Allstate Ins. Co. v. Thompson

• Decision Date: 29 May 1954
• Docket Number: Civ. A. No. 614.
• Citation: 121 F. Supp. 696
• Parties: ALLSTATE INS. CO. v. THOMPSON et al.
• Court: U.S. District Court — Western District of Arkansas

121 F. Supp. 696

ALLSTATE INS. CO. v. THOMPSON et al.

Civ. A. No. 614.

United States District Court W. D. Arkansas, El Dorado Division.

May 29, 1954.

Barber, Henry & Thurman, Little Rock, Ark., for plaintiff.

Melvin E. Mayfield and S. E. Gilliam, El Dorado, Ark., for defendants.

JOHN E. MILLER, District Judge.

Prior to the filing of the instant suit for a declaratory judgment, the present defendant, H. H. Thompson, on January 12, 1954, filed his complaint against the present plaintiff, Allstate Insurance Company, in the Circuit Court of Union County, Arkansas, and service of summons was had upon Allstate on January 14, 1954. In that suit Thompson alleged that on October 25, 1952, Allstate issued him an insurance policy covering medical payments and damages to his automobile as a result of collision or upset; that on October 31, 1953, while said policy was in full force and effect, he was driving his automobile and was involved in an accident; that his automobile was damaged and he was required to incur medical expenses. Thompson prayed judgment against Allstate for the total amount of $2,080.

On January 23, 1954, Allstate filed the instant suit against H. H. Thompson, Herman G. Lowery, Mr. Thos. J. Woods, and Mrs. Thos. J. Woods, seeking a declaratory judgment declaring the policy issued to Thompson to be void because of an alleged false answer made by Thompson in his application for insurance, said false answer being relied upon by Allstate when it issued the policy to Thompson.

More specifically, Allstate alleges that it is an Illinois corporation; the defendants, H. H. Thompson and Herman G. Lowery, are citizens and residents of Arkansas; and the defendants, Mr. and Mrs. Thomas J. Woods, are citizens and residents of Louisiana. The amount in controversy exceeds the sum of $3,000.

That on October 24, 1953, plaintiff received a signed application from Henry H. Thompson for insurance on his 1952 Pontiac automobile, and that in said application Thompson had answered "No" to the question, "Has any Insurer ever cancelled any automobile insurance issued, or refused any automobile insurance to the applicant or to any of his household?" On October 25, 1953, having received said application and relying upon the representations therein, plaintiff issued its policy No. 10 514 148 10 25 to Thompson.

Plaintiff alleges that Thompson's answer to the above-quoted question was false and known to be false by him; that plaintiff did not know the answer was false and would not have issued the policy if it had been advised that said answer was false; that Thompson had had an automobile liability policy cancelled by the National Farmers Union Property & Casualty Co. of Denver, Colorado, on March 16, 1953.

On October 31, 1953, Thompson, while driving said automobile, was involved in a collision with a car driven by the defendant, Thomas J. Woods; that the said collision occurred on United States Highway 190 approximately two miles east of Lavonia, Louisiana; that at the time of the accident Thompson had a passenger in said car, namely, the defendant Herman G. Lowery, and that Mrs. Thomas J. Woods was a passenger in her husband's car; that Mr. and Mrs. Woods and Lowery were injured in said collision.

Thompson has filed suit in the Circuit Court of Union County, Second Division, against plaintiff for $1,998 damages to his automobile and for $82 for hospital and medical expenses; that Lowery is claiming damages on account of personal injuries in excess of $2,000; and that other demands will be made upon plaintiff by Mr. and Mrs. Woods for personal injuries and property damage.

Plaintiff further alleges that a controversy exists between it and the defendants as to whether it had any liability under the policy to any of the defendants; that it is necessary that plaintiff obtain relief in the nature of a declaratory judgment in order that the matter may be adjudicated with all possible speed and in order to prevent a multiplicity of suits.

Plaintiff prays for relief in the nature of a declaratory judgment (1) declaring the said policy void by reason of the false answer of Thompson, (2) declaring that there is no liability under said policy on the part of plaintiff to any of the defendants, (3) enjoining the defendant, H. H. Thompson, from further prosecuting the action brought by him in the Union Circuit Court, and that said injunction continue until a hearing and final determination of this cause, and (4) enjoining the defendants, Herman G. Lowery, Mr. Thos. J. Woods, and Mrs. Thos. J. Woods, temporarily during the pendency of this action, and permanently after final determination of the issues herein, from proceeding in any manner to attempt to recover any sum or sums from plaintiff by reason of the issuance of the policy to Thompson.

On January 30, 1954, the defendant, H. H. Thompson, filed his separate answer and motion to dismiss in which he denied that the amount in controversy exceeded the sum of $3,000, and denied that the question heretofore set forth was propounded to him or that he answered the same or that he signed an application with any knowledge that any such question was contained therein; he alleged that if such question appears in any application signed by him, his signature was obtained by and through the fraud of the agent of plaintiff. He denied that plaintiff relied upon the alleged statement in his application.

Thompson alleged that he was not liable for any injuries received by Lowery, since Lowery was his guest, and he denied that either Mr. or Mrs. Wood or Lowery had made or would make any demand upon plaintiff.

He alleged that on January 12, 1954, he filed suit against plaintiff in the Union County Circuit Court; that said suit was pending at the time of the institution of this action; that the Union County Circuit Court had exclusive jurisdiction of the matter and that plaintiff could answer in that suit and plead any defense it might have, including the defense that the policy was procured by fraud.

Thompson prayed that the complaint be dismissed, and that if it were not dismissed, that he be granted a jury trial on all issues of fact.

On the record as it then stood, the Court on February 26, 1954, wrote the attorneys for the respective parties a letter stating, inter alia, the following:

"It is evident that there are several questions raised by the pleadings which should be determined before this case reaches a trial on the merits.

"In the first place, jurisdiction of the Court is questioned on the ground that the requisite jurisdictional amount is not involved. It is true that Thompson is only asserting a claim for $2,080.00 against plaintiff in the State Court action, and it may be true that no other claim has been or will be asserted against plaintiff as a result of the collision involved herein, but, nevertheless, the Court is of the opinion that the requisite jurisdictional amount is involved. Generally, the maximum amount for which the insurance company may be held liable is the amount in controversy where a declaratory judgment is sought on an automobile liability insurance policy. New Century Casualty Co. v. Chase, D.C.W.Va., 39 F.Supp. 768, 771; Builders & Manufacturers Mut. Casualty Co. v. Paquette, D.C.Maine, 21 F.Supp. 858, 864. And, apparently that is the rule in this Circuit. See, Home Ins. Co. of New York v. Trotter, 8 Cir., 130 F.2d 800, 803; Security Insurance Co. v. Jay, D.C. Minn., 109 F.Supp. 87, 89. Thus, it appears that in the instant case, since plaintiff's maximum liability is in excess of $3,000, the requisite jurisdictional amount is involved.

"Likewise, even though the Court does not acquire jurisdiction over the defendants, Mr. and Mrs. Woods, nevertheless the Court has jurisdiction of the instant suit since said defendants, although proper parties, are not necessary parties to this action. Western Casualty & Surety Co. v. Beverforden, 8 Cir., 93 F.2d 166, 168; Hoosier Cas. Co of Indianapolis, Ind. v. Fox, D.C.Iowa, 102 F. Supp. 214, 224.

"It follows from the foregoing that the Court has jurisdiction of the instant suit * * *.

"However, while the Court does have jurisdiction of the action, the question of whether the Court will entertain said action addresses itself to the sound judicial discretion of the Court. * * *"

The Court set defendant's motion to dismiss for a hearing on March 30, 1954, on the question of whether the Court, in the exercise of a sound judicial discretion, should entertain plaintiff's suit for a declaratory judgment. At the hearing it was disclosed that in the meantime Mr. and Mrs. Woods on February 15, 1954, had filed a suit against Allstate and Thompson in the United States District Court, Eastern District of Louisiana, Baton Rouge Division, said suit being based upon the collision between the automobile driven by Thompson and the one driven by Woods. The parties did not introduce at the hearing the pleadings filed in the Louisiana Federal Court, and this Court was not advised of the exact status of that suit. On the record as it then stood, the Court concluded that plaintiff's complaint should not be dismissed, and an order was entered overruling defendant's motion to dismiss.

Subsequently, on April 14, 1954, the defendant, Herman G. Lowery, filed herein his separate answer in which he alleged, inter alia, that prior to the institution of this suit he, on November 20, 1953, assigned to the Baton Rouge General Hospital of Baton Rouge, Louisiana, his claim against Allstate for hospital bills and medical expenses incurred as a result of the collision; that the said Hospital is not a party to this suit and service of process cannot be had upon said Hospital; that neither Mr. or Mrs. Woods have been served with process; and that this Court has not acquired and cannot acquire jurisdiction over said defendants.

Lowery further alleged that both he and the Baton Rouge General Hospital have employed the same counsel who represent...