Windsor v. Guarantee Trust Life Ins. Co.
| Decision Date | 04 May 1988 |
| Docket Number | Civ. No. 88-1025. |
| Citation | 684 F. Supp. 630 |
| Parties | Benny J. WINDSOR, Plaintiff, v. GUARANTEE TRUST LIFE INSURANCE CO., Defendant. |
| Court | U.S. District Court — District of Idaho |
Thomas G. Walker, Jr., Twin Falls, Idaho, for plaintiff.
Terry R. McDaniel, Nelson Rosholt Robertson Tolman & Tucker, Boise, Idaho, for defendant.
The Court has before it a motion by the defendant Guarantee Trust Life Insurance Co. to dismiss the complaint for lack of subject matter jurisdiction under Fed.R. Civ.P. 12(b)(1). The defendant asserts that the plaintiff Benny J. Windsor has not stated an amount in controversy exceeding $10,000 as required by 28 U.S.C. § 1332(a).
The allegations in the complaint are as follows. The plaintiff obtained insurance from the defendant through a creditor to guaranty a monthly payment to the creditor of $273.85 in the event that the plaintiff became totally disabled. The policy took effect on December 31, 1984, and on April 6, 1987, the plaintiff became totally disabled.
The plaintiff asserts that the defendant, acting with bad faith, malice, oppression, and fraud, failed to make timely payment of two monthly benefits—$70.83 for July of 1987 and $45.64 for November of 1987. The plaintiff asserts that the defendant knew or should have known that the delayed payments would cause him financial and emotional injury.
The complaint reveals that the amount of $73.83 was eventually paid by the insurance company. While the amount of $45.64 had not been paid at the time the complaint was filed, counsel for the plaintiff acknowledged at the hearing that the amount has now been paid. The plaintiff asserts that he is nevertheless entitled to damages for emotional distress and to punitive damages because the delay in payment caused the injury.
The first cause of action is for breach of contract. The plaintiff seeks $100,000 for emotional distress. The second cause of action is for tortious bad faith breach of an insurance contract. The plaintiff again seeks $100,000 for emotional distress plus $100,000 in punitive damages. The third cause of action is for unfair claim settlement practices. The plaintiff again seeks $100,000 for emotional distress and $100,000 for punitive damages.
Initially, during the hearing the defendant asserted and the plaintiff conceded that the third cause of action fails to state a claim upon which relief can be granted. In White v. Unigard, 112 Idaho 94, 730 P.2d 1014 (1986), the Idaho Supreme Court held that the Unfair Claim Settlement Practices Act, Idaho Code § 41-1329 (1977), does not give the insured a private right of action against the insurer. Therefore, the third cause of action will be dismissed.
The remaining issues deal entirely with whether the plaintiff has alleged a sufficient amount in controversy for jurisdiction to obtain in federal court. The long established rule for determining federal jurisdiction was stated by the Supreme Court in St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938):
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith ... But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed ... the suit will be dismissed.
Accordingly, failure to properly allege a sufficient jurisdictional amount renders the complaint defective. However, "defective allegations of jurisdiction may be amended ... in the trial or appellate courts." 28 U.S.C. § 1653; Schlesinger v. Councilman, 420 U.S. 738, 95 S.Ct. 1300, 43 L.Ed. 2d 591 (1975). Moreover, if actual damages are less than the jurisdictional amount but, when combined with punitive damages, the total amount is greater than the jurisdictional amount, federal jurisdiction exists. Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943); Davenport v. Mutual Benefit Health and Accident Ass'n, 325 F.2d 785 (9th Cir. 1963).
Thus, the first cause of action fails to state a proper jurisdictional amount and must be dismissed.
Although the defendant attempts to categorize the second cause of action as another breach of contract action, it is in fact a tort action. In White v. Unigard, 730 P.2d at 1020, the Idaho Supreme Court held "that there exists a common law tort action, distinct from an action on the contract, for an insurer's bad faith in settling the first party claims of its insured." The plaintiff can, therefore, recover damages normally recoverable in a tort case.
Idaho case law recognizes two separate types of emotional distress claims— negligent and intentional infliction of emotional distress. The Idaho Court of Appeals has stated that "in order for the tort of negligent infliction of emotional distress to lie, the actions of the defendant must have caused some physical injury to the plaintiff which accompanies the emotional distress." Gill v. Brown, 107 Idaho 1137, 695 P.2d 1276, 1277 (Ct.App. 1985) citing Hatfield v. Max Rouse & Sons Northwest, 100 Idaho 840, 606 P.2d 944 (1980). As in Gill, the plaintiff here has not alleged any physical injury and hence fails to state a claim in excess of $10,000 to a legal certainty.
"An action for intentional infliction of emotional distress will lie only where there is extreme and outrageous conduct coupled with severe emotional distress." Davis v. Gage, 106 Idaho 735, 682 P.2d 1282, 1288 (1984) citing Hatfield, 606 P.2d at 944. Under the view stated in comment j of RESTATEMENT (SECOND) OF TORTS § 46 (1965), as adopted by the court in Davis, "the law intervenes only where the distress inflicted is so severe that no reasonable man could be expected to endure it."
In Davis, there was some evidence that the plaintiffs suffered ulcers. Their "subjective testimony ... indicated that they were upset, embarrassed, angered, bothered and depressed." 682 P.2d at 1288. Based on that proof, the Supreme Court ruled:
The required severity is not borne out by the record. There is no competent evidence to show that the Davises incurred any physical damage or were hampered in the performance of their daily functions, nor did they demonstrate that they suffered a severely disabling emotional response to the Gages' conduct. Venerias v. Johnson, 127 Ariz. 496, 622 P.2d 55, 58 (Ariz.App. 1980). Therefore, we hold, as a matter of law, that the Davises did not suffer the severe emotional distress required to warrant recovery of damages.
In this case, neither the complaint nor the plaintiff's affidavit in support of the jurisdictional amount reveal emotional distress to the extent of that exhibited by the plaintiffs in Davis. At most, the plaintiff here suffered sleeplessness, anxiety, and "great concern." The Court therefore rules that as a legal certainty the claim for intentional infliction of emotional distress does not exceed $10,000.
The remaining issue is whether the plaintiff's claim for punitive damages places the amount in controversy over the jurisdictional amount. This issue raises a unique question of the interplay between a new Idaho statute and the pleading rules under the Federal Rules of Civil Procedure.
Idaho Code § 6-1604 is part of Idaho's tort reform scheme passed by the state legislature in 1987. Subsection (1) essentially codifies the pre-existing punitive damages caselaw. It provides:
In any action seeking recovery of punitive damages, the claimant must prove, by a preponderance of the evidence, oppressive, fraudulent, wanton, malicious or outrageous conduct by the party against whom the claim for punitive damages is asserted.
Subsection (2), however, adds a new dimension to the law. It provides:
In all civil actions in which punitive damages are permitted,...
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