The opinion of the court was delivered by: Decker, District Judge.
This is a motion to dismiss the complaint for failure to meet
the $10,000 jurisdictional amount required in diversity actions
under 28 U.S.C. § 1332, and for failure to state a claim upon
which relief can be granted.
Plaintiff insured sues on a health and accident insurance
policy which, in relevant part, provides the following benefits:
(1) If plaintiff becomes totally disabled, he receives $50 per
week for up to 200 weeks;
(2) If plaintiff is totally disabled for 200 consecutive weeks
and is totally and permanently disabled at the end of 200 weeks,
he receives a lump sum payment of $30,000;
(3) Lesser payments for partial disability are provided.
Plaintiff, following an accident, received thirty-six weekly
$50 payments for total disability. Defendant insurance company
then discontinued the $50 weekly payments and commenced paying
plaintiff partial disability benefits amounting to $37.50 weekly,
claiming that he was no longer totally disabled. Plaintiff
accepted those payments, but now sues for the difference between
what he has received to date and what he would have received
under the total disability provisions. He also seeks a
declaratory judgment that he is entitled to total disability
benefits for the remainder
of the 200 weeks. Neither of these claims, nor both taken
together, amount to $10,000, and thus they will not support
jurisdiction of this Court.
However, plaintiff also seeks a declaratory judgment that he
"* * * is now, and will continue to be at the
conclusion of such 200 weeks and for the remainder of
his life, totally and permanently disabled, * * * and
that plaintiff is, and can and will become, eligible
for the $30,000.00 total and permanent disability
benefit provided by the contract of insurance."
If the claim for $30,000 can be heard and decided by this
Court, the jurisdictional amount has been met. A suit for a
declaratory judgment under 28 U.S.C. § 2201 can be heard only if
there is an "actual controversy." The cases involving the problem
consistently turn on the distinction between suits based on total
repudiation or denial of the validity of a contract, on the one
hand, and suits for payments under provisions of a contract still
valid and in force. Professor Moore clearly summarizes this
"The cases have held that in a suit to recover
payments, future installments are not directly
involved, and therefore may not be counted in the
amount in controversy. Nor may the reserve for future
payments, which the insurer would have to set up if
the insured prevailed, be counted in the amount in
controversy. And in a suit for a declaratory judgment
on the question of the insured's continuing
disability, the future liability of the insurer may
not be counted in the jurisdictional amount.
"On the other hand, where the question is not the
disability of the insured, but the validity of the
policy itself, then the total value of the policy may
be counted in the amount in controversy in suits, for
example, to reinstate a policy, to cancel it, or to
enjoin its cancellation." 1 Moore, Federal Practice ¶
0.93[5.2], at pp. 854-56.
A sample of the case law will illustrate the distinction. In
Bell v. Philadelphia Life Ins. Co., 78 F.2d 322 (4th Cir. 1935),
plaintiff insured sued for a declaratory judgment that a $10,000
policy had not lapsed for non-payment of certain premiums as the
insurer had claimed. The Court held that the validity of the
entire policy was in issue, not merely certain benefits under it;
the "actual controversy" involved the policy itself, and
therefore its face value determined the jurisdictional amount.
The same rule was followed in Ballard v. Mutual Life Ins. Co. of
New York, 109 F.2d 388 (5th Cir. 1940), where the insurer sued
for a declaratory judgment that certain policies were not in
In contrast, in Mutual Life Ins. Co. of New York v. Moyle,
116 F.2d 434 (4th Cir. 1940), plaintiff insurance company sued for a
declaratory judgment that it was no longer liable under a
disability policy because the insured was no longer disabled
under the terms of that policy. The Court held that the only
controversy in the case was over payments then due, and did not
involve claims to future payments under a policy admitted to be
valid. The Court said (at page 435):
"We think it clear that all that is in controversy
is the right of the insured to the disability
payments which had accrued at the time of suit. The
company is obligated to make these payments only so
long as the condition evidencing total and permanent
disability continues; and, as this condition,
theoretically at least, may change at any time, it is
impossible to say that any controversy exists as to
any disability payments except such as have accrued.
New York Life Ins. Co. v. Viglas, 297 U.S. 672, 56
S.Ct. 615, 80 L.Ed. 971; New York Life Ins. Co. v.
Stoner, 8 Cir., 92 F.2d 845; United States Fidelity &
Guaranty Co. v. McCarthy, 8 Cir., 33 F.2d 7, 13, 70
A.L.R. 1447; Metropolitan Life Ins. Co. v. Hobeika,
D.C., 23 F. Supp. 1;
Small v. New York Life Ins. Co., D.C., 18 F. Supp. 820.
Such a case is to be distinguished from one
where the controversy relates to the validity of the
policy and not merely to liability for benefits
accrued; for, in the latter case, the amount involved
is necessarily the face ...