United States District Court, N.D. Illinois, Eastern Division
June 16, 2005.
CONTINENTAL GARDENS OF MIAMI, INC., Plaintiff,
CLARENDON AMERICA INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: JOHN GRADY, District Judge
Before the court is defendant's motion to dismiss for lack of
subject matter jurisdiction. For the reasons that follow, the
motion is granted.
According to the complaint, plaintiff Continental Gardens of
Miami, Inc. ("CGM") owns several commercial properties in Florida
that were significantly damaged by Hurricanes Frances and Jeanne
in September 2004. The damaged properties were insured under a
primary insurance policy issued by defendant Clarendon America
Insurance Company ("Clarendon"). The policy provided a coverage
limit of $1,000,000 per "occurrence," and the following
deductibles: (i) a $10,000 per property deductible for losses
resulting from, inter alia, a hurricane, and (ii) a "5% of
total insured value" per property deductible for losses caused by "windstorm or hail." (Compl., Ex. A, p. 2, 3, 19, 20.)
On or about September 28, 2004, CGM filed a claim under the
policy for property damage caused by the hurricanes. Clarendon,
on November 9, 2004, sent CGM a letter stating that it was
conducting an investigation subject to a full reservation of
rights, and that it intended to apply the "5% windstorm
deductible" to any recovery under the policy. (Compl., Ex. D, p.
1, 2.) Three days later, CGM filed this suit under the
Declaratory Judgment Act, 28 U.S.C. § 2201, seeking the following
relief: (i) a declaration that Clarendon's failure to pay the $1
million policy limit constitutes a breach of the policy, and (ii)
a declaration that Clarendon's application of the "5% windstorm
deductible" (instead of the "$10,000 hurricane deductible") is
also a breach of the policy.
On December 30, 2004, Clarendon paid CGM $1 million in policy
proceeds. Then, on February 8, 2005, it filed the present motion
to dismiss. Clarendon argues that the complaint is now moot
because, having paid the coverage limit, there is no longer a
dispute as to its obligations under the policy. CGM acknowledges
that the payment moots any dispute over whether the policy
obligates Clarendon to pay the coverage limit. It maintains,
however, that the dispute concerning the proper deductible is
still a live controversy. According to CGM, its properties are
covered by, in addition to the Clarendon policy, an excess
insurance policy issued by Lloyd's of London with a coverage limit of $15.5
million. This excess policy provides coverage only over and above
the primary policy's $1 million limit plus the amount of the
deductible.*fn1 Therefore, CGM argues, Clarendon's
application of the windstorm deductible instead of the hurricane
deductible reduces the amount of payments it will receive from
Lloyd's under the excess policy.
We agree with Clarendon that the $1 million payment moots this
case in its entirety. Were the court to declare which deductible
is properly applied to CGM's claim, that would not affect the
parties' present rights and obligations under the primary policy.
Clarendon has paid all that CGM is entitled to, no matter what
It is true that a determination of the proper deductible
might affect CGM's recovery under the excess policy, but that
dispute is not before the court. First, there is no allegation
that Lloyd's has applied the windstorm deductible resulting in
a lower excess recovery than if it had calculated coverage under
the hurricane deductible. In fact, we do not even known whether a
claim has been filed with Lloyd's. To issue a declaratory
judgment, "there must be a dispute which calls, not for an
advisory opinion upon a hypothetical basis, but for an
adjudication of a present right upon established facts." Ashcroft v. Mattis,
431 U.S. 171, 172 (1977) (citation omitted). And, even if we were to
assume that Lloyd's has applied the windstorm instead of the
hurricane deductible, and to CGM's detriment, that would be an
injury remedied by a suit against Lloyd's, not Clarendon.
In sum, CGM's request for a declaration of its rights under the
policy has been rendered moot by Clarendon's payment of the
policy limits. Clarendon's motion [8-1] is therefore granted, and
this case is dismissed for lack of subject matter jurisdiction.