Hedberg v. State Farm Mutual Automobile Insurance Co.

• Citation: 350 F.2d 924
• Decision Date: 30 August 1965
• Docket Number: No. 17797.,17797.
• Parties: Robert E. HEDBERG, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Life Insurance Company, State Farm Fire & Casualty Company, State Farm General Insurance Company, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

350 F.2d 924 (1965)

Robert E. HEDBERG, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, State Farm Life Insurance Company, State Farm Fire & Casualty Company, State Farm General Insurance Company, Appellees.

No. 17797.

United States Court of Appeals Eighth Circuit.

August 30, 1965.

COPYRIGHT MATERIAL OMITTED

Joe A. Walters and Robert J. Christianson, Jr., both of O'Connor, Green, Thomas & Walters, Minneapolis, Minn., for appellant.

Marvin E. Lundquist, Wheaton, Minn., for appellee.

Before VAN OOSTERHOUT, BLACKMUN, and MEHAFFY, Circuit Judges.

BLACKMUN, Circuit Judge.

State Farm Mutual Automobile Insurance Company (State Automobile), State Farm Life Insurance Company (State Life), State Farm Fire & Casualty Company (State Fire), and State Farm General Insurance Company (State General), all Illinois corporations, instituted this diversity suit in the United States District Court for the District of Minnesota against Robert E. Hedberg, a Minnesota resident. The relief sought was (a) replevin of personal property; (b) damages for the detention of that property; (c) an injunction; and (d) damages for violation of contracts between the plaintiffs and the defendant. Hedberg's answer challenged the presence of the $10,000 jurisdictional amount prescribed by 28 U.S.C. § 1332(a) and, as well, the plaintiffs' right to the relief requested.

At the argument on the plaintiffs' motion for a preliminary injunction Hedberg again raised the jurisdictional issue. The trial court (Judge Nordbye) did not mention this in any written order but obviously decided the issue in favor of the plaintiffs. The court did file a memorandum holding that the plaintiffs were entitled to injunctive relief for a period of one year from March 2, 1964. 236 F.Supp. 797. The injunction was issued on July 10, 1964. Hedberg takes his appeal under 28 U.S.C. § 1292(a) (1).

There is no dispute about the facts as they appear for present purposes. Hedberg for some years was one of several local agents in the Twin Cities area for the respective plaintiffs. This relationship was formalized by written contract consisting of Hedberg's appointment by the insurance company and his acceptance. This contract provided, among other things, that (a) Hedberg "will not represent any other insurer in any capacity without the written consent" of the State Farm insurer, "or engage in any practice competitive with or prejudicial to the best interests of the" State Farm insurer; (b) records and materials furnished to Hedberg by the insurer shall remain the property of the insurer and upon termination shall be delivered to it; (c) also upon termination, Section I G, Hedberg "shall thereafter refrain from further solicitation for or servicing of policyholders of the insurer and from interfering in any way for a period of one year with existing policies and policyholders"; and (d) the agreement "may be terminated * * * with or without cause, by either party * * * giving written notice to the other and shall be deemed terminated as of the date specified in such notice". Subject to stated conditions, Section IV B 4,¹ which, concededly, were not fulfilled by Hedberg, termination other than by death was to be accompanied by payment to the agent of a percentage of local agency annual earnings.

Actually the contracts took the form of one collective instrument, together with an acceptance, between Hedberg and State Automobile, State Life, and State Fire, and a separate one between Hedberg and State General. The former, however, was phrased in terms of "each Company" and recited that "each appoints" Hedberg as "its Local Agent".

Hedberg's agency for each of the four companies was terminated March 2, 1964, and he thereupon ceased to be a representative of any of them. The trial court found, and stated as its reasons for the preliminary injunction, as required by Rule 65(d), F.R.Civ.P.,

"Until March 2, 1964, when he was discharged by the plaintiffs, defendant represented the State Farm Companies under a written `Local Agent\'s Appointment.\' Since March 2, 1964, he has been actively engaged in representing an insurance company which is one of plaintiffs\' competitors, and has carried on a studied campaign to obtain for his present insurance company the insurance business of the present policyholders in plaintiffs\' companies, which policyholders he formerly secured and serviced during the years of his employment with the plaintiffs."

Hedberg states that, for purposes of this appeal, he does not dispute these findings.

The court then concluded that Hedberg was violating the contracts in that he was interfering with "existing policies and policyholders", that the contracts' restrictive period of one year was reasonable under all the circumstances, and that irreparable injury would be sustained by the plaintiffs if injunctive relief were not granted. It accordingly enjoined Hedberg for the year following his termination "from soliciting the insurance business of any present policyholder in plaintiffs' companies which he had formerly secured and serviced while employed by the plaintiffs".

Jurisdictional amount. We necessarily and initially are confronted with the jurisdictional question. A statement of some general principles is perhaps in order.

Statutes conferring diversity jurisdiction upon federal courts are, it has been said, to be strictly construed. Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 86 L.Ed. 951 (1942); Janzen v. Goos, 302 F.2d 421, 424 (8 Cir. 1962). The determination of the value of "the matter in controversy", under 28 U.S.C. § 1332(a), "is a federal question to be decided under federal standards, although the federal courts must, of course, look to state law to determine the nature and extent of the right to be enforced in a diversity case" footnote omitted. Horton v. Liberty Mut. Ins. Co., 367 U.S. 348, 352-353, 81 S.Ct. 1570, 1573, 6 L.Ed.2d 890 (1961).

Where a money judgment is sought, the amount in controversy is the sum claimed by the plaintiff "if the claim is apparently made in good faith", and

"It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. * * * But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed, or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed." Saint Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).

National Sur. Corp. v. City of Excelsior Springs, 123 F.2d 573, 576-577, 156 A. L.R. 422 (8 Cir. 1941). Absolute certainty, however is not required. Aetna Cas. & Sur. Co. v. Flowers, 330 U.S. 464, 468, 67 S.Ct. 798, 91 L.Ed. 1024 (1947).

In a replevin action, where title is being litigated, the value of the property is the amount in controversy. Gibson v. Shufeldt, 122 U.S. 27, 29, 7 S.Ct. 1066, 30 L.Ed. 1083 (1887); Peyton v. Robertson, 9 Wheat. 527, 528, 22 U.S. 527, 528, 6 L.Ed. 151 (1824).

In an injunction suit the amount in controversy may be tested by the value of the right sought to be gained by the plaintiff. Glenwood Light & Water Co. v. Mutual Light, Heat & Power Co., 239 U.S. 121, 125, 36 S.Ct. 30, 60 L.Ed. 174 (1915); Packard v. Banton, 264 U.S. 140, 142, 44 S.Ct. 257, 68 L.Ed. 596 (1924); Hulsenbusch v. Davidson Rubber Co., 344 F.2d 730, 733 (8 Cir. 1965); Federated Mut. I. & H. Ins. Co. v. Steinheider, 268 F.2d 734, 738 (8 Cir. 1959). However, cost to the defendant has also been suggested as an alternative basis. Ronzio v. Denver & R. G. R.R., 116 F.2d 604 (10 Cir. 1940); Pennsylvania Ins. Co. v. Allstate Ins. Co., 226 F.Supp. 99, 102 (W.D.Va.1964); Government Employees Ins. Co. v. Lally, 327 F.2d 568, 569 (4 Cir. 1964); 1 Barron & Holtzoff, Federal Practice & Procedure (Wright Rev.1960), § 24, pp. 112-13; 1 Moore's Federal Practice (2d Ed. 1964), Par. 0.911, pp. 826-28.

In a case instituted in federal court the burden of pleading and, when challenged, of supporting jurisdictional facts by competent and preponderant proof is upon the plaintiff. McNutt v. General Motors Acceptance Corp., 298 U. S. 178, 182, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 81 L.Ed. 183 (1936); Hulsenbusch v. Davidson Rubber Co., supra, p. 733 of 344 F.2d; Ringsby Truck Lines, Inc. v. Beardsley, 331 F.2d 14, 15 (8 Cir. 1964). It has been said that where the challenge is made upon an application for a preliminary injunction, the plaintiff must "adequately establish that there is at least a reasonable probability of ultimate success upon the question of jurisdiction when the action is tried on the merits." Industrial Electronics Corp. v. Cline, 330 F.2d 480, 482 (3 Cir. 1964).

This court has recognized that, although injury in an injunction suit may not be capable of exact valuation in money, this fact of itself does not negative federal jurisdiction. City of Memphis v. Ingram, 195 F.2d 338, 342 (8 Cir. 1952).

With these principles in mind, we turn to the complaint. The four plaintiffs purport to allege two "joint and several causes of action against the defendant". The first is one in replevin for records and materials furnished by the plaintiffs to Hedberg as their agent "pertaining to all persons who were policyholders of the plaintiffs" during the defendant's agency. It is alleged that "said items of personal property have an innate value of $15,000.00", and that the value of the loss during the property's detention "is in the reasonable amount of $25.00 per day". The second cause of action relates to Hedberg's solicitation of the plaintiffs' existing policyholders, in claimed violation of his contract, to the detriment and "severe and irreparable damage to the...