The opinion of the court was delivered by: RONALD GUZMAN, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff American Economy Insurance Company ("AEIC") seeks a
declaratory judgment regarding its duty to indemnify and defend
its insured, Wholesale Life Insurance Brokerage, Inc.
("Wholesale"), in a state court action. Defendants Wholesale and
Stonecrafters, Inc. ("Stonecrafters") have both moved pursuant to
Federal Rule of Civil Procedure ("Rule) 12(b)(1) to dismiss the
complaint, contending that AEIC has failed to establish that the
amount in controversy exceeds $75,000. For the reasons set forth
below, the Court grants the motions to dismiss.
The following facts of the complaint are assumed to be true for
purposes of this motion to dismiss. Capitol Leasing Co. v.
F.D.I.C., 999 F.2d 188
, 191 (7th Cir. 1993). AEIC is an Indiana
corporation with its principal place of business in Seattle,
Washington. (Compl. ¶ 3.) AEIC issued insurance policy no.
02-BP-005779-1 (the "Policy") to Wholesale. (Id. ¶ 15.) Wholesale is an Illinois corporation with its principal place of
business in Batavia, Illinois. (Id. ¶ 4.) The Policy provides,
We will pay those sums that the insured becomes
legally obligated to pay as damages because of
"bodily injury", "property damage", "personal injury"
or "advertising injury" to which this insurance
applies. We will have the right and duty to defend
the insured against any "suit" seeking those damages.
However, we will have no duty to defend the insured
against any "suit" seeking damages for "bodily
injury", "property damage", "personal injury" or
"advertising injury" to which this insurance does not
apply. We may at our discretion, investigate any
"occurrence" and settle any claim or "suit" that may
The Policy then defines the words and phrases in quotation marks.
Stonecrafters is an Illinois corporation with its principal
place of business in Lakemoor, Illinois. (Id. ¶ 5.) On June 12,
2003, Stonecrafters filed a class action complaint against
Wholesale in the Circuit Court of the 19th Judicial Circuit,
McHenry County, Illinois, under the caption, Stonecrafters,
Inc., v. Wholesale Life Insurance Brokerage, Inc., Case No. 03
CH 435. (Id. ¶ 6.) The complaint alleges that on or about
November 20, 2002, Wholesale transmitted by telephone facsimile
machine an unsolicited advertisement to a facsimile machine owned
by Stonecrafters, violating Illinois and federal statutory
prohibitions against the transmittal of unsolicited facsimiles.
(Id. ¶ 7a.) The complaint alleges three counts against
Wholesale for violations of the Telephone Consumer Protection Act
("TCPA"), 47 U.S.C. § 227 ("TCPA"), the common law of conversion,
and the Illinois Consumer Fraud and Deceptive Business Practices
Act, 815 ILL. COMP. STAT. § 505/2. (Compl. ¶¶ 8, 11, 13.) The
complaint seeks unspecified damages including, but not limited
to, $500 per violation of the TCPA. (Id. ¶ 10.)
In the instant action, Plaintiff seeks a declaratory judgment
adjudicating its rights and liabilities with respect to the
insurance policy, including its duty to indemnify and defend its
insured. (Id. Prayer ¶ A.) AEIC argues that the underlying
lawsuit does not allege "bodily injury," "personal injury," or "advertising injury" as the terms
are defined in the Policy. (Id. ¶¶ 24-26.) Furthermore, AEIC
states that although "property damage" may be alleged in the
underlying lawsuit, any such "property damage" is not covered
under the Policy because it did not arise out of an "occurrence"
as defined in the Policy. (Id. ¶ 27.)
Wholesale and Stonecrafters argue that diversity jurisdiction
is lacking because the threshold amount in controversy is not
satisfied. See 28 U.S.C. § 1332(a) (2004). Defendants also
contend that the complaint is premature, i.e., unripe, and
should be dismissed pursuant to Rule 12(b)(1).
When moving to dismiss pursuant to Rule 12(b)(1), a defendant
may opt for a facial attack, i.e., a challenge of the court's
subject matter jurisdiction based on the sufficiency of the
complaint's allegations, or a factual attack, i.e., a challenge
of the factual basis for the court's subject matter jurisdiction.
Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583 (Fed.
Cir. 1993). If a defendant makes a facial attack, the
"allegations are taken as true and construed in a light most
favorable to the complainant." Id. "If the Rule 12(b)(1) motion
denies or controverts the pleader's allegations of jurisdiction,
however, the movant is deemed to be challenging the factual basis
for the court's subject matter jurisdiction." Id. When making a
factual attack, "the allegations in the complaint are not
controlling, and only uncontroverted factual allegations are
accepted as true for purposes of the motion." Id. (citations
omitted). "The court may weigh the evidence in order to satisfy
itself that jurisdiction exists; as such, disputes over material
facts will not preclude the court from deciding jurisdictional
issues." Bd. of Trs. of Pipe Fitters' Welfare Fund Local 597 v.
Adams, No. 97 C 5592, 1998 WL 259543, at *2 (N.D. Ill. May 7,
1998). Diversity jurisdiction is governed by 28 U.S.C. § 1332.
28 U.S.C. § 1332 provides in pertinent part: "The district courts
shall have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000. . . ."
Dismissal of a complaint based on a failure to satisfy the amount
in controversy is proper only if it appears to a legal certainty
that less than $75,000 is at issue. See, e.g., Target Mkt.
Publ'g, Inc., v. ADVO, Inc., 136 F.3d 1139, 1141-42 (7th Cir.
In support of their motions to dismiss, Defendants make a
factual attack on jurisdiction. When a defendant challenges the
amount in controversy, the plaintiff must submit "competent
proof" that the amount in controversy exceeds $75,000. NLFC,
Inc., v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir.
1995). Competent proof "has been interpreted to mean a
preponderance of the evidence or `proof to a reasonable
probability that jurisdiction exists.'" Id. (quoting Gould v.
Artisoft, Inc., 1 F.3d 544, 547 (7th Cir. 1993)).
Both Wholesale and Stonecrafters assert there is no reasonable
probability that at least $75,000 is at issue because: (1) there
is no present controversy regarding indemnification because the
state court action is currently pending and thus does not count
toward the amount in controversy; and (2) AEIC has not submitted
competent proof that their attorneys' fees will exceed $75,000.
AEIC contends the amount in controversy exceeds $75,000 because
the underlying lawsuit seeks at least $500 for each member of a
potential class numbering more than 1,000 and the Policy's
liability limit for the underlying claim is at least $2 million,
with an aggregate of $4 million for all "occurrences."
Additionally, AEIC asserts it will have to pay a "presumably
substantial amount" in lawyers' fee if AEIC is found to have a
duty to defend. (Pl.'s Opp'n Br. Wholesale's Mot. Dismiss Compl.
Declaratory J. at 3.)
Illinois courts regularly hold that decisions about indemnity
should be postponed until underlying liability has been established. Lear Corp. v. Johnson
Elec. Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003); see
Nationwide Ins. v. Zavalis, 52 F.3d 689, 693 (7th Cir. 1995)
("[T]he duty to indemnify is not ripe for adjudication until the
insured is in fact held liable in the underlying suit.");
Grinnell Mut. Reins. Co. v. Reinke, 43 F.3d 1152, 1154 (7th
Cir. 1995) ("Illinois treats arguments about the duty to
indemnify as unripe until the insured has been held liable.");
Travelers Ins. Cos., v. Penda Corp., 974 F.2d 823, 833 (7th
Cir. 1992) ("[T]he determination of whether [defendant] has a
duty to indemnify is not ripe until the underlying litigation is
Here, the state court in the underlying lawsuit has not
determined whether Wholesale is liable to Stonecrafters. The
indemnification claim, therefore, is premature. See Lear Corp.,
353 F.3d at 583. As such, it cannot count toward the amount in
controversy as it is not ripe, and may never be ripe, for
adjudication. See Solo Cup Co. v. Fed. Ins. Co., 619 F.2d 1178,
1189 (7th Cir. 1980) ("The mere possibility that proceedings
might be commenced against an insured regarding an act of the
insured's as to which the insurer might contest coverage, is not
sufficient to create a controversy within the meaning of either
the Declaratory Judgment Act or Article III of the
Constitution."); Nat'l Union Fire Ins. Co. v. Cont'l Ill.
Corp., 113 F.R.D. 637, 640-42 (N.D. Ill. 1987).
AEIC incorrectly contends that when a plaintiff seeks
declaratory relief, the amount in controversy is the value of the
object of the litigation from the perspective of either the
plaintiff or defendant. (Pl.'s Opp'n Br. Stonecrafter Inc.'s Mot.
Dismiss Compl. at 3.) See Int'l Gateway Communications, Inc., v.
Communication Telesystems Int'l, Inc., 922 F. Supp. 122, 124-25
(N.D. Ill. 1996). This rule is only applicable if the court is
attempting to evaluate how much an actual case or controversy is
potentially worth. As is the case here, if there is no case ...