Adams v. State Farm Mutual Automobile Insurance Co., DC 7030.

• Decision Date: 02 July 1970
• Docket Number: No. DC 7030.,DC 7030.
• Parties: Ruby C. ADAMS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Mississippi

313 F. Supp. 1349

Ruby C. ADAMS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. DC 7030.

United States District Court, N. D. Mississippi, Delta Division.

July 2, 1970.

COPYRIGHT MATERIAL OMITTED

Elzy Smith, Clarksdale, Miss., for plaintiff.

Andrew C. Baker, Charleston, Miss., for defendant.

MEMORANDUM OPINION

KEADY, Chief Judge.

Plaintiff, a Mississippi citizen, originally brought this action in the Circuit Court of Tallahatchie County, Mississippi, against defendant State Farm, a non-resident insurance corporation, to recover under the uninsured motorist provisions of two separate automobile liability insurance policies issued by defendant to her husband, Clyde M. Adams, on his two motor vehicles, and under which she, as the spouse resident in the same household, is an insured. The complaint alleged that on September 11, 1969, while plaintiff was riding as a passenger in a Pontiac automobile operated by Mrs. Emma Susie Smith, one J. L. McMillen, an uninsured motorist, negligently allowed his car to collide with that of Mrs. Smith, seriously injuring plaintiff. The complaint sought recovery against defendant State Farm for the full amount of the uninsured motorist coverage of both policies, which were for $5,000 each, plus $1,343.90 accrued medical expenses. Each policy contained a $1,000 medical payments clause.

Defendant removed the action to this court on the ground of diversity of citizenship, and plaintiff promptly moved to remand. Following oral argument, the case is now before the court for decision on plaintiff's motion. Four challenges to this court's removal jurisdiction have been asserted.

I.

Plaintiff first claims that 28 U.S.C. § 1332(c)¹ requires that in any "direct action" against an insurer in which the insured is not joined as a defendant, the insurer shall be deemed a citizen of the same state as the insured. Since the insured is not joined as a defendant in the present action, plaintiff argues that § 1332(c) is applicable to the present case and compels us to remand it to state court for lack of diversity jurisdiction.

Counsel have not cited and we have not found any Supreme Court or Fifth Circuit decisions construing the proviso clause to § 1332(c). The only Court of Appeals case construing the proviso appears to be White v. United States Fidelity & Guaranty Co., 356 F.2d 746 (1 Cir. 1966).² In that case the plaintiff sued her liability insurer in a Rhode Island state court; the insurer's attempted removal to federal court was contested by plaintiff on the same ground as in the case at bar. The First Circuit held, in sustaining removal jurisdiction, that the words "direct action" referred exclusively to statutes such as those of Louisiana and Wisconsin which allow a party injured by negligence of an insured tort-feasor to sue his liability insurer alone without joining the insured. As evidence that Congress intended the words "direct action" to be so limited, the Court in White cited Senate Report # 1308, submitted by Senator Eastland, Chairman of the Senate Judiciary Committee, which drafted the 1964 amendment creating the proviso to § 1332(c). That report³ clearly shows that the purpose of the limitation on federal jurisdiction provided by § 1332(c) proviso was to lessen the flood of litigation in federal courts brought about by the direct action statutes of Louisiana and Wisconsin.

A district court case directly in point is Inman v. M. F. A. Mutual Ins. Co., 264 F.Supp. 727 (D.C.Ark. 1967), in which an insured sued her own insurer in Arkansas state court under the uninsured motorist provisions of her liability insurance policy. Following removal to federal court by defendant insurer, plaintiff moved to remand. After reviewing Senate Report # 1308 (Fn. 3, supra), the court held that Congress created the "direct action" provisions of § 1332(c) for the purpose of easing the case loads of the federal courts in Wisconsin and Louisiana, which had been overburdened by suits of insured local citizens against out-of-state liability insurers. Obviously, direct action statutes which allow an injured plaintiff to sue a tort-feasor's liability insurer without joining the tort-feasor as a defendant create diversity jurisdiction in a large number of cases in which both the injured plaintiff and the tort-feasor are citizens of the same state. It was clearly the withdrawal of federal jurisdiction over this large group of cases in states having such "direct action" statutes that motivated Congress to enact the proviso clause to § 1332(c). As the court in Inman rightly pointed out, Congress did not intend that the proviso should apply to suits by an insured against his own insurer, but only to actions brought by an injured plaintiff directly against the insurer of the alleged tort-feasor where the tort-feasor himself was not joined as a defendant. For that reason § 1332(c) does not apply to the present action, and plaintiff's challenge to our removal jurisdiction thereunder must fail.

II.

Plaintiff next alleges that the amount in controversy requirement of 28 U.S.C. § 1332(a)⁴ is not met in this case because the limits of the two policies amount to exactly $10,000, and thus the amount sued for fails to exceed $10,000. Defendant responds that the plaintiff is bound by her complaint, which seeks $11,343.90, including $1,343.90 for accrued medical expenses in excess of the $10,000 policy limits.

The rule generally applied by federal courts to determine what constitutes the amount in controversy is often called the "plaintiff-viewpoint" rule. As outlined by the Supreme Court, it is:

"The rule governing dismissal for want of jurisdiction in cases brought in the federal courts is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).

Thus it must appear to a legal certainty that the amount claimed by plaintiff is unrecoverable before a court will dismiss an action for lack of jurisdictional amount. In the present case we have the novel situation of a plaintiff-insured challenging the amount claimed in her complaint as excessive and a defendant-insurer asserting that plaintiff's claim in excess of the policy limits is proper. Nevertheless, plaintiff having raised a jurisdictional question, we must examine the complaint to see whether, as a matter of law, it puts in controversy the requisite jurisdictional amount. In this diversity case, we must look to state law to determine the nature and extent of the right to be enforced. Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 81 S. Ct. 1570, 6 L.Ed.2d 890 (1961). To date Mississippi appears not to have passed on the question of whether an insured may recover medical expenses under a medical payments clause in excess of the liability limits stated in the uninsured motorist clause. Some states have, however, allowed such recovery. Tuggle v. Government Employees Ins. Co., 207 So. 2d 674 (Fla.1968); see Annotation at 79 A.L.R.2d 1252 and Later Case Service....