Publications

(Article from Insurance Law Alert, March 2015)

For more information, please visit the Insurance Law Alert Resource Center.

A Florida federal district court ruled that the $75,000 amount-in-controversy requirement for diversity jurisdiction was met where the governing policy’s limit was $300,000. Witherup v. State Farm Mut. Auto. Ins. Co., 2015 WL 419064 (M.D. Fla. Feb. 2, 2015).

In a coverage dispute between an automobile insurer and an injured driver, the insurer removed the case to federal court based on diversity jurisdiction. The driver sought to remand the case back to state court, arguing that the amount in controversy was not met. The court held that where, as here, the complaint does not contain a specific damage amount, the court may look to the notice of removal or other relevant documents to determine the amount in controversy. However, the court emphasized that "it is the value of the claim, not the value of the underlying policy, that determines the amount in controversy." The court concluded that here, the value of the claim at issue was the full policy limit because the validity of the entire policy was at stake. In particular, the coverage dispute turned on whether the subject policy was in force on the date of the collision (or conversely, whether a rejection of coverage as to the driver’s previous car extended to his current car, which was involved in the accident). The court reasoned that the nature of this dispute "put the entire $300,000 value of the policy at stake" because the "object of the litigation is to determine whether UM coverage is in force … regardless of whether [ ] personal injury damages actually reach that amount."

The court distinguished several cases that held that a policy limit does not establish the amount in controversy where a specific damage amount is not pled. The court explained that those "cases all hinge upon the amount of plaintiffs’ personal injury damages under concededly in-force policies. None of those cases involve the validity of an insurance policy or whether coverage exists at all."