Ferguson v. Life Insurance Company of North America

Filing 4

OPINION AND ORDER re 1 Notice of Removal: Court, through its authority under Rule 12(h)(3), ORDERS Defendant to submit a brief in support of its assertion that the amount in controversy exceeds $75,000. Defendant is afforded up to and including June 3, 2015, to submit the brief. Signed by Magistrate Judge Susan L Collins on 5/20/15. (mc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
MICHELLE FERGUSON,
Plaintiff,
v.
LIFE INSURANCE COMPANY OF
NORTH AMERICA,
Defendant.

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CAUSE NO. 1:15-cv-122-RL-SLC

OPINION AND ORDER
Defendant removed this case to this Court from the Grant Superior Court by Defendant
based on diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). (DE 1). The Notice of
Removal, however, elicits concerns regarding the Court’s subject matter jurisdiction. As always,
subject matter jurisdiction is the first issue that must be addressed, Baker v. IBP, Inc., 357 F.3d
685, 687 (7th Cir. 2004); thus, the Court now raises the issue sua sponte, pursuant to Federal
Rule of Civil Procedure 12(h)(3).
In particular, the Court is concerned that the amount in controversy does not exceed
$75,000, as required under 28 U.S.C. § 1332(a). A party that chooses federal court is required to
set out the basis of federal jurisdiction. Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540
(7th Cir. 2006).
Plaintiff alleges in her Complaint that Defendant breached the terms of a group insurance
policy when it discontinued her long-term disability benefits. (DE 2). She seeks unpaid
disability benefits and damages for “emotional distress, financial losses and other losses” due to
Defendant’s “bad faith refusal” to pay her claim. (DE 2).
In its Notice of Removal, Defendant estimates Plaintiff’s unpaid disability payments

through the date of her complaint at $12,773; future benefits at a net present value of
$101,583.75; and punitive damages at $34,307.25. (DE 1 at ¶¶ 6, 7). Defendant acknowledges
that Plaintiff seeks damages for emotional distress, financial losses and other losses, but makes
no attempt to plausibly assign a dollar value to these matters. As such, Defendant satisfies the
$75,000 jurisdictional minimum only by including future benefits. (DE 1 at ¶ 9).
However, “[i]n a case seeking payments under a disability insurance policy where the
dispute is over whether the plaintiff qualifies for the benefits, only amounts allegedly past due
can be considered ‘in controversy.’” Stachewicz v. Nat’l Union Fire Ins. Co. of Pittsburg[h],
PA, No. 3:09-cv-470, 2009 WL 3065065, at *2 (S.D. Ill. Sept. 23, 2009). “Thus, future
payments under a disability insurance policy cannot be used to determine the amount in
controversy for federal jurisdiction where the plaintiff seeks only payment of certain benefits.”
Id. (citing Keck v. Fid. & Cas. Co., 359 F.2d 840, 841 (7th Cir. 1966)). “Future benefits
payable under a contract of insurance may be used to compute the sum in controversy for
jurisdictional purposes only when the validity of the insurance policy itself, and not merely the
presence or absence of conditions measuring the insurer’s liability thereunder, is the matter in
dispute.” Id. (quoting Keck, 359 F.2d at 841); see also Kaplan v. Standard Ins. Co., No. 11 C
6487, 2013 WL 5433463, at *3 (N.D. Ill. Sept. 30, 2013). Here, the issue appears to be whether
Plaintiff is entitled to long-term disability benefits under the policy, not whether the policy itself
is valid.
The case relied upon by Defendant in its Notice of Removal, Paddack v. Life Insurance
Company of North America, No. 4:09-cv-25, 2009 WL 2611932, at *2-3 (N.D. Ind. Aug. 24,
2009), is distinguishable. There, Defendant’s numerical estimates of the plaintiff’s unpaid

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disability benefits, punitive damages, and other compensatory damages exceeded $75,000
without consideration of future benefits. Id. at 2-5 (observing that defendant had abandoned the
future damages category in its response to plaintiff’s motion to remand, and thus, that the court
need not decide whether future benefits should be included in the amount in controversy).
Consequently, the Court, through its authority under Rule 12(h)(3), ORDERS Defendant
to submit a brief in support of its assertion that the amount in controversy exceeds $75,000.
Defendant is afforded up to and including June 3, 2015, to submit the brief.
SO ORDERED.
Enter for this 20th day of May, 2015.
s/ Susan Collins
Susan Collins
United States Magistrate Judge

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