Nationwide Property and Casualty Insurance Company v. Dubose
Filing
18
ORDER granting 8 Motion to Dismiss. This action is dismissed without prejudice for want of subject matter jurisdiction. Signed by Chief Judge William H. Steele on 4/12/2016. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
NATIONWIDE PROPERTY AND
CASUALTY INSURANCE
COMPANY,
Plaintiff,
v.
WILLIAM DUBOSE, Individually,
and as Parent and Next Friend of
KIMBERLY DUBOSE,
Defendants.
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CIVIL ACTION 16-0017-WS-B
ORDER
This matter, which was recently transferred to the undersigned’s docket, comes before the
Court on defendants’ filing styled “Rule 12(b) Motion to Dismiss” (doc. 8). The Motion has
been briefed and is now ripe for disposition.
I.
Background.
Plaintiff, Nationwide Property and Casualty Insurance Company, brought this action for
declaratory judgment against William Dubose, both individually and in his capacity as parent
and next friend of Kimberly Dubose. Well-pleaded factual allegations of the Complaint reflect
that, during the relevant timeframe, Nationwide issued an automobile insurance policy (the
“Policy”) to William Dubose, providing coverage for him and certain members of his family,
including his then-18-year old daughter, Kimberly Dubose, as insured drivers on each of three
family-owned vehicles, including a 2007 Nissan Altima. (Doc. 1, ¶¶ 3, 11-13.) The Complaint
reflects that the Policy afforded certain coverages to Kimberly Dubose and other covered family
members, but not uninsured/underinsured motorist coverage, which Nationwide says William
Dubose had expressly rejected in a signed application dated February 22, 2013. (Id., ¶¶ 11-13.)
The Complaint further alleges that Kimberly Dubose sustained personal injuries in a
single-vehicle accident on August 30, 2014, as a passenger in the covered 2007 Nissan Altima.
(Id., ¶¶ 7-8.) According to the Complaint, Kimberly Dubose’s friend, nonparty Toni Raine
Delacey, was behind the wheel of the Altima when the accident occurred at 1:15 a.m. on County
Road 55 in Loxley, Alabama. (Id.) Kimberly Dubose is alleged to have suffered injuries to her
jaw, teeth and back, requiring her hospitalization for “a number of days” after the wreck. (Id., ¶
10.) William Dubose and/or Kimberly Dubose presented a claim to Nationwide for
uninsured/underinsured motorist benefits under the Policy for these injuries. (Id., ¶ 14.) For its
part, Nationwide took the position that no such benefits are available under the Policy for various
reasons, including (among others) William Dubose’s purported rejection of such coverage in the
Policy application. (Id., ¶¶ 19-21.) Notwithstanding its denial of coverage, Nationwide
acknowledges that “Mr. Dubose and Ms. Dubose dispute Nationwide’s position relative to the
claim at issue and assert that the claim has a value of at least $75,000.” (Id., ¶ 22.)
Based on these factual allegations, Nationwide filed suit against the Duboses in this
District Court pursuant to 28 U.S.C. § 2201, seeking a judicial declaration “that no coverage
applies or that coverage is otherwise precluded by the Policy for the claim at issue.” (Doc. 1, at
9.) Subject matter jurisdiction is predicated on the diversity provisions of 28 U.S.C. § 1332, and
is rooted in Nationwide’s assertion that “the citizenship of Nationwide and the defendants is
diverse and the amount in controversy exceeds $75,000.00.” (Id., ¶ 4.)1 Defendants now move
for dismissal of the Complaint without prejudice for want of subject matter jurisdiction pursuant
to Rule 12(b)(1), Fed.R.Civ.P., on the ground that § 1332’s amount-in-controversy requirement
is not satisfied.
1
Nationwide also maintains in its pleading that “[j]urisdiction over this matter lies
pursuant to 28 U.S.C. § 2201,” the federal Declaratory Judgment Act. (Doc. 1, ¶ 5.) This
statement is incorrect as a matter of law. It is well settled that § 2201 does not confer jurisdiction
upon federal courts; rather, an action brought under § 2201 must include an independent
jurisdictional foothold in order to be viable. See, e.g., Medtronic, Inc. v. Mirowski Family
Ventures, LLC, --- U.S. ----, 134 S.Ct. 843, 848, 187 L.Ed.2d 703 (2014) (“We agree with
amicus that the Declaratory Judgment Act does not ‘extend’ the ‘jurisdiction’ of the federal
courts.”); Stuart Weitzman, LLC v. Microcomputer Resources, Inc., 542 F.3d 859, 861-62 (11th
Cir. 2008) (“Of course, it is well established that the Declaratory Judgment Act does not, of
itself, confer jurisdiction upon federal courts.”); Federal Election Com’n v. Reform Party of U.S.,
479 F.3d 1302, 1307 n.5 (11th Cir. 2007) (“a suit brought under the [Declaratory Judgment] Act
must state some independent source of jurisdiction”).
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II.
Analysis.
A.
Legal Standard.
Under 28 U.S.C. § 1332(a), federal courts have original jurisdiction over all civil actions
between citizens of different states where the amount in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs. See Underwriters at Lloyd’s, London v. OstingSchwinn, 613 F.3d 1079, 1085 (11th Cir. 2010) (“For federal diversity jurisdiction to attach, all
parties must be completely diverse … and the amount in controversy must exceed $75,000.”)
(citations omitted). “In light of the federalism and separation of powers concerns implicated by
diversity jurisdiction, federal courts are obligated to strictly construe the statutory grant of
diversity jurisdiction … [and] to scrupulously confine their own jurisdiction to the precise limits
which the statute has defined.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1268 (11th Cir.
2000) (citations omitted); see also Osting-Schwinn, 613 F.3d at 1086 (similar).
As noted, the focal point of defendants’ jurisdictional challenge is the amount-incontroversy prong of the diversity statute. To be sure, Nationwide includes in its Complaint a
blanket assertion that “the amount in controversy exceeds $75,000.00” (doc. 1, ¶ 4); however,
that representation is buttressed only by an allegation that the Duboses “assert that the claim has
a value of at least $75,000” (id., ¶ 22). The general rule is that “[w]hen a plaintiff invokes
federal-court jurisdiction, the plaintiff’s amount-in-controversy allegation is accepted if made in
good faith.” Dart Cherokee Basin Operating Co. v. Owens, --- U.S. ----, 135 S.Ct. 547, 553, 190
L.Ed.2d 495 (2014); see also Giovanno v. Fabec, 804 F.3d 1361, 1365 (11th Cir. 2015) (“A
plaintiff satisfies the amount in controversy requirement by claiming a sufficient sum in good
faith.”) (citation omitted). Here, however, Nationwide does not claim a determinate amount in
damages; rather, its allegations concerning amount in controversy seek to assign a monetary
value to its indeterminate claims for declaratory relief. For § 1332 jurisdiction to lie in that
context, “the party seeking to invoke federal jurisdiction bears the burden of proving by a
preponderance of the evidence that the claim on which it is basing jurisdiction meets the
jurisdictional minimum.” Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807
(11th Cir. 2003).2
2
See also SUA Ins. Co. v. Classic Home Builders, LLC, 751 F. Supp.2d 1245, 1248
(S.D. Ala. 2010) (“This preponderance-of-the-evidence standard applies to declaratory judgment
(Continued)
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“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.” Cohen v. Office
Depot, Inc., 204 F.3d 1069, 1077 (11th Cir. 2000); see also South Florida Wellness, Inc. v.
Allstate Ins. Co., 745 F.3d 1312, 1315-16 (11th Cir. 2014) (“We have held that for amount in
controversy purposes, the value of injunctive or declaratory relief is the value of the object of the
litigation measured from the plaintiff’s perspective.”) (citation and internal marks omitted).
“Because [Nationwide] seeks declaratory relief, the amount in controversy is the monetary value
of the object of the litigation from [its] perspective.” Weiner v. Tootsie Roll Industries, Inc., 412
Fed.Appx. 224, 227 (11th Cir. Feb. 2, 2011) (citations and internal quotation marks omitted).
Ultimately, then, the Motion to Dismiss turns on whether Nationwide has shown by a
preponderance of the evidence that, from its own perspective, the monetary value of the
declaratory relief it seeks is in excess of $75,000.
B.
Whether Plaintiff Has Satisfied the Amount-in-Controversy Threshold by a
Preponderance of the Evidence.
In an effort to meet its burden of showing that the amount in controversy surpasses the
jurisdictional minimum, Nationwide leans heavily on two specific facts. Whether considered
individually or collectively, however, these facts do not show by a preponderance of the
evidence that the monetary value of the declaratory judgment sought in this case exceeds the sum
or value of $75,000, exclusive of interest and costs.
1.
The December 2014 Demand Letter.
First, Nationwide maintains that the § 1332 threshold is satisfied because “Defendant’s
counsel made a settlement demand in the amount of $500,000.00.” (Doc. 14, at 2.) Without a
doubt, demand letters are relevant and may be considered in evaluating the § 1332 amount in
controversy. See Burns v. Windsor Ins. Co., 31 F.3d 1092, 1097 (11th Cir. 1994) (“[w]hile [a]
actions brought in federal court by an insurer. … This makes sense, given that a declaratory
judgment plaintiff does not seek damages at all and thus does not seek a determinate amount of
damages.”); Spooner Petroleum Co. v. Utsey, 2015 WL 3658182, *2 (S.D. Ala. June 11, 2015)
(similar); Company Property & Cas. Ins. Co. v. Metal Roofing Systems, 2013 WL 5770730, *2
(S.D. Fla. Oct. 24, 2013) (“where Plaintiff requests a declaratory judgment, 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.”).
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settlement offer, by itself, may not be determinative, it counts for something”). However, it is
equally true that the utility of such demands in the jurisdictional analysis varies widely
depending on the circumstances. See, e.g., Jackson v. Select Portfolio Servicing, Inc., 651 F.
Supp.2d 1279, 1281 (S.D. Ala. 2009) (“Settlement offers commonly reflect puffing and
posturing, and such a settlement offer is entitled to little weight in measuring the preponderance
of the evidence.”); Montgomery v. Food Giant Supermarkets, Inc., 2014 WL 5307890, *2 (S.D.
Ala. Oct. 16, 2014) (in evaluating proper jurisdictional weight to give a demand letter, “courts
draw distinctions between settlement offers steeped in puffery and posturing at a high level of
abstraction, on the one hand, and those yielding particularized information and a reasonable
assessment of value, on the other”). Scrutiny of the subject demand letter here readily exposes
the insignificance, jurisdictionally speaking, of the $500,000 figure touted by Nationwide.
As an initial matter, Nationwide disregards the critical fact that the demand letter from
the Duboses’ counsel dated December 22, 2014, was addressed jointly to both Nationwide
(Kimberly Dubose’s purported uninsured/underinsured motorist coverage insurer) and First
Acceptance Insurance Services, Inc. (by all appearances, the liability carrier for Toni DeLacey,
Ms. Dubose’s friend who was driving the 2007 Nissan Altima when the wreck occurred). The
$500,000 settlement demand in the December 22 letter was not directed solely at Nationwide,
and did not purport to relate exclusively to Kimberly Dubose’s demand for uninsured/
underinsured motorist insurance benefits from Nationwide. Rather, on its face, the settlement
demand was framed as a global figure encompassing all of Ms. Dubose’s claims and potential
claims against both her own carrier (for uninsured/underinsured motorist benefits) and
DeLacey’s carrier (presumably for liability benefits). (Doc. 14, Exh. A.) Viewed in this light,
the $500,000 figure cited by Nationwide says nothing about the magnitude of the Duboses’
demands against Nationwide alone, and is of no value in quantifying the insurance benefits or
other monetary damages sought by the Duboses from their own insurer, as distinguished from
that of the vehicle’s driver.3
3
First Acceptance Insurance Services, Inc. (the driver’s insurer) is not a party to
this declaratory judgment action; therefore, any settlement demands that the Duboses might have
directed to First Acceptance, rather than Nationwide, are jurisdictionally irrelevant here.
-5-
Moreover, Nationwide’s jurisdictional argument pertaining to the demand letter
inexplicably overlooks another key qualifier in the letter itself. The Duboses’ lawyer demanded
settlement “in the amount of $500,000 or all of the available policy limits, whichever is least.”
(Id. at 1-2 (emphasis added).) Defendants have made a convincing showing, with neither
objection nor dissent from Nationwide, that “all of the available policy limits” in the Nationwide
policy amounted to, in the aggregate, a maximum of $75,000;4 therefore, by the plain language
of the December 22 letter, the Duboses’ demand from Nationwide did not exceed $75,000. For
these reasons, it is not accurate to say, as plaintiff does, that the Duboses’ counsel demanded
$500,000 from Nationwide to settle the instant insurance coverage dispute.
2.
The Coffield Affidavit and Projected Costs of Defense.
Second, Nationwide posits that the § 1332 amount-in-controversy requirement is satisfied
by reference to the Affidavit of Darren Coffield (doc. 14, Exh. B). In that exhibit, Coffield avers
that he is a Nationwide claims representative, explains that his duties include retention and
supervision of outside counsel to defend Nationwide in claims for uninsured/underinsured
motorist benefits, and posits that “the cost of defending such actions … would be, at a minimum,
$5,000.00,” and potentially considerably more. (Id., at 2.)5 In reliance on the Coffield Affidavit,
4
In particular, the Duboses point to Policy language showing that any uninsured/
underinsured motorist coverage furnished by Nationwide was confined “to the sum of the limits
of the number of described vehicles, but not to exceed three, insured by this policy.” (Doc. 8,
Exh. A, at ¶ 2(a).) The Duboses further show that the Policy covered four vehicles, each with a
limit of $25,000. (Doc. 8, Exh. B.) Given the language in the Policy restricting the stacking of
uninsured/underinsured motorist coverage limits to no more than three vehicles, the maximum
coverage that would have been available to the Duboses from Nationwide under the Policy
(assuming that Nationwide provided such coverage to them at all) would have been $75,000
exactly (i.e., $25,000 coverage limit per vehicle x 3 vehicles). Hence, the maximum amount of
the December 22 demand letter directed at Nationwide did not exceed $75,000, because the letter
called for the lesser of $500,000 or the available policy limits.
5
The Duboses protest that the Coffield Affidavit should not be considered in
adjudicating this Motion to Dismiss because, even though a notary public notarized Coffield’s
signature, she failed to attach a notarial seal. On that basis, the Duboses insist that this Court
may not look to the Coffield Affidavit as a self-authenticating document. (Doc. 15, at 5.) To be
clear, defendants’ argument is not that Coffield did not actually sign the affidavit or that the
affidavit is a forgery, but rather that the notary public failed to comply with a technical
requirement under Alabama law in notarizing his signature. The trouble is that defendants point
to nothing in the Federal Rules of Civil Procedure or any other federal authority that would
forbid a court adjudicating a Rule 12(b)(1) motion from considering exhibits that have not been
(Continued)
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Nationwide maintains that adding the claimed uninsured/underinsured motorist benefits to the
defense costs it would incur if the Duboses sued Nationwide for coverage vaults the amount in
controversy above the $75,000 threshold. (Doc. 14, at 4.)
The Court finds this argument unpersuasive. As noted, the amount in controversy in a
declaratory judgment action is properly gauged by the monetary value of the object of the
litigation from the plaintiff’s perspective. However, “[t]he general rule is that attorneys’ fees do
not count towards the amount in controversy unless they are allowed for by statute or contract.”
McKinnon Motors, 329 F.3d at 808 n.4 (attorney’s fees demanded by insured in bad faith claim
pursued in separate litigation do not count toward jurisdictional amount in insurer’s declaratory
judgment action). Nationwide has cited no statute or contract that would allow consideration of
such fees here, and the Court is aware of none.6 More fundamentally, the inescapable fact
properly authenticated in conformity with technical principles of state law. To the contrary,
federal courts routinely consider unauthenticated documents on motions for summary judgment,
for example, when it is apparent (as it is here) that such documents are capable of reduction to
admissible, authenticated form. See, e.g., Rule 56(c)(2), Fed.R.Civ.P. (“A party may object that
the material cited to support or dispute a fact cannot be presented in a form that would be
admissible in evidence.”); Johnson v. Mobile Infirmary Medical Center, 2015 WL 1538774, *1
(S.D. Ala. Apr. 7, 2015) (“It is well settled that exhibits are properly considered for summary
judgment purposes as long as they may be reduced to admissible form at trial.”). Besides,
defendants’ authentication argument, if accepted, would eliminate from consideration the
Duboses’ own exhibits in support of their Motion to Dismiss, consisting of unauthenticated
pages purportedly lifted from the subject Policy. The draconian position that defendants urge
with respect to the Coffield Affidavit would thus disqualify important exhibits on both sides, all
without identifying any federal procedural requirement mandating such a result. The Court
declines to do so, but will consider the exhibits presented without passing on their authenticity or
ultimate admissibility at trial in their present form.
6
In this regard, Nationwide’s circumstances are materially distinguishable from
those in SUA Insurance Co. v. Classic Homebuilders, LLC, 751 F. Supp.2d 1245 (S.D. Ala.
2010). In SUA, the undersigned quoted binding authority for the proposition that “[t]he
pecuniary value of the obligation to defend the separate lawsuit is properly considered in
determining the existence of the jurisdictional amount.” Id. at 1251 (citation omitted). But SUA
was an insurance declaratory judgment action in which the insurer sought to include in the
amount in controversy the costs of defending its insured in the underlying lawsuit pursuant to a
contractual duty to defend. Here, by contrast, Nationwide seeks inclusion of its own attorney’s
fees that it might incur in its own defense should the Duboses file a lawsuit against it for nonpayment of uninsured/underinsured motorist benefits. Unlike the fees at issue in SUA, the
attorney’s fees claimed by Nationwide are not a creature of statute or contract; therefore, SUA
(Continued)
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remains that the Duboses have not brought a bad-faith or breach-of-contract action against
Nationwide based on the denial of uninsured/underinsured motorist coverage for the underlying
accident. Thus, Nationwide’s evidence of the defense costs it might incur if some hypothetical
contingency were to come to pass (i.e., if the Duboses were to sue it) rests on conjecture and
speculation, which this Court cannot indulge in a § 1332 jurisdictional analysis. See, e.g., Pretka
v. Kolter City Plaza II, Inc., 608 F.3d 744, 753-54 (11th Cir. 2010) (divining the amount in
controversy “only through speculation … is impermissible”); Crocker v. Lifesouth Community
Blood Centers, Inc., 2016 WL 740296, *4 (S.D. Ala. Feb. 23, 2016) (“the amount in controversy
cannot be satisfied by conjecture or speculation”).
At any rate, the Coffield Affidavit is inadequate to satisfy Nationwide’s burden as to the
amount in controversy for another, independent reason. Even if Nationwide’s own litigation
expenses in defending itself against a hypothetical suit brought by the Duboses were properly
weighed in the amount-in-controversy inquiry, Nationwide’s showing of the likelihood of at least
$5,000 in defense costs would not suffice. Here is why: Defendants’ counsel has affirmatively
represented to this Court that “Defendants do not claim more than $65,000.00 in potential
uninsured/underinsured motorist coverage damages.” (Doc. 15, at 5.)7 In conducting amount-incontroversy analyses under § 1332, federal courts afford great deference to these sorts of
representations made by counsel as officers of the court, and presume them to be true. See, e.g.,
McKinnon, 329 F.3d at 808 (where opposing party indicates that it does not seek and will not
accept damages in excess of specified amount, “we give great deference to such representations
does not bolster Nationwide’s jurisdictional position. And plaintiff cites no other cases that it
contends would support inclusion of its own prospective attorney’s fees in the amount-incontroversy calculations.
7
This representation is backed by the Affidavit of Kimberly Dubose, who avers
that she “will never plead and/or claim” from Nationwide “an amount greater than $65,000” in
uninsured or underinsured motorist coverage relating to the August 30, 2014 accident. (K.
Dubose Aff. (doc. 15, Exh. A), ¶ 3.) She further “agree[s] and stipulate[s] to a cap of any and all
damages … for a total of $65,000 from Nationwide” in this coverage dispute. (Id.) And Ms.
Dubose clarifies that she “would not accept more than $65,000.00 from Nationwide Property and
Casualty Insurance Company for the aforesaid coverage pertaining to the aforesaid motor vehicle
accident.” (Id., ¶ 4.) Ms. Dubose is now over the age of 19 (id., ¶ 1); therefore, no competency /
capacity concerns would appear to be implicated by her Affidavit dated February 25, 2016.
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and presume them to be true”); see also Land Clearing Co. v. Navistar, Inc., 2012 WL 206171,
*4 (S.D. Ala. Jan. 24, 2012) (“Plaintiff’s counsel’s insistence that his client does not seek, and
will not accept, more than $74,000 from defendants looms large in the jurisdictional inquiry and
merits considerable deference.”); Wallace v. Kentucky Fried Chicken, 2008 WL 4531773, *6
n.13 (S.D. Ala. Oct. 9, 2008) (for amount-in-controversy purposes, “courts in the Eleventh
Circuit credit representations of counsel that their clients will neither seek nor accept recovery
exceeding the jurisdictional amount”).
Accordingly, and in the absence of any contrary evidence or argument, the Court credits
defense counsel’s representations (and Kimberly Dubose’s averments) that the insureds do not
seek, and will not accept, more than $65,000 in potential damages from Nationwide relating to
any uninsured/underinsured motorist benefits due and owing to Ms. Dubose as a result of the
August 30, 2014 automobile accident. Combining defendants’ stipulated damages cap of
$65,000 with the $5,000 in litigation costs that Nationwide has shown it would likely incur in
defending against any claims the Duboses might bring would yield a total of $70,000. That
figure, in turn, constitutes the maximum value of the monetary object of this declaratory
judgment action, viewed from plaintiff’s perspective, that Nationwide has shown by a
preponderance of the evidence. Obviously, that figure falls short of the $75,000 jurisdictional
threshold fixed by 28 U.S.C. § 1332. On that basis, the Court concludes that plaintiff has not
met its burden of showing by a preponderance of the evidence that the amount in controversy
exceeds the sum or value of $75,000, and that diversity jurisdiction is therefore lacking.
Inasmuch as no other viable basis for federal subject matter jurisdiction has been pleaded in the
Complaint, this action is properly dismissed on jurisdictional grounds.
III.
Conclusion.
For all of the foregoing reasons, defendants’ Rule 12(b) Motion to Dismiss (doc. 8) is
granted, pursuant to Rule 12(b)(1), Fed.R.Civ.P. This action is hereby dismissed without
prejudice for want of subject matter jurisdiction.
DONE and ORDERED this 12th day of April, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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