Massachusetts Cas. Ins. Co. v. Harmon

• Citation: 88 F.3d 415
• Decision Date: 10 July 1996
• Docket Number: No. 95-5614,95-5614
• Parties: MASSACHUSETTS CASUALTY INSURANCE COMPANY, Plaintiff-Appellant, v. Glen A. HARMON, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 415

88 F.3d 415

MASSACHUSETTS CASUALTY INSURANCE COMPANY, Plaintiff-Appellant, v. Glen A. HARMON, Defendant-Appellee.

No. 95-5614.

United States Court of Appeals, Sixth Circuit.

Argued June 13, 1996.

Decided July 10, 1996.

Jeffrey C. Mando (argued and briefed), Adams, Brooking, Stepner, Woltermann & Dusing, Covington, KY, for plaintiff-appellant.

Leonard J. Stayton (argued and briefed), Inez, KY, for defendant-appellee.

Before: MERRITT, Chief Judge; KEITH and SUHRHEINRICH, Circuit Judges.

MERRITT, Chief Judge.

The sole issue on this appeal is whether, in a suit to rescind a disability insurance contract, the face value of the contract should be considered in determining whether a complaint avers the jurisdictional amount required to sustain diversity jurisdiction under 28 U.S.C. § 1332. Following the unanimous federal rule, we hold that the face value of the contract should be considered, and we accordingly reverse the district court's order dismissing the complaint for lack of subject matter jurisdiction.

Plaintiff/Appellant Massachusetts Casualty Insurance Company in January 1993 issued to defendant a disability insurance policy with a monthly benefit of $1,140 and a maximum benefit period of sixty months, for a total possible benefit of $68,400. The application for insurance required full disclosure of defendant's prior medical history, and provided that false statements could lead to a loss of coverage under the policy. In July 1993, defendant made a claim for total disability benefits based upon an on-job back injury, potentially reaching the full $68,400 value of the policy. Massachusetts Casualty made $2,280 in benefits payments, but, in the course of evaluating defendant's claim fully, discovered a prior medical history of lower back pain and anxiety that had not been disclosed by defendant. Massachusetts Casualty then disallowed defendant's claim and made demand for $890.26, which is the difference between the benefits already paid to defendant and the $1,389.74 in premiums paid by defendant to Massachusetts Casualty before his injury.

Defendant made no return of the alleged overpayment, and in January 1995 plaintiff filed the instant suit in federal district court, seeking $890.26 and demanding that "the attached policy of disability insurance be rescinded as of date of issue." The district court, upon motion by defendant, dismissed the complaint, finding that the relief requested by Massachusetts Casualty did not exceed the sum of $50,000 required for diversity jurisdiction under 28 U.S.C. § 1332. The appeal comes to this Court upon the district court's denial of plaintiff's motion to reconsider.

The district court based its holding on its conclusion that "[t]he only claim at issue in the instant action is the plaintiff's claim for $860.26 [sic] in overpayment to the defendant." J.A. at 64. The court, however, completely ignored Massachusetts Casualty's demand, clear upon the face of the complaint, that the contract for insurance be rescinded as of the date of issue...