Court Holds That The Amount In Controversy Requirement For Diversity Jurisdiction May Be Satisfied By Alleged Unpaid Benefits Under Multiple Policies
Howard v. Farmers Ins. Co., 2014 U.S. Dist. LEXIS 50154 (C.D. Cal. Apr. 9, 2014)
In Howard, the district court held that the plaintiff-insured satisfied the “amount in controversy” for diversity jurisdiction because his damages alleged against the carrier for unpaid benefits under two separate “Landlord Protector” insurance policies—covering two separate properties during two separate policy periods (2003 and 2011) – allegedly exceeded $75,000 combined.
Before bringing the Howard action, the insured filed a lawsuit against the insurer in the District Court for the Southern District of West Virginia for wrongfully denying a property loss claim under the 2011 policy arising from a tenant’s vandalism of the insured property. The court dismissed the insured’s prior lawsuit and held that the $75,000 amount in controversy requirement for diversity jurisdiction was not present due to the fact that the 2011 policy was subject to a $60,000 limit of liability for property loss.
The insured thereafter filed the Howard action against the insurer, among others, in the Central District of California, based on the insurer’s same alleged wrongful denial of unpaid benefits under the 2011 policy. Unlike the earlier suit, however, the complaint also included claims alleging that the insurer wrongfully denied benefits under a policy the insurer issued in 2003. The complaint, however, failed to make clear whether the claims made under the 2003 policy were related to losses arising from the same alleged act of vandalism as the 2011 policy claim or from a different loss. The insurer moved for dismissal of the insured’s complaint on grounds of lack of subject matter jurisdiction, arguing that the insured could not satisfy the amount in controversy requirement and was barred from re-litigating the issue.
The district court found that although the insurer was correct that the insured was precluded from re-litigating whether the value of the claim under the 2011 policy exceeded $60,000, that conclusion was not dispositive because a single plaintiff could aggregate two or more claims against a single defendant to satisfy the amount in controversy requirement. In this regard, the district court noted that the complaint was seeking damages in relation to the insured’s claims under the 2011 and 2003 policies against the insurer in the combined amount of $250,000. The district court found that insured’s damages allegations were made in good faith based on its review of the complaint and the insured’s explanation of his assertions related to the amount in controversy. Accordingly, the district court denied the insurer’s motion to dismiss the complaint.
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