Motsinger v. Nationwide Mutual Insurance Company
Filing
81
ORDER denying 59 Motion to Dismiss for Lack of Jurisdiction. Signed by Honorable J Michelle Childs on 1/30/2013.(hcic, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Carlotta Motsinger,
)
)
Plaintiff,
)
)
v.
)
)
Nationwide Mutual Insurance Company,
)
)
Defendant.
)
___________________________________ )
Civil Action No.: 4:11-cv-01734-JMC
OPINION AND ORDER
This matter is before the court on Plaintiff Carlotta Motsinger’s (“Motsinger”) Motion to
Dismiss Counterclaim of Defendant Nationwide Mutual Insurance Company (“Nationwide”)
[Dkt. No. 59] seeking a declaratory judgment regarding Motsinger’s status as a Class I insured
under her Nationwide insurance policies based on her allegation of a common law marital
relationship. In support of her motion, Motsinger asserts that the court lacks jurisdiction to issue
this declaratory judgment and, alternatively, that Nationwide lacks standing to seek this
declaratory judgment.
FACTUAL AND PROCEDURAL BACKGROUND
This suit arises from a motor vehicle accident on November 10, 2008, involving a
collision between a vehicle driven by William Workman (“Workman”) in which Motsinger was
a passenger and another vehicle driven by Mary Alice Johnson, the driver allegedly responsible
for the collision. Motsinger maintained two separate Nationwide automobile insurance policies
with underinsured motorist (“UIM”) coverage. Both policies were allegedly in effect at the time
of the accident. One policy insured one vehicle, and a second policy insured three vehicles.
1
Motsinger sought coverage as a Class I insured1, claiming that she and Workman were
common law husband and wife at the time of the accident.2 By claiming Class I insured status,
Motsinger could “stack”3 all UIM coverage available under Motsinger’s two Nationwide
automobile insurance policies.
Nationwide brought a declaratory judgment action [Dkt. No. 20-1] in the Court of
Common Pleas for Horry County seeking a determination as to the validity of Plaintiff’s alleged
common law marriage to Workman. Motsinger and Workman subsequently filed an Answer and
Counterclaim [Dkt. No. 20-2] contending that the state circuit court lacked subject matter
jurisdiction to determine the validity of a common law marriage.4 [Dkt. No. 20-1]. Additionally,
Motsinger and Workman counterclaimed, alleging that Nationwide engaged in bad faith
practices in delaying and denying their claims. [Dkt. No. 20-1]. The parties agreed to a
Stipulation of Dismissal without prejudice of their respective claims and counterclaims in the
Court of Common Pleas for Horry County. [Dkt. No. 52-2].
1
Under South Carolina law, a Class I insured includes the named insured, the insured’s spouse,
and the insured’s relatives residing in his household. See Concrete Services, Inc. v. U.S. Fidelity
& Guar. Co., 331 S.C. 506, 498 S.E.2d 865 (1998).
2
South Carolina recognizes common law marriage by statute. See S.C. Code Ann. 20-1-360
(1985) (“Nothing contained in this article shall render illegal any marriage contracted without the
issuance of a license”).
3
“Stacking refers to an insured's recovery of damages under more than one insurance policy in
succession until all of his damages are satisfied or until the total limits of all policies have been
exhausted.” Nakatsu v. Encompass Indem. Co., 390 S.C. 172, 178, 700 S.E.2d 283, 286 (Ct.
App. 2010) (quoting State Farm Mut. Auto. Ins. Co. v. Moorer, 330 S.C. 46, 60, 496 S.E.2d 875,
883 (Ct. App. 1998)).
4
Motsinger relied on Thomas v. McGriff, 368 S.C. 485, 488, 629 S.E.2d 359, 360 (2006) for the
proposition that “[t]he family court has exclusive subject-matter jurisdiction to determine an
action for a declaration that a common-law marriage exists or existed” to support her allegation
of lack of subject matter jurisdiction.
2
Nationwide then filed its declaratory judgment action in family court. [Dkt. No. 20-3].
Subsequently, Motsinger brought her own action against Workman in family court asking for a
determination that she and Workman had a common law marriage at the time of the accident.
[Dkt. No. 20-4]. Upon stipulation by Motsinger and Workman, the family court issued an order
finding that the two were married at the time of the accident. [Dkt. No. 20-5]. Nationwide
sought to intervene in the matter, citing its own pending action before the family court. As a
result of those efforts, Motsinger alleges the family court judge vacated his prior order, finding
that the court lacked subject matter jurisdiction to hear the case on the grounds that there was
never a justiciable or actual controversy between Motsinger and Workman. [Dkt. No. 21-8]. In
his order vacating his prior decision, the judge also denied Nationwide’s Motion to Intervene.
As a result, no state court has yet ruled on the issue of whether Motsinger and Workman had a
valid common law marriage at the time of the accident.
Motsinger then filed the present action [Dkt. No. 1] in the Court of Common Pleas in
Horry County alleging that Nationwide acted in bad faith in failing to resolve Motsinger’s claim,
breached its contractual obligations of good faith and fair dealing, and engaged in litigation
regarding the common law marriage issue that amounted to an abuse of process. See Second
Amended Complaint. [Dkt. No. 56]. Nationwide removed the case to this court [Dkt. No. 1-2]
and filed its Answer and Counterclaim [Dkt. No. 57] seeking a declaratory judgment from this
court regarding Motsinger’s entitlement to Class I insured status as a result of her alleged
common law marriage.
Motsinger filed the instant Motion to Dismiss [Dkt. No. 59] Nationwide’s counterclaim
arguing that the court lacks subject matter jurisdiction to hear the counterclaim and that
Nationwide does not have standing to seek a declaratory judgment in this matter. Nationwide
3
filed its Response in Opposition [Dkt. No. 67] to Motsinger’s motion.
DISCUSSION
A. The Domestic Relations Exception to Diversity Jurisdiction.
Motsinger argues that the longstanding domestic relations exception to diversity jurisdiction
divests this court of the jurisdiction to adjudicate Nationwide’s declaratory judgment action
because the issue presented involves a determination of Motsinger’s marital status at the time of
the accident.
This matter is before the court as an issue of federal diversity jurisdiction pursuant to 28
U.S.C. § 1332. Federal courts have long recognized an exception to diversity jurisdiction where
domestic relations are at issue. See Ankenbrandt v. Richards, 504 U.S. 689 (1992) (detailing the
history and evolution of the domestic relations exception). Though courts have liberally applied
the domestic relations exception in the past, the Supreme Court has stated that the exception
should be applied narrowly to “divest the federal courts of the power to issue divorce, alimony,
and child custody decrees.” Id. at 703 – 705; see also Marshall v. Marshall, 547 U.S. 293, 299
(2006) (in which the Court acknowledges that the Ankenbrandt decision “reined in the ‘domestic
relations exception”’). The policy justifications underlying the exception are rooted in matters of
judicial economy and judicial expertise, on the ground that state courts are more suited to
adjudicate domestic issues, which typically arise out of state law, and deferring to state courts’
“special proficiency . . . over the past century and a half in handling issues that arise in the
granting of [divorce, alimony and child custody] decrees.” Id. at 704.
The court further
recognized “that in certain circumstances, the abstention principles developed in Burford v. Sun
Oil Co., 319 U.S. 315 (1943), might be relevant in a case involving elements of the domestic
relationship even when the parties do not seek divorce, alimony, or child custody.”
4
Ankenbrandt, 504 U.S. at 705.5
Such a case might arise “if a federal suit were filed prior to
effectuation of a divorce, alimony, or child custody decree, and the suit depended on a
determination of the status of the parties.” Id. Even still, if the case does “not require the court
either to adjust family status or to establish duties under family-relations law or to determine
whether or not such duties had been breached” then the domestic relations exception likely does
not limit a federal court’s jurisdiction. Cole v. Cole, 633 F.2d 1083, 1088 (4th Cir. 1980); see
also Raftery v. Scott, 756 F.2d 335, 338 (4th Cir. 1985); Wasserman v. Wasserman, 671 F.2d
832, 834-35 (4th Cir. 1982).
The declaratory judgment action in this case does not require the court to rule on a
divorce, alimony or child custody decree.
Furthermore, ruling on whether Motsinger and
Workman had a valid common law marriage at the time of the accident would not involve an
adjustment to family status, since it has never been determined whether Motsinger and Workman
are, in fact, spouses. Finally, Nationwide is not asking the court to make a legal finding that
5
Neither party briefed the court on the potential applicability of the Burford abstention doctrine.
Nonetheless, the Burford abstention doctrine, which is to be applied sparingly, is not applicable
in this case. A determination as to the validity of Motsinger’s common law marriage would not
present sufficiently “difficult questions of state law bearing on policy problems of substantial
public import whose importance transcends the result in the case then at bar,” nor would
adjudication in a federal forum be “disruptive of state efforts to establish a coherent policy with
respect to a matter of substantial public concern.” Johnson v. Collins Entm't Co., Inc., 199 F.3d
710, 719 (4th Cir. 1999) (quoting New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491
U.S. 350, 361 (1989)). In determining whether a common law marriage exists, a court must look
merely for facts and circumstances demonstrating the parties’ intent to be married. See Callen v.
Callen, 365 S.C. 618, 624, 620 S.E.2d 59, 62 (2005). A simple facts-and-circumstances test does
not constitute a difficult question of state law. Additionally, a federal court asked to determine
the validity of a common law marriage would rule according to South Carolina law based on the
same facts and circumstances manifesting intent that would be presented in state court.
Therefore, adjudication of this issue in a federal forum would not be disruptive of a coherent
state policy.
5
would dissolve an otherwise valid marriage since, again, no court has conclusively determined as
a matter of law that a valid marriage exists. See e.g. Coleman v. Monson, CA 5:10-0535-MBS,
2010 WL 4038606 (D.S.C. Oct. 14, 2010) (domestic relations exception to the diversity statute
precluded the court from addressing the plaintiff’s action seeking an annulment, a divorce and $1
billion in damages).
For these reasons, the domestic relations exception does not strip the court of its subject
matter jurisdiction to hear Nationwide’s declaratory judgment action on the issue of whether
Motsinger is a Class I issued under the Nationwide policies at issue simply because the court
may need to make some determination of Motsinger’s marital status at the time of the accident.
B. Nationwide’s Standing under the Declaratory Judgment Act.
Motsinger also argues that Nationwide lacks standing to seek a declaratory judgment
because it does not have the requisite interest in her marital status. She further argues, that even
if Nationwide does have a legal interest in her marital status, Nationwide’s interest is so
peripheral as to warrant dismissal of the counterclaim. However, Motsinger’s arguments are
misguided. Although this case may involve some issues related to Motsinger’s marital status at
the time of the accident, Nationwide’s counterclaim for a declaratory judgment concerns its
coverage obligations under its insurance policies.
The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides that “in a case of actual
controversy . . . any court of the United States, upon the filing of an appropriate pleading, may
declare the rights and other legal relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.” 28 U.S.C.A. § 2201. As a preliminary
matter, the issue of whether a party has standing to maintain an action in federal court is a
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question of federal, not state law.6 Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 804, (1985)
(holding “[s]tanding to sue in any Article III court is, of course, a federal question which does
not depend on the party's prior standing in state court.”); White v. National Union Fire Ins. Co.,
913 F.2d 165, 167 (4th Cir. 1990) (holding “[f]ederal standards guide the inquiry as to the
propriety of declaratory relief in federal courts, even when the case is under the court's diversity
jurisdiction.”). Additionally, a party’s “standing to maintain a declaratory judgment action is a
question of federal law, even where, as here, a district court in diversity is called on to adjudicate
a state-created right.” Lott v. Scottsdale Ins. Co., 811 F. Supp. 2d 1224, n. 8 (E.D. Va. 2011);
Miller v. Augusta Mut. Ins. Co., 157 F. App'x 632, 636-37 (4th Cir. 2005) (“Whether Miller has
standing to maintain this declaratory judgment action is a question that must be resolved under
well-established principles of federal law.”).
A declaratory judgment may be issued only if the case-or-controversy requirements under
Article III of the United States Constitution are satisfied. Miller, at 637. Article III, Section 2 of
the United States Constitution limits federal court jurisdiction to “Cases” and “Controversies.”
U.S. Const. amend. III § 2. “This limitation is implemented, in part, by the judicially created
standing-to-sue doctrine.” Lott, at 1228-29 (E.D. Va. 2011). To demonstrate constitutional
6
Motsinger relies on the South Carolina Supreme Court’s decision in Ex Parte Gov’t.
Employee's Ins. Co. (“GEICO”), 373 S.C. 132, 644 S.E.2d 699 (2007), which involves a claim
for Class I coverage on the basis of the insured Plaintiff’s common law marriage. In that case,
the Supreme Court upheld the family court’s decision denying GEICO’s request to join and/or
intervene in Plaintiff’s action in family court seeking a ruling on the legitimacy of his common
law marriage. Id. at 135, 644 S.E.2d at 700. The Supreme Court agreed that GEICO failed to
show that it had a real interest, rather than merely a tangential interest in the outcome of the
family court action sufficient to allow joinder under Rule 19 of the South Carolina Rules of Civil
Procedure and that GIECO did not have “an interest relating to the property or transaction which
is the subject of the action” sufficient to allow it to intervene pursuant to Rule 24(a)(2) of the
South Carolina Rules of Civil Procedure. Id. at 136, 139, 644 S.E.2d 699, 701-02. Because the
case at bar involves a claim under the federal Declaratory Judgment Act, rather than an action to
join or intervene under procedural rules, the analysis from GEICO is not applicable.
7
standing, a plaintiff must show that she suffered or faces an actual or imminent “(1) injury in fact
(2) that is fairly traceable to the defendant's conduct and (3) that is likely to be redressed by a
favorable decision.” Retail Indus. Leaders Assoc. v. Fielder, 475 F.3d 180, 186 n. 1 (4th Cir.
2007) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). When seeking a
ruling under the Declaratory Judgment Act, plaintiff must also demonstrate standing pursuant to
the statute. In such situations, the question becomes “whether the facts alleged, under all the
circumstances, show that there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”
Miller, at 637 (quoting Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)).
Nationwide meets its constitutional standing requirements.
First, Nationwide has a
legally protected interest in knowing its coverage obligations. Furthermore, Nationwide has an
interest in paying only those claims that are legitimate. Nationwide would be injured if it were
required to pay Motsinger based on her unvalidated claims of Class I insured status under the
Nationwide policies resulting from an alleged common law marriage.
Additionally,
Nationwide’s coverage obligations are not peripheral, as Motsinger argues, but are directly
dependent on a determination of Motsinger’s marital status. Finally, if the court determines that
Motsinger did not have a common law marriage at the time of the accident, Nationwide will not
only know its coverage obligation, but it will avoid the injury of having to pay stacked coverage
claimed by an alleged Class I insured.
Nationwide also meets the statutory standing requirements under the Declaratory
Judgment Act. First, there is a substantial controversy presented in this action. Nationwide
challenges Motsinger’s claim to Class I insured status based on her assertion that she was
Workman’s common law spouse at the time of the accident. The validity of Motsinger’s
8
common law marriag must, by its very nat
ge
ture, be veri
ified by a co
ourt. No su determin
uch
nation
has yet been made. Therefore, the validit of Motsi
b
ty
inger’s claim to Class I insured s
ms
status
remains in dispute. Second, the is no question that N
ere
Nationwide and Motsinger have ad
dverse
interests. A finding that Motsing had a com
t
ger
mmon law m
marriage at t time of th accident c
the
he
could
give her Class I ins
sured status such that she could b entitled t stack her UIM cove
be
to
r
erage.
Converse a finding that Motsi
ely,
inger did no have a val common law marria at the tim of
ot
lid
n
age
me
the accid
dent would preclude su coverag
uch
ge.
Finally Nationwid
y,
de’s counter
rclaim seeki
ing a
determin
nation of its obligations under Motsi
o
u
inger’s insur
rance contra is of suffi
act
ficient immediacy
and realit to warran the issuanc of a decla
ty
nt
ce
aratory judgm
ment. Natio
onwide is en
ntitled to kno its
ow
contractu obligatio regardles of the out
ual
ons
ss
tcome of M
Motsinger’s b faith acti
bad
ion. As a r
result,
Nationwi is within its rights to bring this action as a v
ide
n
o
valid counte
erclaim in or
rder to deter
rmine
those righ
hts.
For the reasons stated abo Nationw
ove,
wide has sta
anding to bri this decl
ing
laratory judg
gment
A
y,
o
Nationwide’s Counterclaim [Dkt. No 59]
s
o.
action. Accordingly Motsinger’s Motion to Dismiss N
is DENIE
ED.
IT IS SO OR
T
RDERED
Unit States District Judge
ted
e
January 30, 2013
3
Florence, South Caro
olina
9
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