Safeco Insurance Company of America v. Underwood et al
Filing
22
MEMORANDUM OPINION AND ORDER (Motion to Dismiss) granting defendant Jamison T. Conrad's 10 MOTION to Dismiss; denying as moot the 9 MOTION to Set Aside Default Judgment, 17 MOTION for Entry of Default Judgment, and 19 MOTION to Set Aside Default Judgment. Signed by Judge Joseph R. Goodwin on 12/4/2014. (cc: attys; any unrepresented party) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
SAFECO INSURANCE COMPANY OF
AMERICA,
Plaintiff,
v.
CIVIL ACTION NO. 2:14-cv-25684
MICHAEL DALE UNDERWOOD, II, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
(Motion to Dismiss)
Pending before the court are Defendant Jamison T. Conrad’s Motion to Set Aside Default
Judgment [Docket 9], Defendant Jamison T. Conrad’s Motion to Dismiss [Docket 10], Plaintiff
Safeco Insurance Company of America’s (“Safeco”) Motion for Entry of Default Judgment
Against Defendant Underwood [Docket 17], and Defendant Michael D. Underwood’s Motion to
Set Aside Default [Docket 19]. For the reasons provided below, Defendant Jamison T. Conrad’s
Motion to Dismiss [Docket 10] is GRANTED for lack of subject matter jurisdiction. Therefore,
the remaining motions are DENIED as moot.
I.
Background
The plaintiff, Safeco, filed a complaint for declaratory relief on September 9, 2014,
seeking declaratory relief regarding its rights and obligations under insurance policies issued to
the defendants, Mr. Conrad and Mr. Underwood, for claims currently pending against them.
(Compl. [Docket 1]). On January 1, 2014, the defendants were involved in a physical altercation
with John C. Scott. (Id. ¶ 9). Criminal charges were filed and on March 7, 2014, Mr. Scott also
filed a civil complaint against the defendants alleging assault, battery, malicious wounding,
wanton endangerment, and concealment. (Id. ¶¶ 9-10; see also Scott v. Underwood and Conrad,
Civ. Act. No. 14-C-483). Mr. Scott seeks both compensatory and punitive damages from the
defendants. (Id. ¶ 15). Both of the defendants are insured under homeowner policies issued by
Safeco. (Id. ¶¶ 16-17). These policies expressly exclude coverage “for any violations of criminal
law committed by, or with the knowledge or consent of the insured, whether or not the insured is
charged or convicted of a violation of criminal law.” (Id. ¶¶ 33, 42). Accordingly, Safeco argues
that it has no duty to defend or indemnify the defendants in the underlying action brought by Mr.
Scott.
Because the defendants failed to answer by October 20, 2014, the clerk filed an Entry of
Default [Docket 8]. In response to this Entry, Mr. Conrad filed both a Motion to Set Aside
Default Judgment [Docket 9] and a Motion to Dismiss [Docket 10]. Safeco filed a Motion for
Entry of Default Judgment Against Defendant Underwood [Docket 17] on November 11, 2014,
and Mr. Underwood filed a Motion to Set Aside Default Judgment [Docket 19] on November 13,
2014.
II.
Standard of Review
The Declaratory Judgment Act of 1934, 28 U.S.C. § 2201, permits a federal court to issue
a declaratory judgment in a “case or controversy within [the court’s] jurisdiction.” Such relief “is
appropriate when the judgment will serve a useful purpose in clarifying and settling the legal
relations in issue, and when it will terminate and afford relief from the uncertainty, insecurity,
and controversy giving rise to the proceeding.” Penn-America Ins. Co. v. Coffey, 368 F.3d 409,
412 (4th Cir. 2004) (internal quotation marks omitted). The Act authorizes a cause of action
2
only; the federal court must be satisfied that it possesses an independent basis for subject matter
jurisdiction.
Under Federal Rule of Civil Procedure 12(h)(3), “[i]f the court determines at any time
that it lacks subject-matter jurisdiction, the court must dismiss the action.” Furthermore, the court
may raise issues of subject matter jurisdiction sua sponte, regardless of whether the parties have
contested the availability of federal jurisdiction.1 Arbaugh v. Y & H Corp., 546 U.S. 500, 506
(2006); In re Kirkland, 600 F.3d 310, 314 (4th Cir. 2010). Federal jurisdiction here is premised
on 28 U.S.C. § 1332(a), which states: “The district courts shall have original jurisdiction of all
civil actions where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of
interest and costs, and is between . . . citizens of different States.” Because the plaintiff is a
corporate citizen of New Hampshire and Massachusetts and the defendants are both residents of
West Virginia, diversity of citizenship exists for purposes of 28 U.S.C. § 1332(a)(1). Still, the
court must determine whether “the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs.” 28 U.S.C. § 1332(a). Courts in this district have adopted the
preponderance of the evidence standard for determining whether the amount in controversy
exceeds $75,000. See, e.g., McCoy v. Erie Ins. Co., 147 F. Supp. 2d 481, 489 (S.D. W. Va.
2001); Sayre v. Potts, 32 F. Supp. 2d 881, 885 (S.D. W. Va. 1999). Thus, the plaintiff bears the
burden of proving by the preponderance of the evidence that the amount in controversy in the
case exceeds $75,000. To do so, the plaintiff “must offer more than a bare allegation that the
amount in controversy exceeds $75,000.” Sayre, 32 F. Supp. 2d at 886.
III.
Discussion
1
Defendant Conrad has moved to dismiss for lack of subject matter jurisdiction. However, Defendant Underwood
has not presently moved to dismiss the case. Regardless, my decision to dismiss applies equally to both defendants.
3
Mr. Conrad argues that the plaintiff has failed to provide any proof that the amount in
controversy exceeds $75,000 and that “SAFECO’s reliance on an ‘estimate’ of costs of defense
and indemnification for Jamison T. Conrad in [the] Scott case does not satisfy the § 1332
requirements.” (Reply to Resp. by Safeco in Opp. to Def.’s Mot. to Dismiss [Docket 18], at 5).
The plaintiff contends that based on the allegations in Scott—severe permanent physical injuries,
emotional distress, loss of income, medical costs, and other harms—“[i]t is more than reasonable
for Safeco to expect and estimate that the cost of defense and indemnification for Defendant in
the Scott case will exceed $75,000.” (Pl.’s Resp. in Opp. to Def.’s Mot. to Dismiss [Docket 13],
at 5). Although I agree with the plaintiff that “[i]n actions seeking declaratory . . . relief, it is well
established that the amount in controversy is measured by the value of the object of the
litigation,” this recitation of the law is not sufficient to save the plaintiff’s case.
In Scott, the Complaint does not request a specific amount of damages. “If not specified
in the complaint, the amount in controversy must be determined on the likely monetary relief that
may be grated to a plaintiff if he succeeds on all of his claims asserted in good faith.” Burdette v.
ReliaStar Life Ins. Co., No. 2:06-0210, 2006 WL 1644234, at *1 (S.D. W. Va. June 12, 2006).
When determining the amount in controversy, courts often consider the seriousness and nature of
the plaintiff’s alleged injuries, along with medical costs. See Elliott v. Wal-Mart Stores, Inc., No.
5:08-cv-30, 2008 WL 2544650, at *2 (N.D. W. Va. June 23, 2008); McCormick v. Apache, Inc.,
No. 5:09-cv-49, 2009 WL 2985470, at *3 (N.D. W. Va. Sept. 15, 209). The court is also free to
consider the “entire record before it and make an independent evaluation of whether the amount
in controversy is satisfied.” Burdette, 2006 WL 1644234, at *1 (citing Sayre, 32 F. Supp. 2d at
886 (internal quotation marks omitted)).
4
Mr. Scott’s Complaint alleges that the defendants’ actions resulted in “severe physical
injuries which are permanent or lasting in nature,” which the plaintiff has and will continue to
pay for. (Scott Compl. [Docket 1-1], at 2 (alleging also “injury to his emotional well being, pain
and suffering, annoyance and inconvenience, lost income, loss of enjoyment of day to day
activities and other harm”)). These allegations are insufficient proof that the amount in
controversy exceeds $75,000. Any estimation of damages is speculative at this time. See Elliott
v. Tractor Supply Co., No. 5:14CV88, 2014 WL 4187691, at *3 (N.D. W. Va. Aug. 21, 2014).
Allegations of possible permanent injuries, future damages, attorneys’ fees and the like, cannot
satisfy the plaintiff’s burden of establishing that the amount in controversy has been met. Id.
Therefore, this court cannot find that the plaintiff has met its burden of proof as to the amount in
controversy based solely on the allegations in the Scott Complaint.
IV.
Conclusion
Thus, the court FINDS that the plaintiff has not met its burden of proving by a
preponderance of the evidence that the amount in controversy exceeds $75,000. Accordingly,
Defendant Jamison T. Conrad’s Motion to Dismiss [Docket 10] is GRANTED for lack of
subject matter jurisdiction, and the remaining motions are DENIED as moot. The court
DIRECTS the Clerk to send a copy of this Order to counsel of record and any unrepresented
party.
ENTER:
5
December 4, 2014
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?