The opinion of the court was delivered by: GETTLEMAN
Plaintiff Leonard Kenebrew filed this complaint against Defendants CONNECTICUT GENERAL LIFE INSURANCE COMPANY a CIGNA COMPANY; CIGNA HEALTHPLAN OF ILLINOIS, INC.; CIGNA HEALTHPLAN OF TEXAS, INC.; CIGNA HEALTHPLAN OF ARIZONA, INC. CIGNA HEALTHPLAN OF SOUTHERN CALIFORNIA, INC.; and ROSS LOOS MEDICAL GROUP d/b/a CIGNA HEALTHPLAN OF NORTHERN CALIFORNIA, (collectively, "CIGNA"), alleging actual and exemplary damages under the Illinois Sales Representative Act, breach of contract, and quantum meruit. Defendants have moved to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), or, in the alternative, for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6).
This is a diversity action in which the court is presented with the threshold question of whether the jurisdictional amount required by 28 U.S.C. § 1332 (a) has been satisfied. Diversity of citizenship among the parties is uncontested, but the amount in controversy must exceed $ 50,000 for this court to have jurisdiction. Therefore, because the actual damages alleged are less than $ 50,000, federal jurisdiction exists only if the Illinois Sales Representative Act, which provides for treble damages, applies to this case.
Plaintiff is a licensed insurance agent in the State of Illinois, and had established an agency relationship with defendants for the purpose of selling insurance. In November 1992, plaintiff entered into various contracts with CIGNA, pursuant to which he represented CIGNA as an agent and independent contractor for the purpose of establishing health and dental prepaid insurance plans between TransAmerica, Inc. ("TransAmerica") and CIGNA.
In return for plaintiff's role in selling and continuously servicing those accounts on behalf of CIGNA, CIGNA agreed to pay plaintiff commissions based on premiums paid by TransAmerica. The various contracts between plaintiff and CIGNA listed the rates at which commissions would be earned and, according to the contracts, commissions would be calculated based on the actual monthly net premium received from TransAmerica. The contracts state that commissions earned are payable upon actual receipt of the premiums paid by TransAmerica, and would be payable for as long as plaintiff was the agent of record. Plaintiff was the agent of record until March 1993, at which time he was released from his position by TransAmerica, who designated a new agent of record. At issue are the commissions based on premiums CIGNA received from TransAmerica from March 1993 to December 1993. Plaintiff had obtained TransAmerica's business on behalf of CIGNA in November 1992, for calendar year 1993. Plaintiff contends that he is entitled to these commissions, totalling $ 20,459.64, because he was the agent of record at the time the policy was secured. Plaintiff also asserts a claim for exemplary damages not to exceed $ 61,648.92 under the Illinois Sales Representative Act, for defendants' failure to pay the commissions allegedly owed. In response, CIGNA filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), contending that plaintiff has failed to establish diversity jurisdiction because the amount in controversy is only $ 20,459.64, the amount of the commissions at issue. CIGNA asserts that the Illinois Sales Representative Act does not apply to insurance sales representatives because such representatives do not sell tangible goods or products. In the alternative, CIGNA asserts that plaintiff has failed to state a claim for which relief could be granted pursuant to Fed. R. Civ. P 12(b)(6), because the contract specifies that the commissions were payable to the agent of record at the time the premiums were paid, not to plaintiff.
For the following reasons, the court finds that plaintiff has failed to establish the requisite amount in controversy for federal diversity jurisdiction. Accordingly, CIGNA's motion for lack of subject matter jurisdiction is granted.
In order for the court to exercise diversity jurisdiction over a case, the amount in controversy must exceed "the sum or value of $ 50,000, exclusive of interest and costs...." 28 U.S.C. § 1332(a). The amount in controversy requirement is met initially if the good faith allegations establish that the amount in dispute is more than $ 50,000. Loss v. Blankenship, 673 F.2d 942, 950 (7th Cir. 1982). The court is not bound to accept, however, the mere allegations in the plaintiff's complaint, ITT Commercial Finance Corp. v. Unlimited Automotive, Inc., 814 F. Supp. 664, 667 (N.D. Ill. 1992); Racich v. Mid Continent Builders Co., 755 F. Supp. 228, 229 (N.D. Ill. 1991), and the party seeking federal jurisdiction bears the burden of supporting its jurisdictional allegations by "competent proof." McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S. Ct. 780, 785, 80 L. Ed. 1135 (1936); Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979). The plaintiff is allowed considerable latitude in supporting the allegations and must be given the benefit of any facts that could conceivably be proven. Racich, 755 F. Supp. at 229. Finally, in a diversity action, the court will not dismiss a case because of a jurisdictional amount deficiency unless it appears to a legal certainty that the plaintiff cannot meet the required amount in controversy. ITT Commercial Fin. v. Unlimited Auto., 814 F. Supp. 664, 667 (N.D. Ill. 1992).
In determining the amount in controversy, the amount demanded may be the aggregate of compensatory damages and punitive damages when both types are recoverable. Bell v. Preferred Life Assurance Soc. of Montgomery, 320 U.S. 238, 240, 88 L. Ed. 15, 64 S. Ct. 5 (1943); Sharp Electronics Corp. v. Copy Plus. Inc., 939 F.2d 513, 515 (7th Cir. 1991). For purposes of a Rule 12(b)(1) motion where compensatory damages alone do not satisfy the jurisdictional amount requirement under section 1332, the court must determine whether punitive damages are recoverable under the applicable state law; if they are found to be recoverable, then the court must determine whether the complaint satisfies the jurisdictional amount to a legal certainty. Sharpe, 939 F.2d at 515; Cadek v. Great Lakes Dragaway, Inc., 1994 U.S. Dist. LEXIS 11521, 1994 WL 449284, *2 (N.D. Ill. 1994).
The court recognizes that "when the issue of jurisdictional amount is intertwined with the merits of the case, 'courts should be careful not to decide the merits, under the guise of determining jurisdiction without the ordinary incident of trial.'" Loss, 673 F.2d at 950. When a claim for punitive damages, however, "comprises the bulk of the amount in controversy and may have been colorably asserted solely or primarily for the purpose of conferring jurisdiction, that claim should be given particularly close scrutiny." Cadek, 1994 U.S. Dist. LEXIS 11521, 1994 WL 449284, *2. Further, it is a question of law for the court, not for the jury, to decide whether a plaintiff has established that punitive damages are available. Racich, 755 F. Supp. 228, 229 (N.D. Ill. 1991) (citing AMPAT/Midwest, Inc. v. Illinois Tool Works. Inc., 896 F.2d 1035, 1043 (7th Cir. 1990)).
Because plaintiff seeks only $ 20,459.64 in commissions (i.e., compensatory damages) his jurisdictional claim is grounded on the additional $ 61,648.92 in exemplary damages sought under the Illinois Sales Representative Act 820 ILCS § 120/1 et. seg. (the "Act"). Therefore, the critical question before the court is whether insurance sales representatives fall within the protection of the Act in order to satisfy the jurisdictional amount required under 28 U.S.C. § 1332(a).
The Act provides for exemplary damages not to exceed three times the amount of commissions found to be owed to a "sales representative" from a "principal." 820 ILCS 120/3. ...