Hall v. Unum Life Insurance Company of America

Filing 38

MEMORANDUM AND ORDER re: 22 MOTION to Remand Case to State Court For Lack of Subject Matter Jurisdiction to Circuit Court of Butler County filed by Plaintiff Robert L. Hall, M.D. IT IS HEREBY ORDERED that plaintiff's motion to remand (#22) is GRANTED. IT IS FURTHER ORDERED that this case is REMANDED to the Circuit Court for Butler County, Missouri. Signed by District Judge Stephen N. Limbaugh, Jr on 3/1/19. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION
ROBERT L. HALL, M.D.,
Plaintiff,
v.
UNUM LIFE INS. CO. OF AMERICA,
Defendant.

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Case No. 1:18 CV 104 SNLJ

MEMORANDUM and ORDER
Plaintiff brings breach of contract and vexatious refusal to pay claims against his
Disability Income insurance policy provider, defendant Unum Life Insurance Company
of America. Defendant removed this matter from state court pursuant to 28 U.S.C. §§
1332, 1441, and 1446. Plaintiff has moved to remand (#22).
“Subject matter jurisdiction asserted under 28 U.S.C. § 1332 requires an amount in
controversy greater than $75,000 and complete diversity of citizenship among the
litigants….” Junk v. Terminix Intern. Co., 628 F.3d 439, 445 (8th Cir. 2010). No party
contests that complete diversity exists. Rather, the parties disagree regarding the amount
in controversy.
The plaintiff was employed as a surgeon. On May13, 1993, he took out a
Disability Income policy with defendant. The policy contains a Lifetime Sickness Benefit
Rider which states

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BENEFITS
Beginning on the later of the policy anniversary when your
age is 65 or the end of the Maximum Benefit Period, the Total
Disability Benefit is amended to read as follows:
We will pay the Maximum Disability Benefit in any month
after you have satisfied the Elimination Period that:
1.
You are totally disabled; and
2.
That total disability:
a.
Is the result of sickness which began before the
policy anniversary when your age was 60 and
while this rider was in effect; and
b.
Began before the policy anniversary when your
age was 60 and has been continuous until the
month for which this benefit is payable.
Plaintiff alleges that in June 2012, before he turned 60 years old, he became disabled as a
result of systemic contact dermatitis and systemic inflammatory response syndrome. He
contacted defendant in November 2012, before turning 60, and advised defendant that his
sickness and disability began on June 1, 2012. Plaintiff alleges that, pursuant to the
Lifetime Sickness Benefit Rider, his benefit in the event of total disability should have
applied beginning on the policy anniversary when plaintiff’s age was 65. Plaintiff claims
defendant owes him payments of $9,124 per month for his lifetime, beginning December
2017. Plaintiff filed his lawsuit on March 26, 2018.
Plaintiff filed the motion to remand because, he insists, the amount in controversy
does not exceed $75,000. Where a complaint alleges no specific amount of damages or
an amount under the jurisdictional minimum, the removing party must prove by a
preponderance of the evidence that the amount in controversy exceeds $75,000. Bell v.
Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009); see also In re Minnesota Mut. Life Ins.

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Co. Sales Practices Litig., 346 F.3d 830, 834 (8th Cir. 2003). “To meet this burden, the
defendant must present some specific facts or evidence.” Harris v. Transamerica Life Ins.
Co., No. 4:14-cv-186 CEJ, 2014 WL 1316245, at *1 (E.D. Mo. Apr. 2, 2014) (internal
quotation marks omitted). “All doubts about federal jurisdiction should be resolved in
favor of remand to state court.” Junk v. Terminix Int'l Co., 628 F.3d 439, 446 (8th Cir.
2010).
“In Missouri, when seeking damages based upon a breach of a disability insurance
policy, the plaintiff can recover, at most, the unpaid installments claimed to have accrued
to the date of suit.” Umbenhower v. Mut. of Omaha Ins. Co., 298 F. Supp. 927, 928
(W.D. Mo. 1969) (internal quotations omitted). Even if this Court were to find plaintiff
entitled to disability payments under the contract, such a determination
would not preclude [defendant] from finding, at some future
time, that [plaintiff] is no longer disabled and is therefore no
longer entitled to benefits. For this reason, most courts
confronting this issue—including the Eighth Circuit, in a
long-ago case—have held that courts should not consider
possible future disability benefits when determining the
amount in controversy.
Garvey v. Prudential Ins. Co. of Am., No. 08-cv-147 PJS, 2008 WL 1805603, *2 (D.
Minn. Apr. 18, 2008) (citing Colorado Life Co. v. Steele, 95 F.2d 535, 537 (8th
Cir.1938)). Wright & Miller describes this as the “prevailing view” and reiterates that
“only the amount of the installments unpaid at the commencement of the suit may be
taken into account, even though the judgment will be determinative of the company’s

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liability for future installments.” 14AA Wright & Miller, Fed. Prac. & Proc.§ 3710 (4th
ed.) (collecting cases).
Plaintiff acknowledges that, in disability insurance cases, “where the validity of [a
disability] insurance policy…is involved in a diversity action in a federal district court,
future potential benefits may be considered in computing the requisite jurisdictional
amount.” Massachusetts Cas. Ins. Co. v. Harmon, 88 F.3d 415, 416-17 (6th Cir. 1996)
(quoting Joseph E. Edwards, Annotation, Determination of Requisite Amount in
Controversy in Diversity Action in Federal District Court Involving Liability Under, or
Validity of, Disability Insurance, 11 A.L.R. Fed. 120, 128 (1972) (collecting cases)),
cited by Stanley v. Lafayette Life Ins. Co, No. 3:13cv5137MDH, 2015 WL 2062568, *3
(W.D. Mo. May 4, 2015).

Plaintiff states that the “validity” of the policy is not at issue

here, so only the amount owed to plaintiff between December 2017 and May 2018—
approximately $36,000—may be considered. Even adding damages for vexatious refusal
to pay, attorneys’ fees, and costs to that amount, plaintiff says, does not approach the
$75,000 jurisdictional threshold.
Relying on Massachusetts Casualty, 88 F.3d at 416–17, defendant argues that
because the validity of the insurance contract is at issue, the Court may consider the
future payments as part of the amount of in controversy. Defendant’s position is that
plaintiff was not totally disabled prior to reaching age 60, and the policy terminated, thus
plaintiff is owned no future benefits of the policy regardless of his future disability status.
The Court disagrees that the validity of the contract is at issue. Defendant appears to

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conflate the contract’s termination (which occurred under its own terms in December
2017) with the question of the contract’s validity. No one disputes that the parties had a
valid contract.
Defendant also cites several cases that do allow consideration of future disability
insurance payments when calculating the amount in controversy, without mentioning the
“validity of the contract” exception. In Engle v. Life Insurance Company of North
America, for instance, this Court noted that “Federal courts have held that the
jurisdictional minimum can be met even though the outstanding claim is for less than the
jurisdictional amount, where there are potential future claims under a policy.” No.
4:10cv963CAS, 2010 WL 2720697, *2 (E.D. Mo. July 8, 2010); see also Buckmaster v.
Life Ins. Co. of N. Am., 4:17-CV-02439-NCC, 2018 WL 1519375, at *2 (E.D. Mo. Mar.
28, 2018). The Engle court denied a motion to remand under circumstances similar to
those here, relying on Burns, an Eighth Circuit case that addressed a life insurance policy.
See Burns v. Massachusetts Mut. Life. Ins. Co., 820 F.2d 246, 249 (8th Cir. 1987). In
Burns, the Eighth Circuit instructed that “[w]here the heart of a cause of action is a claim
for future benefits, the amount in controversy is the present value of the claimed future
benefit.” Id. Notably, the Burns matter involved the promise of future dividends, not
lifetime disability payments. The difference is that future dividends must be paid under
all circumstances, but, under a disability contract, the amount of benefits are contingent
because is it uncertain how long he will be disabled or how long he will live. The Court
is satisfied that, when a defendant’s obligations under a disability insurance contract (and

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not the contract’s validity) are at issue, the “amount in controversy” for jurisdictional
purposes includes only the amounts allegedly due up to the time the suit was filed.
Accordingly,
IT IS HEREBY ORDERED that plaintiff’s motion to remand (#22) is GRANTED.
IT IS FURTHER ORDERED that this case is REMANDED to the Circuit Court
for Butler County, Missouri.

Dated this 1st day of March, 2019.
______________________________
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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