Victoria Automobile Insurance Company v. Rider et al

Filing 8

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (#4) is DENIED. Signed by District Judge Stephen N. Limbaugh, Jr on 3/2/2017. (JMC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
VICTORIA AUTOMOBILE
INSURANCE COMPANY,
Plaintiff,
v.
MATTHEW RIDER and M.S., a minor,
by KASANDRA ILER, her Next Friend,
Defendants.

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Case No. 1:16-CV-289 SNLJ

MEMORANDUM AND ORDER
This case comes before the Court on defendant Matthew Rider’s Motion to
Dismiss for Lack of Subject Matter Jurisdiction (#4). The issues are fully briefed and
ripe for disposition. For the following reasons, the motion is denied.
I.

Factual Background

The tragic facts of this case stem from a car accident whereby Matthew Rider
(“Rider”) was driving his pregnant wife Sarah Iler, who was in labor, to a hospital to give
birth. As the first amended petition for damages alleges,1 Rider greatly reduced his
speed while on the interstate, resulting in a semi-tractor trailer striking Rider’s vehicle.
Sarah Iler was ejected from the vehicle and passed away. M.S., the child of Sarah Iler,
survived but sustained substantial and permanent brain injuries. M.S., through Sarah
Iler’s sister Kasandra Iler, brought the state-court action against Rider, the driver of the
semi-tractor trailer, and the driver’s employer.
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The petition was filed in the Circuit Court of the County of Cape Girardeau and is Cause No.: 16CG-CC00116.

The case here is a declaratory judgment action in which plaintiff, Victoria
Automobile Insurance Company (“plaintiff”), seeks clarification of its rights and
responsibilities under a policy of motor vehicle insurance issued to Bruce Rider, Matthew
Rider’s father. In its complaint, plaintiff alleges it has no duty to indemnify or defend
Rider resulting from the accident because Rider was not covered under the policy.
Plaintiff explains that the 1999 Chevy Blazer driven by Rider was not listed as a covered
auto under the policy and no other coverage extension offered by the policy applies to the
Blazer as to create coverage for Rider under the policy.
Plaintiff brought this action pursuant to this Court’s diversity jurisdiction under 28
U.S.C. § 1332. The policy at issue has a “bodily injury” limit of $25,000 and a “per
accident” limit of $50,000. Plaintiff contends that the amount in controversy requirement
is satisfied when the policy limits are aggregated with the potential costs of defending
Rider through trial and any appeal. Rider filed the instant motion, contending that this
Court lacks subject matter jurisdiction over this action because the costs of the duty to
defend may not be considered in the determination of the amount in controversy and
because they cannot be considered, the amount in controversy does not exceed $75,000.
II.

Legal Standard

Federal Rule of Civil Procedure 12(b)(1) provides that a party may dismiss an
action based on lack of subject matter jurisdiction. In ruling on a motion to dismiss for
lack of subject matter jurisdiction, this Court “must accept all factual allegations in the
pleadings as true and view them in light most favorable to the nonmoving party.” Great

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Rivers Habitat Alliance v. Fed. Emergency Mgmt. Agency, 615 F.3d 985, 988 (8th Cir.
2010) (internal citation omitted).
Diversity of citizenship jurisdiction exists when the amount in controversy
exceeds $75,000, exclusive of costs or interest, and the matter is between citizens of
different states. See 28 U.S.C. § 1332. In this case, only the amount in controversy is
contested. Generally, “the amount claimed by the plaintiff controls in determining the
existence of diversity jurisdiction.” St. Paul Mercury Indemnity Co. v. Red Cab Co., 303
U.S. 283, 288-289 (1938).
In a declaratory judgment in which an insurer sues an insured to determine its
obligation to defend and indemnify, as here, the amount in controversy “ordinarily equals
the probable costs of defense and indemnification of the underlying litigation.”
Scottsdale Ins. Co. v. Universal Crop Prot. Alliance, LLC, 620 F.3d 926, 932 (8th Cir.
2010) (internal citations omitted). See also National Union Fire Ins. Co. of Pittsburgh,
Pa. v. Maune, Case No. 4:05-CV-2021 JCH, 2006 WL 587650 at *2 (E.D. Mo. March
10, 2006) (“in declaratory judgment cases that involve the applicability of an insurance
policy to a particular occurrence, ‘the jurisdictional amount in controversy is measured
by the value of the underlying claim – not the face amount of the policy.’”)
A complaint “that alleges the jurisdictional amount in good faith will suffice to
confer jurisdiction, but the complaint will be dismissed if it appear[s] to a legal certainty
that the claim is really for less than the jurisdictional amount.” Scottsdale Ins. Co., 620
F.3d at 931 (internal citations omitted). “If the defendant challenges the plaintiff’s
allegations of the amount in controversy, then the plaintiff must establish jurisdiction by a
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preponderance of the evidence.” Kopp v. Kopp, 280 F.3d 883, 884 (8th Cir. 2002)
(internal citation omitted). “[I]t appears that the relevant legal rule is that the proponent
of diversity jurisdiction must prove a negative by a preponderance of the evidence in
order to avoid dismissal of his or her case.” Id. at 885 (internal citation omitted). In
other words, the proponent of diversity jurisdiction must show by preponderance of the
evidence “that it does not appear to a legal certainty that the claim for relief is for less
than the statutorily prescribed jurisdictional amount” to avoid dismissal. Id.
III.

Discussion

In this case, the Court finds that plaintiff alleged the jurisdictional amount in good
faith. If Rider is covered under the policy, plaintiff would have a duty to defend Rider
for all claims against him through any possible trial and appeal and would have a duty to
indemnify up to the policy limits. Because the state-court action alleges substantial
injuries and damages, it is foreseeable that plaintiff would expend a significant amount of
time and money in Rider’s defense, potentially in excess of $50,000. And as noted, the
policy contains a “bodily injury” limit of $25,000 and a “per accident” limit of $50,000.
Accordingly, the potential costs of defense and indemnification may well exceed $75,000
and it does not appear to a legal certainty that the amount in controversy is less than
$75,000.
Rider cites Maune in support of his argument that “the costs of the duty to defend
may not be considered in the determination of the amount in controversy.” 2006 WL
587650 at *3. Although the Maune Court declined to consider the costs of defense under
the particular facts of that case, the Court expressly noted that in other cases the “costs of
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defense, attorney’s fees, and statutory penalties may be considered as part of the amount
in controversy.” Id. at *2 (internal citations omitted). In Maune, defendant drove a
covered vehicle under the applicable insurance policy and hit his brother’s motorcycle,
injuring his brother. Id. at *1. The brother demanded payment of the full $100,000 under
the policy, but, the policy contained a “household exclusion” clause that applied to the
brother, denying coverage in excess of the $25,000 statutory minimum. Id. Therefore,
on the face of the policy, only $75,000 was in controversy, which did not exceed $75,000.
The Court declined to consider the costs of defense in the amount in controversy
requirement because the brother had not sued defendant and no duty to defend had yet
been triggered. In the case at hand, in contrast, suit has indeed been filed, thus triggering
plaintiff’s duty to defend Rider if Rider is covered under the policy.
IV.

Conclusion

This Court has proper diversity jurisdiction.
Accordingly,
IT IS HEREBY ORDERED that defendant’s Motion to Dismiss for Lack of
Subject Matter Jurisdiction (#4) is DENIED.
So ordered this 2nd day of March, 2017.

STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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