Budget Rent-A-Car, Inc. v. Higashiguchi

• Citation: 109 F.3d 1471
• Decision Date: 31 March 1997
• Docket Number: Nos. 94-15932,RENT-A-CA,INC,94-16510,s. 94-15932
• Parties: 97 Cal. Daily Op. Serv. 2357, 97 Daily Journal D.A.R. 4228 BUDGET, Plaintiff-Counter-Defendant-Appellant, v. George HIGASHIGUCHI; Sharon Higashiguchi, Defendants-Counter-Claimants-Appellees, v. Alan STAUBER and Tammie Deponte, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1471

109 F.3d 1471

97 Cal. Daily Op. Serv. 2357, 97 Daily Journal

D.A.R. 4228

BUDGET RENT-A-CAR, INC., Plaintiff-Counter-Defendant-Appellant, v. George HIGASHIGUCHI; Sharon Higashiguchi, Defendants-Counter-Claimants-Appellees, v. Alan STAUBER and Tammie Deponte, Defendants.

Nos. 94-15932, 94-16510.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted May 9, 1996.

Submission Deferred Jan. 21, 1997.

Resubmitted March 19, 1997.

Decided March 31, 1997.

Carleton B. Reid, Matthew S. Kohm, Reid, Richards & Miyagi, Honolulu, Hawaii, for plaintiff-appellant.

Michael K. Tateishi, Laureen L. Martin, Tateishi & Apo, Wailuku, Hawaii, for defendants-appellees.

Appeals from the United States District Court for the District of Hawaii, Samuel P. King, District Judge, Presiding. D.C. No. CV-93-00936-SPK.

Before: FLETCHER, D.W. NELSON, and CANBY, Circuit Judges.

CANBY, Circuit Judge:

Budget Rent-A-Car Systems, Inc. sought in federal court a declaratory judgment that it had no duty to defend or indemnify Alan Stauber or Tammie Deponte for the injuries George and Sharon Higashiguchi sustained in an incident involving a Budget rental car. The district court found that the amount in controversy did not exceed the $50,000 jurisdictional requirement of 28 U.S.C. § 1332, and granted the Higashiguchis' motion to dismiss for lack of subject matter jurisdiction. Budget appeals the dismissal. We have jurisdiction under 28 U.S.C. § 1291. We reverse the district court's dismissal of Budget's action because Budget may aggregate its multiple claims against each defendant to reach the jurisdictional amount.

I.

We recite the facts as accepted by the district court for purposes of its decision. In March 1992, Stauber rented a car from Budget. Under the terms of the Rental Agreement that Stauber signed, Budget extended to Stauber and to any other Authorized Driver liability coverage for bodily injury and property damage. In accordance with Hawaii law, the liability coverage under the Rental Agreement required Budget to indemnify its insureds for "not less than $35,000 for all damages arising out of accidental harm sustained by any one person as a result of any one accident." Haw.Rev.Stat. § 431:10C-301(b)(1) (1991). ¹

After obtaining the rental car, Stauber, accompanied by Deponte, drove to the Higashiguchis' home. When Sharon and her granddaughter, Daphne, approached the car to talk with Deponte, Stauber and Deponte allegedly attempted to abduct Daphne. An altercation ensued. During the altercation Stauber and Deponte allegedly assaulted George and Sharon. Sharon was injured when she was shoved from the car. George was injured when he leaned into the driver's door of the car in an attempt to remove the keys from the ignition. George was thrown against the car and fell to the ground, and Stauber drove the car over George's right foot.

In December 1993, Budget filed a declaratory action in the district court seeking a declaration that it did not owe a duty to defend or indemnify Stauber and Deponte. The Higashiguchis moved to dismiss for lack of subject matter jurisdiction, alleging that the amount in controversy did not exceed $50,000 exclusive of interest and costs. The district court granted the motion, and Budget appeals the dismissal.

II.

We review de novo the district court's dismissal for lack of subject matter jurisdiction. See United States v. Vasquez-Velasco, 15 F.3d 833, 838-39 (9th Cir.1994). To justify dismissal, "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). A claim in excess of the requisite amount, made in good faith in the complaint, satisfies the jurisdictional requirement. Id. at 288, 58 S.Ct. at 590. Events occurring after the filing of the complaint that reduce the amount recoverable below the requisite amount do not oust the court from jurisdiction. Id. at 293, 58 S.Ct. at 592.

Budget argues that the amount placed in controversy by its declaratory judgment complaint is "the value of the object of the litigation" from its viewpoint as plaintiff. See Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 347, 97 S.Ct. 2434, 2443, 53 L.Ed.2d 383 (1977). Budget therefore contends that its maximum potential liability under the Rental Agreement, $140,000 ($70,000 of coverage each for Stauber and Deponte against claims by each Higashiguchi), is the value of the object of the litigation.

Budget's maximum liability under the Rental Agreement is relevant to determining the amount in controversy only if the validity of the entire insurance policy is at issue, or if the value of the underlying tort claims exceeds the liability ceiling. 14A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3710 (2d ed. 1985) (hereinafter "Wright & Miller"). Because the applicability of Budget's liability coverage to a particular occurrence is at issue, the amount in controversy is the value of the underlying potential tort action. Id. The Higashiguchis have not disputed Budget's assumption that the value of each of their underlying tort claims against Stauber and Deponte is $35,000 or more. We therefore assume that, at the time of the filing of Budget's complaint, each of the Higashiguchis potentially would have sought at least $35,000 in damages against each of the potential defendants.

We need not decide whether Budget may calculate the amount in controversy by aggregating its potential liabilities to different defendants, because we conclude that Budget otherwise satisfies the jurisdictional requirement. A declaratory judgment plaintiff may reach the jurisdictional amount by aggregating its multiple claims against a single defendant. See Combined Communications Corp. v. Seaboard Sur. Co., 641 F.2d 743, 744 n. 1 (9th Cir.1981) (in declaratory action against its insurer, broadcaster was permitted to aggregate claims for coverage that arose from three separate suits against it); 14A Wright & Miller, § 3704. Because Budget could assume at the time it filed its complaint that George and Sharon each might sue both Stauber and Deponte, ² Budget asserted two claims of nonliability against each Higashiguchi. ³ Budget's two claims against George aggregated to $70,000, as did its two claims against Sharon. ⁴

This is not a case in which Budget, through the vehicle of a declaratory judgment action, is creating federal diversity jurisdiction that otherwise would not exist. If both Higashiguchis were to prevail against both Stauber and Deponte in their state tort claims, George and Sharon each could meet the amount in controversy requirement for federal diversity jurisdiction by aggregating their two breach of contract claims against Budget. Thus Budget's claims against each defendant in its complaint exceed the $50,000 amount in controversy requirement in 28 U.S.C. § 1332. We accordingly reverse the district court's dismissal for lack of jurisdiction.

III.

After this case was argued, this court was advised that the Higashiguchis had settled their claim against Stauber and Stauber's personal carrier, State Farm Insurance Company. We therefore...