former Fifth Circuit handed down before October 1, 1981, are binding in the
Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
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liability to $10,000 for personal injuries. Id. In coming to its decision, the court
stated that it must consider whether recovery in a sum in excess of the
jurisdictional minimum, which was then $10,000, is possible. Id. at 65. The court
determined that because the policy was only for $10,000, the plaintiff could not
recover from State Farm an amount in excess of the jurisdictional limit even if his
damages from the accident might be $50,865.68. Id.
Other courts in this circuit have also considered this issue in the
uninsured/underinsured motorist context. For example, in Henry v. State Farm
Mutual Automobile Insurance Company, 2013 WL 5178518, at *1 (M.D. Fla. Sept.
13, 2013), the insured brought an action on his policy in state court, and the
defendant insurer sought to remove based on diversity. Henry, 2013 WL 5178518,
at *1. However, in its notice of removal, the defendant admitted that the policy
limit was at most $75,000. Id. The defendant contended that the policy limit did
not determine amount in controversy and asserted that the plaintiff’s damages
exceeded $75,000. Id. The court, however, remanded the action. Id. While noting
that policy limits do not always determine amount in controversy, the court
distinguished cases in which “the value of the claim exceeds the value of the
policy.” Id. (quoting Kelly v. Gen. Star Nat’l Indem. Co., No. 8:07-cv-1143-JDWTGW, 2007 WL 3034654, at *2 (M.D. Fla. Oct. 16, 2007)). Thus, the court held
that where the amount a plaintiff can recover is limited to $75,000 or less, no
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amount of damages above that amount can create jurisdiction under 28 U.S.C. §
1332(a).
In the present action, Plaintiff is likewise the holder of a $75,000 policy for
uninsured and underinsured motorist insurance coverage. (Doc. 1 ¶ 19). Plaintiff
settled with Tortfeasor for $55,000 of his $100,000 auto liability coverage. (Doc. 1
¶¶ 12, 22). While the court does not dispute the Plaintiff’s assertion that he need
not exhaust the tortfeasor’s liability policy before recovering underinsured motorist
benefits, this has no effect on the amount in controversy where Plaintiff’s
underinsured policy limits are below the jurisdictional limits.

The question

instead, is whether the facts legally support a judgment in excess of $75,000
against GEICO.

Plaintiff asserts he is entitled to damages in excess of the

jurisdictional limit, specifically citing damages in excess of $100,000 for pain,
mental anguish, and medical expenses. (Doc. 1 ¶¶ 22-23). Similar to Payne,
however, the Plaintiff’s policy limit is less than the amount of damages sought.
Because Plaintiff’s policy only allows recovery up to $75,000 and no more, the
fact that his total damages from the accident might be above the jurisdictional limit
cannot satisfy the required amount in controversy.

Therefore, the amount in

controversy does not exceed the jurisdictional limit.
Plaintiff contends the court must look to what amount is actually in
controversy in the case, not how much a plaintiff will ultimately recover, citing
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Erby v. Pilgrim’s Pride, No. 2:16-cv-0497-VEH, 2016 WL 3548792, at *1 (N.D.
Ala. June 30, 2016).

(Doc. 11).

While the court would acknowledge the

correctness of that proposition, Erby did not involve an insurance policy. Thus,
there was no question presented with regard to the role that policy limits might
play in determining the amount in controversy. By contrast, the coverage limit
under Plaintiff’s insurance policy establishes the upper limit of the amount in
controversy: $75,000.00. (Doc. 1 ¶ 19). Because Plaintiff is legally unable to
collect more than the jurisdictional limit, the amount in controversy is not met.
III.

CONCLUSION
Based on the foregoing, Defendant’s motion to dismiss for lack of

jurisdiction (Doc. 7) is due to be GRANTED. A separate order will be entered.
DONE, this 26th day of January, 2018.

_________________________________
JOHN E. OTT
Chief United States Magistrate Judge

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