State Farm Mutual Automobile Ins. Co. v. West
| Citation | 149 F. Supp. 289 |
| Decision Date | 21 February 1957 |
| Docket Number | Civ. No. 8314. |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation v. Alexander R. WEST, Huret Ralph Pickle, William Howard Pickle, Edna Gaddis, and Lessie Gaddis, Administratrix of the Estate of Nora Gaddis, deceased. |
| Court | U.S. District Court — District of Maryland |
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George M. Mullen, Baltimore, Md., Charles C. Collins and Robert E. Anderson, Washington, D. C., for plaintiff.
Charles D. Sanger Jr., Silver Spring, Md., for defendant Alexander R. West. Aulette, Davis, Ogden, Leonard & Cervera, Paul F. Leonard and James A. Davis, Washington, D. C., and Joseph I. Huesman, Baltimore, Md., for other defendants.
This is an action brought on June 24, 1955, by State Farm Mutual Automobile Insurance Company, an Illinois corporation, against the defendants, Alexander R. West, Huret Ralph Pickle, William Howard Pickle, Edna Gaddis, and Lessie Gaddis, Administratrix of the estate of Nora Gaddis, deceased, all residents of the State of Maryland, for a declaratory judgment that a certain policy of insurance issued by the plaintiff to the defendant West be rescinded as of the date of its issuance. Motions to dismiss were filed on behalf of all defendants, and after passage of an order denying the motions, the case was tried by the court without a jury.
Motions to Dismiss.
The complaint contained averments of jurisdiction under Title 28 U.S.C. § 2201, alleging diversity of citizenship, and an amount in controversy exceeding the sum of $3,000, exclusive of interest and costs. The complaint in substance alleged that subsequent to receipt of and in reliance upon the statements and representations made in an application for insurance by the defendant West, the plaintiff issued to him an automobile insurance policy; that on or about April 1, 1954, plaintiff received from the defendant West another application for insurance identical in all respects with the first, except that it added an application for a $50 deductible collision insurance provision; and that in reliance upon the statements and representations made therein, plaintiff issued to defendant West an automobile insurance policy which superseded and replaced the policy previously issued. The complaint further alleged that on October 16, 1954, within the State of Maryland, the defendant West, while operating the motor vehicle covered by said second policy, was involved in a collision with an automobile owned by the defendant William Howard Pickle, and operated by defendant Huret Ralph Pickle, said collision resulting in the death of Nora Gaddis, personal injuries to defendants Huret Ralph Pickle and Edna Gaddis, and destruction of the automobile owned by defendant William Howard Pickle; that claims for said death, personal injuries and property damage have been asserted against the plaintiff as the insurer of the defendant West, and that during the course of the investigation of the accident, plaintiff discovered that the defendant West had made misrepresentations, material to the risk, in both applications for insurance in that he had answered in the negative questions as to whether he had had any prior accidents or whether his operator's license had ever been revoked when, in fact, he had been involved in prior accidents and his operator's license had been revoked in the State of North Carolina in the year 1947 and in the District of Columbia in the year 1952, and that had defendant West correctly answered said questions, plaintiff would not have issued said policies; and that upon learning of these misrepresentations, plaintiff notified defendant West of its decision to rescind the policy issued to him, and tendered its check in full refund of the premium paid, which refund defendant West has refused to accept.
Defendant West moved to dismiss the complaint on the ground that the court lacked jurisdiction because the actual amount in controversy does not exceed $3,000, exclusive of interest and costs. The other defendants filed a motion to dismiss on the ground that there existed no justiciable or actual controversy warranting relief by way of declaratory judgment. At the hearing on the motions, all counsel admitted that there existed diversity of citizenship and that a justiciable controversy existed. Defendant West insisted that the amount in controversy did not exceed $3,000 on the grounds that within the jurisdictional requirement, the amount of $3,000 had to be "certain" and "due at the time" that the suit was filed and that no formal demand had been made upon plaintiff with respect to the policy before suit was filed. Counsel for West also contended that the declaratory judgment act is procedural and that the acceptance of jurisdiction by the District Court is discretionary even if the formal jurisdictional requirements are met, and that the court should exercise its discretion and decline to exercise jurisdiction even if it existed.
At the hearing on the motions, counsel for the plaintiff, without objection, filed certified copies of four suits filed in the Circuit Court for Prince George's county, Maryland, on June 2, 1955, against the defendant Alexander R. West; one by the State of Maryland for the use and benefit of Lassie M. Gaddis as surviving parent of Nora N. Gaddis, deceased, for the recovery of loss of earnings and support of the deceased attributable to the alleged negligence of defendant West, the amount claimed being $50,000; the second by Lassie M. Gaddis, Administratrix of the estate of Nora N. Gaddis, deceased, for the recovery of expenses attributable to the alleged negligence of defendant West, for damages, for physical and mental pain and suffering by the deceased during her lifetime and for funeral expenses, the amount claimed being $50,000; the third by Edna M. Gaddis, infant, by her mother and next friend, Lassie M. Gaddis, and Lassie M. Gaddis, individually, plaintiffs, for permanent injuries and pain and suffering sustained by the infant plaintiff, and for medical expenses of the mother Lassie M. Gaddis in the treatment of the infant plaintiff, the amount claimed on behalf of the infant plaintiff being $25,000 and that on behalf of the mother being $25,000; and fourth, a suit by Huret Ralph Pickle, for permanent injuries and expenses, the amount claimed being $50,000.
The insurance policy which is the subject of this action required the insurer to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages * * arising out of the use of the automobile" and to "* * * defend any suit against the insured * * * seeking damages on account thereof * * *." The contention that the amount in controversy was not certain and due at the time of filing of this suit for declaratory relief or, as otherwise phrased by counsel, that the existence of the requisite jurisdictional amount depends on a future contingency or the "possible collateral effect" of the declaratory judgment is based on the fact that the insurer is under no obligation to indemnify the insured until judgment has been rendered against the insured in the negligence cases now pending in the State court. This proposition has been raised before and ruled on adversely to the contention of defendant West by the Court of Appeals for the Fourth Circuit (Aetna Casualty & Surety Co. v. Yeatts, 4 Cir., 1938, 99 F.2d 665, 668; American Casualty Co. of Reading, Pennsylvania v. Howard, 4 Cir., 1949, 173 F.2d 924; accord: United States Fidelity & Guaranty Co. v. Pierson, 8 Cir., 1938, 97 F. 2d 560, 562). As the court said in the American Casualty case, supra, 173 F. 2d at page 929:
Stockman v. Reliance Life Insurance Co. of Pittsburgh, Pa., D.C.W. D.S.C., 1939, 28 F.Supp. 446, and Berlin v. Travelers Insurance Co. of Hartford, Conn., D.C.D.Md.1937, 18 F.Supp. 126, relied on by defendant, are clearly distinguishable both factually and on their holdings that in an action to recover monthly payments due under disability insurance the benefits accrued and claimed as of the time of suit constituted the amount in controversy, and not the reserves which the insurer would be required to set up for future payments, liability for which the insured might be estopped from denying, such matters being merely a collateral, consequential or incidental result of the judgment. Where, as here, the insurer is seeking to determine not only whether or not it is obligated to defend West but also whether or not it must indemnify him under an insurance policy with limits of liability of $25,000 for bodily injury including death sustained by one person in any one accident; $50,000 for bodily injury including death sustained by two or more persons in any one accident; $5,000 for property damage; and $1,000 for medical payments; and when suits are pending against him claiming damages totaling $200,000, the amount in controversy is sufficient to meet the jurisdictional requirements.
The point is urged that no formal demand was made upon the insurer with respect to the policy before this suit was filed on June 24, 1955.1 This is merely another way of saying that the issues in this case are...
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