State Farm Mut. Auto. Ins. Co. v. McWhite, C/A No. 3:15-cv-4749-JFA
| Decision Date | 28 March 2016 |
| Docket Number | C/A No. 3:15-cv-4749-JFA |
| Court | U.S. District Court — District of South Carolina |
| Parties | State Farm Mutual Automobile Insurance Company, Plaintiff, v. DuPont McWhite, Defendant. |
This matter is before the Court on Dupont McWhite's ("Defendant") motion to dismiss for lack of subject matter jurisdiction. ECF No. 9. State Farm ("Plaintiff") seeks a declaratory judgment as to whether it owes Defendant, its insured driver, underinsured motorist ("UIM") coverage under two policies. Defendant moved to dismiss this suit on the grounds that the parties are not diverse and that the amount in controversy has not been met. The matter has been fully briefed, and the Court held oral argument on Monday, March 14, 2016.
This declaratory judgment action has its factual basis in an underlying state court suit for damages resulting from an automobile accident. There, Defendant was severely injured while driving his Ford Ranger in Lexington County in 2012. He brought suit against the at-fault driver. The at-fault driver's liability policy ("at-fault policy") paid out its limits of liability coverage in the amount of $25,000. Defendant alleges that his damages are in excess of that amount and seeks UIM coverage from his own insurer, Plaintiff.
Plaintiff issued Defendant three automobile insurance policies: 1) a policy on his Ford Ranger ("Ranger policy") with liability limits of $25,000 and no UIM coverage; 2) a policy on his Toyota Highlander ("Highlander policy") with UIM coverage of $50,000; and 3) a policy on his Toyota CRV ("CRV policy") with UIM coverage of $50,000. At the time of the accident, Defendant was driving his Ford Ranger without UIM coverage.
Despite the absence of UIM coverage in the Ranger policy, the language of the policy provides that the insured can receive $25,000 of UIM coverage from one of the "at home" vehicles' policies. Thus, pursuant to that language, Plaintiff remitted to Defendant $25,000 in UIM coverage from the "at home" Highlander policy. This payment was made prior to the initiation of both the state and federal litigation.
In this action, Plaintiff seeks a declaration that no UIM coverage is available under the Ranger policy, that no stacking is permissible beyond that provided for in the policy language, and that if the Ranger policy is reformed to include UIM coverage, recovery be limited to $25,000 per vehicle. Defendant moved to dismiss for lack of subject matter jurisdiction claiming the amount in controversy is not in excess of $75,000.
Federal courts are courts of limited jurisdiction and, as such, may only hear and decide cases when given the authority to do so by the United States Constitution and by federal statute. In re Bulldog Trucking, Inc., 147 F.3d 347, 352 (4th Cir. 1998).
In a motion to dismiss pursuant to Rule 12(b)(1), the burden rests with the plaintiff to prove that federal subject-matter jurisdiction is proper. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). "[T]he absence of jurisdiction may be raised at any time during the case, and may be based on the court's review of the evidence." Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999); see Gibbs v. Buck, 307 U.S. 66, 72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939).
"Determining the question of subject matter jurisdiction at the outset of the litigation is often the most efficient procedure." Lovern, 190 F.3d at 654. The "district court may address its lack of subject matter jurisdiction in two ways." Id. It "may find insufficient allegations in the pleadings, viewing the alleged facts in the light most favorable to the plaintiff, similar to an evaluation pursuant to Rule 12(b)(6)," or, "after an evidentiary hearing, the court may weigh the evidence in determining whether the facts support the jurisdictional allegations." Id. (internal citations omitted); see Adams, 697 F.2d at 1219 (same).
Under § 1332, district courts "shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." 28 U.S.C. § 1332.
It is a long-settled rule that in order to invoke diversity jurisdiction, the petitioner must show "complete diversity"—that is, that it does not share citizenship with any defendant. Doctor'sAssociates, Inc. v. Distajo, 66 F.3d 438, 445 (2d Cir. 1995) (citing C.T. Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990)).
Although the statute does not define citizenship, courts have held that it is the individual's domicile which is the state the individual considers her permanent home. Gambelli v. United States, 904 F. Supp. 494, 496 (E.D. Va. 1995) aff'd, 87 F.3d 1308 (4th Cir. 1996). Further, a corporation is deemed a citizen of every state in which it is incorporated and the state where is has its principal place of business. 28 U.S.C. § 1332(c)(1).
On a motion to dismiss an action based on diversity of citizenship for want of the requisite jurisdictional amount, the sum claimed by the plaintiff controls if the claim appears to be made in good faith. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938). However, if from the face of the pleading it is apparent to a legal certainty that there could be no recovery of the amount claimed, then the complaint will be dismissed. Id. at 289; see also 5 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 1350 (3d ed.) ().
"In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). Where the lawsuit seeks a declaration of no liability, the value of the relief sought is measured by the value of the liability that would follow if liability were found to exist. See e.g., Budget Rent-A-Car, Inc. v. Higashiguchi, 109 F.3d 1471, 1473 (9thCir. 1997) ( the maximum liability under a rental agreement is "relevant to determining the amount in controversy only if the validity of the entire insurance policy is at issue"); Biotronik, Inc. v. Medtronic USA, Inc., 840 F. Supp. 2d 1251, 1257 (D. Or. 2012) (same); Matsuda v. Wada, 128 F. Supp. 2d 659, 663-64 (D. Haw.2000); 14A Wright, Miller, et al, § 3708 ().
In declaratory actions filed by insurers, the maximum "amount in controversy" necessary for diversity jurisdiction is the maximum limit of the insurer's liability under the policy. State Farm Mut. Auto. Ins. Co. v. Narvaez, 149 F.3d 1269 (10th Cir. 1998). "Generally, where an automobile liability policy is involved in proceedings for declaratory judgment, the 'amount in controversy' for jurisdictional purposes is the maximum amount for which the insurer could be held liable under the policy." Morgan v. Liberty Mut. Ins. Co., 261 F. Supp. 709, 712 (D.S.C. 1966); see also Grange Mut. Cas. Co. v. Safeco Ins. Co. of Am., 565 F. Supp. 2d 779, 784 (E.D. Ky. 2008) ().
This Court must apply South Carolina's substantive law in resolving this diversity action. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938).
In South Carolina, an insurer is obligated to offer "at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage." S.C. Code Ann. § 38-77-160. In the absence of a meaningful offer, the court will reform an automobile insurance policy to afford coverage up to the limits of the insured's liability coverage. State Farm Mut. Auto. Ins. Co. v.Wannamaker, 354 S.E.2d 555 (S.C. 1987) (expressly adopting Hastings v. United Pacific Ins. Co., 318 N.W.2d 849 (Minn.1982)).
UIM coverage follows the individual insured rather than the vehicle insured; thus, UIM coverage, like UM, is "personal and portable." Nationwide Mut. Ins. Co. v. Rhoden, 398 S.C. 393, 399, 728 S.E.2d 477, 480 (2012) (quoting Burgess v. Nationwide Mut. Ins. Co., 373 S.C. 37, 41, 644 S.E.2d 40, 42 (2007)).
Additionally, an insured may "stack" coverages from multiple automobile policies. See Giles v. Whitaker, 297 S.C. 267, 268, 376 S.E.2d 278, 279 (1989). "Stacking is defined as the insured's recovery of damages under more than one policy until all of his damages are satisfied or the limits of all available policies are met." Id.
However, an insured may only stack UIM coverage "from other policies in an amount equal to the coverage on the car involved in the accident." § 38-77-160; see generally Gambrell v. Travelers Ins. Co.'s, 280 S.C. 69, 310 S.E.2d 814 (1983); Garris v. Cincinnati Ins. Co., 280 S.C. 149, 311 S.E.2d 723 (1984); Nationwide Mut. Ins. Co. v. Howard, 288 S.C. 5, 339 S.E.2d 501 (1985); and S. Carolina Farm Bureau Mut. Ins. Co. v. Mooneyham, 304 S.C. 442, 405 S.E.2d 396 (1991).
In this case, the parties are diverse because Plaintiff is a citizen of Illinois and Defendant is a citizen of South Carolina.
The parties agree that Defendant is a citizen of South Carolina. However, they disagree as to Plaintiff's citizenship. Plaintiff properly alleges that it is a citizen of...
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