Lowe et al v. First Financial Insurance Company et al
Filing
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ORDER that the Clerk of the Court shall immediately remand this matter to the Circuit Court of Clay County, Missouri for all further proceedings. Signed on 2/23/15 by Magistrate Judge John T. Maughmer. (Alexander, Pam)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
Timothy Lowe and Belinda Lowe,
Plaintiffs,
v.
First Financial Insurance Co., et al.,
Defendants.
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Case No. 14-00801-CV-W-JTM
ORDER
This case finds its origins in an October 13, 2003, motor vehicle accident involving
plaintiff Timothy Lowe (“Lowe”), whose truck collided with a vehicle being operated by Casey
Sowa (“Sowa”). Lowe was driving a truck owned by his employer Weston Transportation, Inc.
(“Weston”). On or about September 28, 2004, Lowe entered into a settlement agreement with
Sowa for $20,000.00 (the limits of the liability coverage under Sowa’s automobile insurance
policy). 1 Following the settlement with Sowa, Lowe “began investigating whether there were
other insurance policies which might provide coverage for the injuries received as a result of the
October 2003 crash.” Eventually, over ten years after the accident (but just shy of ten years after
the settlement with Sowa), Lowe filed this lawsuit in the Circuit Court of Clay County, Missouri,
against three insurance companies – defendants First Financial Insurance Company, Burlington
Insurance Company, and Praetorian Insurance Company (formerly known as Insurance
Corporation of Hanover).
Lowe contends that the named insurers provided insurance to Weston on the truck being
driven by Lowe on October 13, 2003, and that the coverage included underinsured motorist
1
In addition to the settlement with Sowa, Lowe pursued workers’ compensation
benefits from Weston.
coverage. 2 In the lawsuit, Lowe asserts that his damages from the October 13, 2003 accident
exceed the $20,000.00 received from Sowa’s policy and, as a result, he seeks “to recover
underinsured motorist benefits under the insurance policies issued” by the three insurance
companies. 3 On September 9, 2014, the insurance companies removed the lawsuit to this Court,
asserting that there was complete diversity of citizenship and “[u]pon information and belief, [the
Lowes] are seeking damages in excess of $75,000.00.” Currently pending before the Court are
the motions of the insurance companies to dismiss the Lowes’ lawsuit. The insurance companies
allege that Lowes’ claims for underinsured motorist benefits are barred by MO. REV. STAT. §
516.110, which provides a statute of limitations of ten years on actions “upon any writing.” 4
In responding to the motions to dismiss filed by the insurance companies, the Lowes
noted to the Court:
2
Missouri statutory law does not define the term “underinsured motorist” nor are
there any “statutory requirements in Missouri for underinsured motorist coverage.” Buehne v.
State Farm Mutual Automobile Insurance Co., 232 S.W.3d 603, 606 (Mo. App. [E.D.] 2007). In
general terms, however, “the objective of underinsured motorist coverage is always the same: to
cover them for damages over and above that which the tortfeasor can provide.” Zemelman v.
Equity Mutual Insurance Co., 935 S.W.2d 673, 679 (Mo. App. [W.D.] 1996) (quoting Krombach
v. Mayflower Insurance Co., Ltd., 827 S.W.2d 208, 211 (Mo. 1992) (en banc)). Consequently,
the applicability of underinsured motorist coverage is generally triggered when an accident
involves “an underinsured vehicle [, that] is one with a policy limit [] less than the amount
needed to compensate the insured for actual damages” since “the purpose of underinsured
motorist coverage []is aimed at full compensation of the victim.” Zemelman, 935 S.W.2d at
680 (citations omitted).
3
The lawsuit filed in Clay County also includes a claim by Lowe’s wife, Belinda
Lowe, for loss of consortium damages from the underinsured motorist benefits. Belinda Lowe
did not bring an original action against Sawa and, it appears, was not a party to the settlement
agreement between her husband and Sawa.
4
The law in Missouri is seemingly well-settled that actions seeking payments of
uninsured motorist benefits and underinsured motorist benefits are governed by the ten year
statute of limitations for writings set out in Mo. Rev. Stat. § 516.110. See, e.g., Edwards v. State
Farm Insurance Co., 574 S.W.2d 505, 506 (Mo. App. [K.C.] 1978).
2
Even more fundamental [sic], the subject matter jurisdiction of this Court
cannot be determined without reference to the insurance policies at issue;
it cannot be determined from the pleadings on file. While this Court
MAY have jurisdiction, that issue turns on the precise language of the
insurance contracts, contracts which no movant has provided either to
[the Lowes] or to this Court. Because the issue of subject matter
jurisdiction is in flux, it is inappropriate for this Court to rule on the
motions to dismiss [because] they are inappropriate and premature.
According to the Lowes, the insurance companies had not produced applicable policies or
revealed policy limits. As such, the Lowes asserted that while they “do not doubt the diversity of
the parties, . . . they cannot concede the amount in controversy.” The insurance companies
ensuing reply briefing on their motions to dismiss did not address the lurking jurisdictional issue.
On January 23, 2015, the Court ordered the parties to brief the policy limits at issue in the
litigation and advance arguments in support of the exercise of federal jurisdiction. Doc. 23. As
noted by the Court, federal courts are courts of limited jurisdiction and, as such, a threshold
requirement in every federal case is jurisdiction. Bradley v. American Postal Workers Union,
962 F.2d 800, 802 n.3 (8th Cir. 1992). A federal court has an obligation to assure itself of its
own subject matter jurisdiction, particularly where issues arise that call jurisdiction into question.
Int’l Ass’n of Fire Fighters v. City of Clayton, 320 F.3d 849, 850 (8th Cir. 2003) (“The federal
courts are under an independent obligation to examine their own jurisdiction.”).
The court now has the parties’ briefing on the issue of jurisdiction. With regard to the
policy limits for underinsured insured motorist coverage First Financial Insurance Company
states that its policy “sets forth an underinsured limit of $50,000,” Burlington Insurance
Company denies issuing any policy that applies to the relevant time period, and Praetorian
Insurance Company states:
At the time Praetorian removed this action, it had the good faith
belief that any policy of insurance covered by the Insurance
Corporation of Hanover to a commercial trucking firm would have
3
had policy limits in excess of $75,000. To date, [Praetorian has
not] located a policy issued by Insurance Corporation of Hanover
to Weston Transportation.
Removal jurisdiction based on 28 U.S.C. § 1441 requires an amount in controversy in
excess of $75,000.00 in addition to complete diversity of citizenship. The Eighth Circuit has
noted that “diversity jurisdiction in removal cases [is] narrower than if the case were originally
filed in federal court by the plaintiff.” Hurt v. Dow Chemical Company, 963 F.2d 1142, 1145
(8th Cir. 1992). Not surprisingly then “if one of the statutory requirements is not met, the district
court has no jurisdiction.” Id. at 1145. To that end, “[f]ederal courts are to strictly construe the
amount in controversy requirement of diversity jurisdiction, as the purpose underlying the
requirement is to limit the federal courts’ diversity caseload.” Corlew v. Denny’s Restaurant,
Inc., 983 F.Supp. 878, 879 (E.D. Mo. 1997) (citing Snyder v. Harris, 394 U.S. 332, 339, 89 S.Ct.
1053, 1058, (1969)).
In their underlying PETITION FOR DAMAGES, each of the Lowes assert breach of contract
claims against the three insurance companies “to recover underinsured motorist benefits under
the insurance policies issued by the defendants.” Accordingly, while the Lowes freely admit that
their personal injuries exceed $75,000, they further note:
This is not a tort case. . . . This is a contract case, plain and simple.
There was a tort claim against the deceased driver, but that claim
was extinguished when plaintiffs settled their claims against her
estate for payment of her liability limits. There are no unasserted
tort case[s] remaining to be filed. There is no other person who
might be liable in tort for plaintiffs’ injuries. All that remains to be
resolved is plaintiffs’ contract action against defendants.
In deciding whether the amount in controversy in a particular case exceeds $75,000, a
federal court must bear in mind that:
it is the amount or value of that which the complainant seeks to
recover, or the sum or value of that which the defendant will lose if
4
the complainant succeeds in his suit, that constitutes the
jurisdictional sum or value of the matter in dispute, which tests the
jurisdiction.
Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809, 815 (8th Cir. 1969) (quoting Cowell v.
City Water Supply Co., 121 F. 53, 57 (8th Cir. 1903)). In such cases such as that brought by the
Lowes, there is a cap on the damages recoverable – the policy limits of underinsured motorist
coverage. See, e.g., Freeland v. Liberty Mutual Fire Insurance Co., 632 F.3d 250, 251-54 (6th
Cir. 2011). 5 Indeed, black letter law instructs:
In disputes regarding the applicability of an insurance policy to a
particular occurrence, as where insurance coverage is denied, the
amount in controversy is the value of the underlying claim, unless
this exceeds the maximum limit of the policy, in which case the
amount in controversy is the maximum limit of the insurer's
liability under the policy. The amount of the claim can be
determined with legal certainty in a case involving a claim asserted
on an insurance policy limiting liability; where the insured seeks to
recover to the fullest extent of coverage, the court can determine
the amount in controversy by referring to the face of the policy.
1A FED. PROC., L. ED. § 1:461 (2014) (emphasis added). See also 14AA CHARLES ALAN
WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 3710 (4th ed. 2014) (in cases involving
the applicability of insurance policy to a particular occurrence, “if the claim exceeds the policy
5
In Freeland, an insured brought an action to recover benefits on a policy that
included a provision for $100,000.00 in underinsured motorist benefits. On appeal, the court
addressed the issue of diversity jurisdiction sua sponte. Because the insurance company had
already paid $25,000.00, the court determined that the amount in controversy was $75,000.00.
As such the court found it lacked subject matter jurisdiction:
Section 1332 [28 U.S.C. § 1332] demands that the matter in
controversy exceed $75,000 “exclusive of interest and costs.”
Therefore, the amount in controversy [is] one penny short. The
absence of that single penny deprived the district court of subjectmatter jurisdiction over the [plaintiffs’] lawsuit.
Id. at 252-53.
5
limits, the maximum limit of the insurer’s liability under the policy for the particular claim is the
measure for determining whether the statutorily required amount in controversy is satisfied”).
The insurance companies cite the Court to several cases that quote the first part of the
black letter law, namely “in disputes regarding the applicability of an insurance policy to a
particular occurrence, as where insurance coverage is denied, the amount in controversy is the
value of the underlying claim.” See, e.g., Fainer v. State Farm Mutual Automobile Insurance
Co., 2009 WL 911724, op. at *1 (E.D. Mo. Apr. 1, 2009). However, at least in this case, the
operative issue is the second part of the law – if the value of a plaintiff’s claim exceeds the
maximum limit of the policy, the amount in controversy is the maximum limit of the insurer’s
liability under the policy. This makes sense inasmuch as no matter how much damages are
alleged by the plaintiffs, they cannot recover more than the maximum coverage for underinsured
motorist coverage. 6 In other words, the policy limits represent both the amount or value the
Lowes seek to recover and the sum or value that the insurance companies will lose if the Lowes
succeed in their suit.
In this case, the insurance companies removed the case to federal court based on diversity
of citizenship and recited that “[u]pon information and belief, [the Lowes] are seeking damages
in excess of $75,000.00.” However, “a removing defendant’s simple say-so will not suffice to
demonstrate that a case meets the jurisdictional threshold.” Evans v. Yum Brands, Inc., 326 F.
Supp. 2d 214, 220 (D.N.H. 2004). Instead, a court must undertake a two-step analysis. First, the
court must determine whether the amount in controversy is apparent on the face of the complaint.
Horton v. Liberty Mutual Insurance Co., 367 U.S. 348, 353, 81 S.Ct. 1570, 1573 (1961). If the
6
Critically, in this case, the Lowes make no claims against the insurance
companies for any amounts other than the underinsured motorist coverage available under their
policies.
6
amount in controversy is not apparent, the court then may look to any other materials submitted
by the removing defendant. Felton v. Greyhound Lines, Inc., 324 F.3d 771, 773-74 (5th Cir.
2003). To that end, “a court may then provid[e] the parties with the opportunity to satisfy the
court as to the amount in controversy.” Feller v. Hartford Life & Accident Insurance Co., 817 F.
Supp.2d 1097, 1101 (S.D. Iowa 2010).
In this case, the Court afforded the insurance companies the opportunity to come forward
with evidence regarding the amount in controversy. In that regard, “[t]he removing party ‘must
show that it appears to a legal certainty that the amount in controversy’ exceeds $75,000.00.”
Corlew, 983 F.Supp. at 879 (citing Visintine v. Saab Auto., A.B., 891 F.Supp. 496, 497 (E.D. Mo.
1995)). A removing party “seek[ing] to invoke federal jurisdiction through removal . . . bears the
burden of proving that the jurisdictional threshold is satisfied.” Bell v. Hershey Co., 557 F.3d
953, 956 (8th Cir. 2009). The evidence brought forward by the insurance shows only that one
policy had underinsured motorist coverage that might apply and that the limits of that coverage
were $50,000, below the $75,000 jurisdictional threshold.
Notwithstanding the policy limits, however, the insurance companies argue that diversity
jurisdiction might exist because potentially each of the Lowes might recover $50,000 under the
policy issued by First Financial Insurance Company. Such a dual recovery theory is contrary to
Missouri law. See, e.g., Ward v. American Family Insurance Co., 783 S.W.2d 921, 923 (Mo.
App. [E.D.] 1989) (“[u]nder Missouri Law, a husband's claim for loss of consortium is derivative
of his wife’s claim for bodily injury [and thus, while] admittedly covered by the insuring clause,
plaintiff’s derivative damages do not constitute a separate and distinct “bodily injury”).
In any event, even assuming that each of the Lowes could assert a claim for the entire
$50,000 in underinsured motorist coverage under the policy issued by First Financial Insurance
7
Company, diversity jurisdiction would still be lacking. It is well settled that each plaintiff in a
removed case must satisfy the jurisdictional amount in controversy, unless they “unite to enforce
a single title or right in which they have a common and undivided interest.” Zahn v. International
Paper Co., 414 U.S. 291, 294, 94 S.Ct. 505, 508 (1973). With respect to this rule, the courts
have found:
[Missouri courts have] explained in that while it is often said a loss
of consortium claim is “derivative” and that such a claim is
“separate and distinct” from the spouses claim for injuries, these
statements are best reconciled by a view that a consortium claim is
a separate, distinct, and personal legal claim, and is derivative only
in the sense that it must be occasioned by a spouse's injury. [The]
nature of a loss of consortium claim under Missouri law makes
evident that a person suffering personal injury and a spouse
claiming a loss of consortium do not “unite to enforce a single title
or right in which they have a common and undivided interest”
under Zahn. . . . As such, the claims are not “common and
undivided” because Missouri law does not create a single right of
recovery.
McClure v. Raymond Corp., 174 F.Supp.2d 982, 985-86 (E.D. Mo. 2001) (citations and internal
punctuation omitted).
Following a removal of a case to federal court, a party objecting to the removal may file a
motion to remand. 28 U.S.C. § 1447(c). Such a remand motion must be made within 30 days
after the filing of the notice of removal. 28 U.S.C. § 1447(c). In this case, the Lowes did not file
a motion to remand. Pursuant to the removal statute, “any defect” in the removal procedure must
be asserted in a timely remand motion or it is waived. 28 U.S.C. § 1447(c). However, such a
waiver does not apply to an argument that the Court “lack[s] subject matter jurisdiction.” 28
U.S.C. § 1447(c). In that regard, courts have concluded that an argument regarding the
substance of an “amount in controversy” goes to subject matter jurisdiction and cannot be
waived. See, e.g., Harmon v. OKI Systems, 902 F. Supp. 176, 178 (S.D. Ind. 1995), aff’d, 115
8
F.3d 477 (7th Cir. 1997). See also Bueford v. Resolution Trust Corp., 991 F.2d 481, 485 (8th
Cir.1993) (“Lack of subject matter jurisdiction, unlike many other objections to the jurisdiction
of a particular court, cannot be waived. It may be raised at any time by a party to an action, or by
the court sua sponte.”).
In this case, the insurance companies have failed to establish to a legal certainty that the
amount in controversy exceeds $75,000. Consequently, it appears that this Court lacks subject
matter jurisdiction. Federal law is abundantly clear and deliberately mandatory:
If at any time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be remanded.
28 U.S.C. § 1447. Consequently, for the reasons set out here, it is
ORDERED that the Clerk of the Court shall immediately remand this case to the Circuit
Court of Clay County, Missouri for all further proceedings. 7
/s/ John T. Maughmer
John T. Maughmer
United States Magistrate Judge
7
The Court expresses no opinion on the merits of PRAETORIAN INSURANCE
COMPANY’S MOTION TO DISMISS PLAINTIFFS’ PETITION [Doc 3] or DEFENDANTS FIRST
FINANCIAL INSURANCE COMPANY’S AND BURLINGTON INSURANCE COMPANY’S MOTION TO
DISMISS [Doc. 10].
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