Crenshaw v. Great Central Insurance Co.

• Citation: 482 F.2d 1255
• Decision Date: 24 August 1973
• Docket Number: No. 72-1747.,72-1747.
• Parties: Columbus and Mae Frances CRENSHAW, Appellants, v. GREAT CENTRAL INSURANCE CO., a Corporation, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

482 F.2d 1255 (1973)

Columbus and Mae Frances CRENSHAW, Appellants, v. GREAT CENTRAL INSURANCE CO., a Corporation, Appellee.

No. 72-1747.

United States Court of Appeals, Eighth Circuit.

Submitted May 16, 1973.

Decided August 24, 1973.

Preston E. Roskin, Clayton, Mo., for appellants.

Robert A. Wulff, St. Louis, Mo., for appellee.

Before VAN OOSTERHOUT, Senior Circuit Judge, HEANEY, Circuit Judge, and TALBOT SMITH, Senior District Judge.^*

VAN OOSTERHOUT, Senior Circuit Judge.

This is a timely appeal from an order of the District Court sustaining defendant Great Central Insurance Co.'s motion to dismiss Count I of plaintiffs' first amended petition in an action for wrongful death pursuant to a policy of insurance affording uninsured motorist coverage. The motion was sustained on the basis that the Count I claim was barred by the Missouri statute of limitations for wrongful death. See V.A.M.S. § 537.100.

Plaintiffs in the original petition, as well as in the amended petition, are Columbus and Mae Frances Crenshaw, Gretschen Crenshaw, by and through her mother and next friend, Mae Frances Crenshaw. The original petition was filed in the Circuit Court of the City of St. Louis on September 7, 1972. It contained three counts. Count I alleged that on May 27, 1969, an automobile owned by Harry Davis and operated by Gail Martin struck and killed Dale Crenshaw, son of plaintiffs Columbus and Mae Frances Crenshaw. Count I also alleged that both Davis and Martin were negligent; that Davis and Martin were uninsured motorists as defined in a policy of insurance with defendant herein; and that Dale Crenshaw was covered by the aforementioned policy. Plaintiffs sought $10,000 damages pursuant to the policy's uninsured motorist coverage for Dale's wrongful death. Finally, Count I alleged that defendant herein had vexatiously, wilfully and without reasonable cause refused to pay the claim. Damages pursuant to this allegation were sought in the amount of $1,000 plus $2,500 in attorneys fees. See V.A.M.S. §§ 375.296, 375.420. On the same operative facts, Count II sought $10,000 damages for severe injury to Dale's sister Gretschen and $3,500 damages and attorneys fees for vexatious refusal to pay the Count II claim.

Count III was a claim by the father, Columbus Crenshaw, for $5,000 in past and anticipated medical expenses in connection with Gretschen's injuries.

On September 25, 1972, defendant filed timely petition for removal alleging diversity of citizenship and an amount in controversy of $32,000. The federal district court initially assumed jurisdiction over the case.

On October 4, 1972, defendant moved to dismiss Count I of plaintiffs' original petition. On October 26, 1972, a pretrial conference was held. On November 16, plaintiffs' first amended petition was filed. It contained two counts for $10,000 each. The claims for damages and attorneys fees for vexatious refusal to pay were eliminated as was the Count III claim in the original petition.

On November 17, 1972, the District Court dismissed Count I as barred by the Missouri statute of limitations for wrongful death. Sua sponte it remanded Count II on the basis that "the claims under original Count II and Count III of the original petition, and Count II of the amended petition, show that under the terms of the policy recovery thereunder is limited to $10,000, to a legal certainty." The court states:

"To defeat jurisdiction of this court once acquired, it must appear to a legal certainty that as of the time of removal, plaintiff could not recover in excess of $10,000. Durate v. Donnelley, supra. The claim under Count I for wrongful death of Dale Crenshaw is shown to a legal certainty to be barred by the statute of limitations. The claims under original Count II and Count III of the original petition, and Count II of the amended petition, show that under the terms of the policy recovery thereunder is limited to $10,000, to a legal certainty. The only basis for retaining jurisdiction, if any, is the claim of vexatious refusal to pay for which plaintiff Gretschen Crenshaw, by next friend, claimed $2,500 in the original petition. Under Missouri law, claimants may proceed directly against the insurance carrier for recovery of damages caused by an uninsured motorist where the injured party is covered as an insured by uninsured motorist coverage. State ex rel. State Farm Mut. Ins. Co. v. Craig, 364 S.W.2d 343 (Mo.App.1963). The liability of the insurance carrier is conditioned upon (1) the accident `arising out of the ownership, maintenance or use of an uninsured highway vehicle\' and (2) the right of the plaintiff to recover from such owner or operator damages on account of such accident. Neither of these conditions is presumed in the law, and the defendant insurance carrier is entitled to have these issues adjudicated before its refusal to pay can be considered willful or vexatious."

An order of remand is, of course, not appealable. See 28 U.S.C.A. § 1447(d). The only appeal here is from the order of dismissal of Count I Plaintiffs urge two grounds for reversal: (1) that the same or similar reasoning which led to a remand of Count II should have been applied to remand, rather than dismiss, Count I; and (2) that even if Count I should not be remanded, the District Court erred in its holding that the Count I claim was barred by the Missouri statute of limitation for wrongful death. Plaintiffs' second ground for reversal is based on its argument that the Missouri contract, rather than wrongful death, statute of limitations is applicable to this suit.

For the reasons which follow, we agree with plaintiffs' first contention that Count I should be remanded to the state court rather than dismissed and reverse with instructions to remand Count I to the state court from which it was removed. We do not reach the second issue based on the statute of limitations.

The Count I claim in plaintiffs' petition at the time of removal sets forth facts which prima facie establish the jurisdictional amount. This amount is determinative of the jurisdictional amount in controversy with one basic exception here applicable: if it appears to a legal certainty that plaintiffs cannot recover in excess of $10,000 then the amount actually claimed may be ignored. 1 Barron & Holtzoff, Federal Practice & Procedure § 104; 1A Moore's Federal Practice ¶ 0.157 6, at 259; St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938); Sanders v. Hiser, 479 F.2d 71 (8th Cir. 1973).

Whether it is a legal certainty that plaintiffs cannot recover is determined by state law, here the Missouri vexatious refusal to pay statutes previously cited and the cases decided pursuant thereto. Horton v. Liberty Mutual Insurance Co., 367 U.S. 348, 81 S. Ct. 1570, 6 L.Ed.2d 890 (1961). Under the Missouri cases, "it is a well settled rule of law, where there is an open question of fact or law determinative of the insured's liability, that the insurer, acting in good faith, may insist on a judicial determination of such question without being penalized therefor." Cohen v. Metropolitan Life Insurance Co., 444 S.W.2d 498, 506 (Mo.App.1969).

There has been some confusion regarding the scope and proper application of the legal certainty test. The appropriate standards are well stated in Nelson v. Keefer, 451 F.2d 289 (3d Cir. 1971). As to Count II, the trial court found the requisite certainty in the mere possibility that the insurer's refusal to pay might, reasonably and in good faith, have been on the basis that the accident did not arise out of the use of an uninsured vehicle or on the basis that the plaintiffs could not have recovered from the owner or operator of the uninsured vehicle. The...