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Alfa Insurance Corp. v. Stedman

United States District Court, S.D. Mississippi, Eastern Division

June 29, 2015

ELIZABETH STEDMAN, et al., Defendants.


DANIEL P. JORDAN, III, District Judge.

This declaratory-judgment case is before the Court on Defendants' Motion to Dismiss [16]. Because the Court concludes that Plaintiff has not met its burden of establishing the existence of subject-matter jurisdiction, the motion is granted.

I. Facts and Procedural History

Plaintiff Alfa Insurance Corporation issued an automobile-insurance policy covering three vehicles owned by Robert Hillman ("the Policy"). On May 2, 2014, Hillman's granddaughter, Defendant Elizabeth Stedman, was operating one of Hillman's covered vehicles. Defendants Heath Parker and Minor Children A, B, and C were passengers, and all five were injured when their vehicle collided with one driven by Coultin Munger. Munger's insurer, Progressive, has tendered its policy limits of $50, 000 per accident to the five Defendants and an injured passenger in Munger's vehicle.

Through their attorney, Defendants requested that Alfa provide underinsured-motorist coverage under the Policy. They further asserted that the coverage for each of Hillman's insured vehicles should be stacked, thereby increasing the per-person and per-accident policy limits. Alfa took issue with Defendants' demand and filed this declaratory-judgment action, seeking an order "determin[ing] its rights and obligations under Mississippi Law and its Policy to the claim of stacked underinsured motorist coverage to the Defendants." Compl. [1] ¶ 23.

The question now before the Court is whether Alfa has established subject-matter jurisdiction. Alfa premises jurisdiction on 28 U.S.C. § 1332, asserting that "the matter in controversy exceeds the sum value of $75, 000.00, exclusive of interest and costs at the limits of the insurance policy at issue as the claims made against Alfa by these Defendants have been in excess of $75, 000.00." Id. ¶ 8. Believing that Alfa has not established that the amount in controversy exceeds $75, 000, Defendants filed their Motion to Dismiss [16]. The matters raised have been well and fully briefed, and the Court is prepared to rule.

II. Analysis

"The burden of establishing subject[-]matter jurisdiction in federal court rests on the party seeking to invoke it." St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998). "As the party invoking federal diversity jurisdiction, [Alfa] bears the burden of establishing the amount in controversy by a preponderance of the evidence." Hartford Ins. Grp. v. Lou-Con Inc., 293 F.3d 908, 910 (5th Cir. 2002) (per curiam).

"In an action for declaratory relief, the amount in controversy is the value of the right to be protected or the extent of the injury to be prevented.'" Id. (quoting Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983) (per curiam)). And where a declaratory-judgment action "involve[s] the applicability of an insurance policy to a particular occurrence, the jurisdictional amount in controversy is measured by the value of the underlying claim-not the face amount of the policy.'" Hartford Ins. Grp., 293 F.3d at 911 (quoting 14B Charles Alan Wright et al., Federal Practice and Procedure § 3710 (3d ed. 1998)). Finally, when multiple claimants exist, the general rule is that their "separate and distinct claims... cannot be aggregated in order to satisfy the jurisdictional amount requirement." Snyder v. Harris, 394 U.S. 332, 335 (1969). This rule applies equally to claims involving a single plaintiff against multiple defendants. Siding & Insulation Co. v. Acuity Mut. Ins. Co., 754 F.3d 367, 373 (6th Cir. 2014).

In the present case, it appears that no single Defendant presents a claim that satisfies the jurisdictional amount due to the Policy's per-person policy limits. But if Defendants' claims were aggregated, they would exceed the jurisdictional threshold. Alfa resists the term "aggregation" and instead asserts that it is merely stacking the policies' $50, 000 per-accident limit for jurisdictional purposes. In other words, the total potential payout from the stacked policies would exceed $75, 000. But Alfa may not simply look to the stacked per-accident policy limits while ignoring the fact that each individual defendant has made a separate claim. See Eagle Star Ins. Co. v. Maltes, 313 F.2d 778, 781 (5th Cir. 1963). And Alfa has not disputed Defendants' contention that those individual claims are all subject to per-person policy limits that fall below the jurisdictional amount. Thus, Alfa must establish an exception to the general rule against aggregating claims.[1]

An exception to the anti-aggregation rule exists when several litigants have a "common and undivided interest'" in the object of the litigation. Id. at 780. Generally speaking, claims that are "joint and common [are] entitled to be aggregated, " whereas claims that are "separate and distinct [are] not aggregable." Snyder, 394 U.S. at 341. Stated another way, where the interests of the litigants whose claims are sought to be aggregated "are distinct, and their only relationship is that they form a class of parties whose rights or liabilities arose out of the same transaction, or have a relation to a common fund or mass or property sought to be administered, such distinct demands or liabilities cannot be aggregated.'" Eagle Star, 313 F.2d at 780 (quoting Clay v. Field, 138 U.S. 464, 480 (1891)).

These rules are sometimes easier stated than applied. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1330 (5th Cir. 1995) (noting that the "common and undivided' test retains an amorphous quality"). But in Eagle Star, the Fifth Circuit helped clarify the issue, noting that the United States Supreme Court has allowed aggregation "only in those situations where there is not only a common fund from which the plaintiffs seek relief, but where the plaintiffs also have a joint interest in that fund, such that if plaintiffs' rights are not affected by the rights of co-plaintiffs then there can be no aggregation. In other words, the obligation to the plaintiffs must be a joint one." 313 F.2d at 781 (citations omitted).

Though Alfa disputes the application of Eagle Star, see Pl.'s Resp. [22] at 5, it alternatively suggests that it has met the Eagle Star standards, id. Most notably, Alfa argues that Defendants' claims could affect each other because the awards may be reduced by the Policy's per-accident limits. Id. at 3. Alfa cites no authority for finding that this potential effect is sufficient to make the claims "common and undivided, " and the Court concludes that it does not.

To begin with, Eagle Star indicates that there must be a "joint interest" in a "common fund." 313 F.2d at 781. Several circuits have adopted this approach and ...

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