United States District Court, N.D. Illinois, Eastern Division
June 15, 2005.
ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff,
COMMERCIAL PROPERTY ASSOCIATES, INC. and JEROLD S. RAWSON, Defendants. JEROLD S. RAWSON, Counterclaimant, v. ST. PAUL MERCURY INSURANCE COMPANY, Counterdefendant.
The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
In ruling on defendants' motions to dismiss, it was held that
plaintiff had not satisfied its burden of providing competent
proof that the amount in controversy requirement for diversity
jurisdiction is satisfied. The case was dismissed without
prejudice for lack of subject matter jurisdiction. See St.
Paul Mercury Insurance Co. v. Commercial Property Associates,
Inc., 2005 WL 1126883 (N.D. Ill. May 10, 2005) ("St. Paul I"). Familiarity with St. Paul I is presumed. Plaintiff has timely
moved for reconsideration of St. Paul I. Plaintiff has not
submitted any additional proof of its jurisdictional contentions,
instead choosing to argue that the (a) the court committed legal
error in holding that potential indemnity amounts are not part of
the amount in controversy and, alternatively, that (b) the proofs
already submitted adequately support that the amount in
controversy exceeds $75,000. Although plaintiff has not submitted
any additional factual support, defendant Commercial Property
Associates, Inc. provides the additional representation that,
through November 2, 2004,*fn1 its costs of representation in
the underlying action were less than $5,000.
As was discussed in St. Paul I, 2005 WL 1126883 at *2-3,
plaintiff's indemnity claim is not ripe because no liability has
yet been incurred and therefore only the potential costs of
defense may be considered in determining the amount in
controversy.*fn2 Plaintiff cites two Seventh Circuit cases
that it contends are to the contrary. Neither case was discussed in St.
Paul I because neither case is on point.
America's Moneyline, Inc. v. Coleman, 360 F.3d 782 (7th Cir.
2004), does not involve insurance defense or indemnification. It
holds that, in determining the amount in controversy for a case
seeking to compel arbitration, the stakes at issue in the
arbitration action represent the amount in controversy. Besides
this not being an insurance defense case, plaintiff ignores that,
when compelling an arbitration, the court retains jurisdiction to
confirm or vacate any award issued in the underlying arbitration.
"[T]he petition to compel arbitration is only the initial step in
a litigation which seeks as its goal a judgment affirming the
award." Id. at 787 (quoting Doctor's Associates, Inc. v.
Hamilton, 150 F.3d 157, 160 (2d Cir. 1998), cert. denied,
525 U.S. 1103 (1999)). Resolution of a duty to defend case does not
provide the court with jurisdiction to subsequently review a
judgment in the underlying litigation nor even jurisdiction to
consider any subsequent duty to indemnify. Although related to
the duty to defend case, the underlying litigation and any
subsequent indemnity action are independent of the duty to defend
case. If anything, Moneyline provides support for the holding
in St. Paul I. Plaintiff ignores that the issue in Moneyline
was whether the value of Coleman's pending state court class
action could be considered. If compelled to arbitrate, the arbitration would be an individual action and
Coleman would have to drop her pending state court putative class
action. The Seventh Circuit held that the value of the state
court class action that would be dropped could not be considered
in determining the amount in controversy for the federal action
to compel arbitration. Moneyline, 360 F.3d at 786-87.
Analogously, St. Paul I holds that the amount at issue in the
underlying litigation is not considered in determining the value
of duty to defend claim.
The other case cited by plaintiff is Motorists Mutual
Insurance Co. v. Simpson, 404 F.2d 511 (7th Cir. 1968), cert.
denied, 394 U.S. 988 (1969). That case did involve insurance
coverage. However, in that case, liability had already been
determined in the underlying action. The insurer sought a
declaration that its policy of insurance did not provide coverage
for the judgment that had been entered against a possible insured
under the policy. The defendants in the case were not the driver
whose status as an insured was at issue, but the estate of the
victim of the accident and the automobile rental agency that
owned the truck that suffered property damage. One issue was
whether the potential $10,000 of insurance coverage for personal
injury to the victim could be aggregated together with the truck
owner's potential $5,000 of insurance coverage for personal
property damage so as to satisfy the then-applicable jurisdictional amount requirement of over $10,000. The Seventh
Circuit held that the two amounts could not be aggregated because
the liability of the two claimants was separate, not joint. Id.
at 513. The present case does not involve an issue of joint or
several liability and, unlike Simpson, there has not yet been
any liability finding in the underlying action. Also, unlike the
present case, a duty of defense was not at issue in the Simpson
case because the two defendants were injured third parties, not
potential insureds who might be provided a defense. See id.
Plaintiff has not provided any sufficient reason to change the
prior ruling that the amounts to be considered for the
jurisdictional amount requirement are the costs of defense and
not any potential indemnification amounts.
The other issue raised by plaintiff is whether the proof it had
previously submitted was sufficient to support that the costs of
defense at issue exceed $75,000. The principal issue is whether
the affidavit it submitted was sufficient to show that the
jurisdictional amount requirement is satisfied. As discussed in
St. Paul I, 2005 WL 1126883 at *1, since defendants had raised
an issue as to the amount in controversy, the burden was on
plaintiff to provide competent proof of the jurisdictional amount
requirement. Plaintiff was no longer accorded a presumption that
its own assessment of the amount in controversy was correct. American Bankers Life Assurance Co. of Fla. v. Evans,
319 F.3d 907, 909 (7th Cir. 2003). The issue having been raised, plaintiff
could not rely on general theories about possible damages, it had
to provide specific proof. See id. As discussed in St. Paul
I, 2005 WL 1126883 at *3-4, the affidavit provided by plaintiff
lacks adequate specificity to support that the potential costs of
defending the underlying lawsuit are likely to exceed $75,000.
See also Security Insurance Co. v. Surrey Vacation Resorts,
Inc., No. 05 C 425 (N.D. Ill. April 26, 2005). Plaintiff's
contention that it could not have provided more details without
revealing attorney-client matters is without merit. Revealing the
hourly rate charged by the attorneys representing Commercial
Property, the amount of hours already worked on the case, the
names of current counsel in the underlying action, whether any
legal work is being coordinated with other defendants, and even
estimating the amount of hours expected to be expended on the
case would not reveal any confidential matters. Nevertheless, in
moving for reconsideration, plaintiff fails to provide any
additional details. Further, the additional fact provided by
Commercial Property that the amount expended on the underlying
action as of the time the federal case was filed was something
less than $5,000 is additional indication that the amount in
controversy is not likely to exceed $75,000. Plaintiff has not
satisfied its burden of showing that the jurisdictional amount requirement is
IT IS THEREFORE ORDERED that plaintiff's Rule 59(e) motion for
reconsideration  is denied.