Burns v. Massachusetts Mut. Life Ins. Co., Civ. No. 84-857-B.

• Decision Date: 18 April 1986
• Docket Number: Civ. No. 84-857-B.
• Citation: 653 F. Supp. 77
• Parties: William R. BURNS, on behalf of himself and as representative of the class herein defined, Plaintiff, v. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Iowa

653 F. Supp. 77

William R. BURNS, on behalf of himself and as representative of the class herein defined, Plaintiff, v. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Defendant.

Civ. No. 84-857-B.

United States District Court, S.D. Iowa, C.D.

April 18, 1986.

Doyle D. Sanders, Peddicord and Wharton, Des Moines, Iowa, for plaintiff.

W. Don Brittin, Jr., Nyemaster, Goode, McLaughlin, Emery & O'Brien, P.C., Des Moines, Iowa, Vaughn C. Williams, New York City, for defendant.

ORDER OF DISMISSAL

VIETOR, Chief Judge.

The court has before it in this diversity action defendant's motion to dismiss for lack of subject matter jurisdiction. Oral argument was heard March 13, 1986, and the motion is now submitted.

Plaintiff's complaint arises out of defendant life insurance company's update program. Under the program a life insurance policyholder may agree to the substitution of an adjustable loan interest rate for the existing provision authorizing policy loans at a fixed rate. If a policyholder so agrees then he or she receives annual dividends reflecting the higher investment return that defendant expects to receive with the increased loan rates. Fixed loan rates vary between 5 and 8 percent, depending on the particular contract.

Plaintiff's contract provides for a 5 percent loan rate. His contract also provides that his "policy while in force will be credited with such share of the surplus funds of the Company as may be apportioned hereto by the Directors, such apportioned shares being designated herein as dividends." Plaintiff complains that he has expected to receive and in fact has always received dividends in amounts proportionately equal to those received by others in his same insured class and equal expectation of life and that an insured class is defined in the industry and in the practice of defendant without any reference to interest rates applicable to loans made to individual policyholders. Defendant's program distinguishes between those policyholders who agree to an adjustable interest rate and those policyholders who choose to stay with the fixed interest rate in their contract. Plaintiff asks that defendant be enjoined from apportioning dividends in this fashion and that a lien and trust be impressed upon the surplus funds of the defendant as of the date dividends have or will be apportioned so that all of plaintiff's rights and the rights of those persons similarly situated will be protected. Plaintiff also requests attorney's fees, litigation expenses, and costs.

Defendant moves to dismiss arguing that plaintiff's claim does not place in controversy an amount greater than $10,000. Plaintiff alleges in his first amendment to his complaint that defendant's actions have resulted in a shifting of as much as $15,000,000 from plaintiff and others similarly situated. Plaintiff does not allege his individual loss; however, the court will assume that he could amend to allege the amount in controversy he sets out in his resistance to the motion to dismiss.

This court is filing a ruling contemporaneously with this order that denies plaintiff's motion for class certification. Therefore, the question of aggregation raised by the plaintiff need not be considered.¹

The jurisdictional issue is thus whether defendant individually puts into controversy a claim that exceeds $10,000. In an action seeking injunctive relief, the value of the right sought to be enforced determines the amount in controversy. Bishop Clarkson v. Memorial Hospital v. Reserve Life Insurance Co., 350 F.2d 1006, 1008 (8th Cir.1965); Hedberg v. State Farm Mutual Automobile Insurance Co., 350 F.2d 924, 928 (8th Cir.1965). The burden is on the party seeking to establish jurisdiction to show the jurisdictional facts by competent and preponderant proof. Hedberg, 350 F.2d at 929. The exact amount need not be established. Bishop, 350 F.2d at 1010.

Plaintiff projects his dividend loss over his remaining life expectancy of 15 years at $12,823 and increases this amount to $19,230 by adding 8 percent investment income during his remaining life expectancy. To calculate the $12,823 amount, plaintiff uses the company's projections of dividends that plaintiff would receive if he did not adopt the program and the dividends he would receive if he did adopt the...