Bowers v. Continental Ins. Co., Nos. 83-8787

CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
Writing for the CourtBefore HENDERSON and HATCHETT; Albert J. HENDERSON; NICHOLS
Citation753 F.2d 1574
PartiesJoseph Alton BOWERS, Plaintiff-Appellant, v. CONTINENTAL INSURANCE COMPANY, Defendant-Appellee.
Decision Date27 February 1985
Docket NumberNos. 83-8787,84-8084

Page 1574

753 F.2d 1574
Joseph Alton BOWERS, Plaintiff-Appellant,
v.
CONTINENTAL INSURANCE COMPANY, Defendant-Appellee.
Nos. 83-8787, 84-8084.
United States Court of Appeals,
Eleventh Circuit.
Feb. 27, 1985.
Certiorari Denied July 1, 1985
See 105 S.Ct. 3531.

Page 1575

Ronald Arthur Lowry, Atlanta, Ga., for plaintiff-appellant.

William S. Sutton, Atlanta, Ga., for defendant-appellee.

Appeals from the United States District Court for the Northern District of Georgia.

Before HENDERSON and HATCHETT, Circuit Judges, and NICHOLS *, Senior Circuit Judge.

Albert J. HENDERSON, Circuit Judge:

Joseph Alton Bowers sued the Continental Insurance Company (Continental) to recover certain optional personal injury protection (PIP) benefits allegedly due him under two no-fault policies issued by Continental. The United States District Court for the Northern District of Georgia granted Continental's motion for summary judgment and motion to strike Bowers' request for attorney's fees, statutory penalties and punitive damages. We affirm.

Bowers is covered by two Continental no-fault insurance policies, each providing $5,000.00 in basic and $45,000.00 in optional PIP coverage. On August 24, 1981, while riding in a truck insured by the Aetna Insurance Company (Aetna), he was involved in an accident as the result of which he incurred over $100,000.00 in medical expenses.

Aetna paid to Bowers $43,750.00 in PIP benefits. 1 During negotiations, Continental took the position that Bowers' total PIP recovery from Continental and Aetna could not exceed $50,000.00, the greatest amount of coverage available under any one of the policies. 2 Because Continental originally believed that Aetna paid the amount of $50,000.00, it claimed that it was not indebted to Bowers for an additional amount. 3

Bowers submitted copies of medical bills in excess of $92,000.00 along with a demand letter to Continental on April 26, 1982. On July 27, 1982, he filed a complaint in the State Court of DeKalb County, Georgia, against Continental seeking $42,419.10 in insurance benefits and, because of the lateness of the payment allegedly due from Continental, a statutory penalty of $10,604.79, reasonable attorney's fees and punitive damages. Continental removed the case to the United States District Court for the Northern District of Georgia on the grounds of diversity. The district court later denied Bowers' motion to remand the case back to the state court.

Page 1576

On May 2, 1983, Continental learned that Aetna had paid only $43,750.00 in PIP benefits to Bowers. 4 Upon receipt of this information, Continental conceded that it owed Bowers the sum of $6,250.00, the difference between $50,000.00, the greatest amount of coverage available under any one of the policies, and Aetna's payment. 5 On May 31, 1983, Continental tendered a check for $6,250.00, but conditioned its acceptance on Bowers' release of all further claims against Continental. 6 Eventually, after Bowers refused to accept the payment, Continental forwarded another check for the same amount on October 20, 1983, without the release provision.

The district court granted Continental's motion for summary judgment, and awarded Bowers $6,250.00, the amount Continental conceded it owed. In a later order the court granted Continental's motion to strike Bowers' request for attorney's fees, statutory penalties and punitive damages. This appeal followed.

Bowers first urges that the district court erred in denying his motion to remand the case back to the state court. According to Bowers, the suit was not removable because it falls under the direct action provision of 28 U.S.C. Sec. 1332(c):

[I]n any direct action against the insurer of a policy or contract of liability insurance ... to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.

28 U.S.C. Sec. 1332(c). Bowers argues that the district court lacked jurisdiction because, under the statute, his domicile must be imputed to Continental, thus destroying diversity.

At first glance, the literal language of the statute appears to support Bowers' contention. It is generally accepted that claims under no-fault insurance contracts may be considered "direct actions" within the meaning of section 1332(c). See, e.g. Ford Motor Co. v. Insurance Co. of North America, 669 F.2d 421, 425-26 (6th Cir.1982); McMurry v. Prudential Property and Casualty Insurance Co., 458 F.Supp. 209, 212-13 (E.D.Mich.1978). Moreover, it is undisputed that this suit is "against the insurer of a policy ... of liability insurance," and that Bowers, the insured, is "not joined as a party defendant."

Nonetheless, we do not believe that section 1332(c) applies to this action. The general rule has always been that the direct action proviso does not affect suits brought by an insured against his own insurer. See, e.g. White v. United States Fidelity and Guaranty Co., 356 F.2d 746, 747-48 (1st Cir.1966). We are aware of no authority to the contrary. 7 The proviso was passed in response to statutes authorizing actions against the holder of a contract of indemnity for liability by a wrongdoer to the plaintiff. See S.Rep. No. 1308,

Page 1577

88th Cong., 2d Sess. reprinted in [1964] U.S.Code Cong. & Ad.News 2778, 2778-79; see also Spooner v. Paul Revere Life Insurance Co., 578 F.Supp. 369, 373 (E.D.Mich.1984) (The direct action proviso is triggered when "the act for which liability is sought to be imposed against the insurance company is the same act for which liability could be imposed against the insured."). In similar situations involving suits by an insured against his own insurer under an uninsured motorist policy, courts have held that section 1332(c) does not control. See, e.g. Adams v. State Farm Mutual Automobile Insurance Co., 313 F.Supp. 1349 (N.D.Miss.1970); Bishop v. Allstate Insurance Co., 313 F.Supp. 875 (W.D.Ark.1970). Accordingly, the district court did not err in denying Bowers' motion to remand.

Bowers next claims that he is entitled to recover PIP benefits in an amount greater than $50,000.00, the highest coverage on any one policy. In Voyager Casualty Insurance Co. v. King, 172 Ga.App. 269, 323 S.E.2d 4 (1984), cert. denied, No. 41655 (Ga., Nov. 6, 1984), the Georgia Court of Appeals resolved a previously unanswered question of state law by holding that optional PIP benefits could not be "stacked" to permit recovery in an amount greater than the highest coverage under any one policy. As a result of...

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32 practice notes
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...of the insurance contract but for failure to settle within policy limits. See id. at 724-25. 11 See Bowers v. Continental Insurance Co., 753 F.2d 1574, 1576 (11th Cir.) (insured's suit against his no-fault insurer is not a "direct action"), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.E......
  • Tuck v. United Services Auto. Ass'n, No. 85-2770
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • October 14, 1988
    ...been that the direct action proviso does not affect suits brought by an insured against his own insurer." Bowers v. Continental Ins. Co., 753 F.2d 1574, 1576 (11th Cir.), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.Ed.2d 655...
  • Peterson v. Tig Specialty Ins. Co., No. C-2-02-311.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • July 26, 2002
    ...actions brought by third parties against the insurer—as a substitute for the insured tortfeasor. See, e.g., Bowers v. Cont'l Ins. Co., 753 F.2d 1574, 1576 (11th Cir.1985); Kimball Small Props. v. Am. Nat'l Fire Ins., 755 F.Supp. 1465 (N.D.Cal.1991); McGlinchey v. Hartford Accident & Indem. ......
  • Woodstock Resort Corp. v. Scottsdale Ins. Co., No. 2:95-cv-148.
    • United States
    • United States District Courts. 2nd Circuit. District of Vermont
    • December 22, 1995
    ...to pay policy benefits ... Rosa v. Allstate Insurance Co., 981 F.2d 669, 675 (2d Cir.1992). Accord Bowers v. Continental Insurance Co., 753 F.2d 1574 (11th Cir.), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.Ed.2d 655 (1985); Hayes v. Allstate Insurance Co., 722 F.2d 1332 (7th Cir. 1983......
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32 cases
  • Rosa v. Allstate Ins. Co., No. 173
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • December 23, 1992
    ...of the insurance contract but for failure to settle within policy limits. See id. at 724-25. 11 See Bowers v. Continental Insurance Co., 753 F.2d 1574, 1576 (11th Cir.) (insured's suit against his no-fault insurer is not a "direct action"), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.E......
  • Tuck v. United Services Auto. Ass'n, No. 85-2770
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • October 14, 1988
    ...been that the direct action proviso does not affect suits brought by an insured against his own insurer." Bowers v. Continental Ins. Co., 753 F.2d 1574, 1576 (11th Cir.), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.Ed.2d 655...
  • Peterson v. Tig Specialty Ins. Co., No. C-2-02-311.
    • United States
    • United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
    • July 26, 2002
    ...actions brought by third parties against the insurer—as a substitute for the insured tortfeasor. See, e.g., Bowers v. Cont'l Ins. Co., 753 F.2d 1574, 1576 (11th Cir.1985); Kimball Small Props. v. Am. Nat'l Fire Ins., 755 F.Supp. 1465 (N.D.Cal.1991); McGlinchey v. Hartford Accident & Indem. ......
  • Woodstock Resort Corp. v. Scottsdale Ins. Co., No. 2:95-cv-148.
    • United States
    • United States District Courts. 2nd Circuit. District of Vermont
    • December 22, 1995
    ...to pay policy benefits ... Rosa v. Allstate Insurance Co., 981 F.2d 669, 675 (2d Cir.1992). Accord Bowers v. Continental Insurance Co., 753 F.2d 1574 (11th Cir.), cert. denied, 473 U.S. 906, 105 S.Ct. 3531, 87 L.Ed.2d 655 (1985); Hayes v. Allstate Insurance Co., 722 F.2d 1332 (7th Cir. 1983......
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