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Tremback v. Mony Life Insurance Co.

United States District Court, Seventh Circuit

May 1, 2013

THOMAS TREMBACK, Plaintiff,
v.
MONY LIFE INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION

JOHN F. GRADY, District Judge.

Before the court is defendant's motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). For the reasons explained below, the motion is denied.

BACKGROUND

This is an action premised on diversity of citizenship in which plaintiff, Thomas Tremback, alleges that defendant, MONY Life Insurance Company ("MONY"), breached an insurance policy and vexatiously and unreasonably denied payment of a claim. The complaint alleges that MONY issued plaintiff a policy of disability income insurance, effective October 1, 1989, that provides for a basic monthly disability income benefit of $2, 900, until the insured reaches the age of 65, with annual cost-of-living increases based on the Consumer Price Index. The policy includes a waiver of premiums that are due subsequent to the date of disability, and it has a rider that provides, under certain circumstances, for a lifetime income benefit at age 65 and thereafter. Benefits are payable under the policy in the event that the insured suffers a "Covered Loss, " which includes an "Incapacity, " which occurs when the insured, due to an "Injury or Sickness, [is] not able to perform the substantial and material duties of [his] Regular Occupation" and is "under the Regular Care of a Physician because of that Injury or Sickness." (Compl., Ex. A, Policy at 4.)

Plaintiff, who is a physician, alleges that he contracted Hepatitis C and thus became unable to work in his most recent occupation as an anethesiologist. Hepatitis C is a liver disease that causes plaintiff to experience, among other things, cirrhosis, orthopedic impairments, extreme fatigue, and severe joint pain and swelling, making "any sort of sustained work impossible." (Compl. § 12.) Plaintiff alleges that he applied for disability benefits under the policy on August 8, 2011, submitting proof that he had been disabled as of July 5, 2008.

On December 12, 2011, the third-party administrator, Disability Management Services Inc. (whom plaintiff has voluntarily dismissed from the action), notified plaintiff that his claim had been denied. On March 26, 2012, plaintiff submitted a written appeal and demand, along with additional medical evidence supporting his disability and the risks associated with any return to work. The denial of the claim was upheld.

Plaintiff filed this action on July 26, 2012. He seeks at least $170, 474.81 in past-due disability benefit payments and a declaratory judgment that he has an ongoing entitlement to monthly disability benefit payments and the waiver of premiums as long as he continues to meet the policy's requirements. (Compl. § 17.) He also asserts a claim under a provision of the Illinois Insurance Code, 215 ILCS 5/155 ("§ 155"), that permits a court to award an additional amount plus attorney's fees and costs for an insurer's vexatious and unreasonable failure to timely pay a claim.

MONY moves to dismiss the complaint for lack of subject-matter jurisdiction.

DISCUSSION

Federal Rule of Civil Procedure 12(b)(1) allows a party to raise by motion the defense of lack of subject-matter jurisdiction. There are two types of challenges to jurisdiction-facial and factual. A facial challenge requires only that the court look to the complaint to see if the plaintiff has sufficiently alleged a basis for subject-matter jurisdiction. In such cases, the court assumes that the allegations in the complaint are true. Apex Digital, Inc. v. Sears, Roebuck & Co. , 572 F.3d 440, 443-44 (7th Cir. 2009). A factual challenge, on the other hand, lies where the complaint is formally sufficient but the contention is that there is in fact no subject-matter jurisdiction. When a motion contains a factual attack on jurisdiction, the court may properly look beyond the allegations of the complaint. Id. at 444. Here, MONY does not dispute the complaint's factual allegations or seek to introduce its own evidence, [1] so we will assume the truth of, and confine our inquiry to, the complaint. We will also consider the insurance policy, which is attached to the complaint as Exhibit A and thus considered a part of it pursuant to Federal Rule of Civil Procedure 10(c).

Jurisdiction based on diversity exists if the amount in controversy exceeds $75, 000, excluding interest and costs, and the suit is between citizens of different states. 28 U.S.C. § 1332(a)(1). There is no dispute that the parties are of diverse citizenship, but the amount in controversy is at issue.

"The amount in controversy is whatever is required to satisfy the plaintiff's demand, in full, on the date suit begins." Hart v. Schering-Plough Corp. , 253 F.3d 272, 273 (7th Cir. 2001) (emphasis omitted). The proponent of federal jurisdiction-here, plaintiff- bears the burden of describing how the controversy exceeds the jurisdictional threshold; this is a pleading requirement, not a demand for proof. See Spivey v. Vertrue, Inc. , 528 F.3d 982, 986 (7th Cir. 2008); Meridian Sec. Ins. Co. v. Sadowski , 441 F.3d 536, 540 (7th Cir. 2006). When the threshold is uncontested, we generally will accept the plaintiff's good-faith allegation of the amount in controversy unless it appears to a legal certainty that the recovery will be less than the jurisdictional amount. McMillian v. Sheraton Chicago Hotel & Towers , 567 F.3d 839, 844 (7th Cir. 2009). If material factual allegations are contested, the plaintiff must prove those jurisdictional facts by a preponderance of the evidence. Meridian , 441 F.3d at 543.[2] The Seventh Circuit has emphasized that "[o]nly jurisdictional facts, such as which state issued a party's certificate of incorporation, or where a corporation's headquarters are located, need be established by a preponderance of the evidence." Back Doctors Ltd. v. Metro. Prop & Cas. Ins. Co. , 637 F.3d 827, 830 (7th Cir. 2011) (emphasis omitted); see also Meridian , 441 F.3d at 540-41 (stating that a proponent of jurisdiction must prove contested factual assertions such as where each party resides, in order to establish domicile, or facts that determine the amount in controversy, such as the economic effect that compliance with the law would have on the defendant). "Jurisdiction itself is a legal conclusion, a consequence of facts rather than a provable fact.'" Meridian , 441 F.3d at 541. The plaintiff does not have to establish that it is likely that he will prevail or, if he does, that he will obtain a judgment exceeding the amount-in-controversy requirement. Back Doctors , 637 F.3d at 829. The burden, rather, is to show what the plaintiff hopes to get out of the litigation; if this amount exceeds the jurisdictional threshold, the case proceeds in federal court unless a rule of law will keep the award under the threshold. Rising-Moore v. Red Roof Inns, Inc. , 435 F.3d 813, 816 (7th Cir. 2006); see also Johnson v. Wattenbarger , 361 F.3d 991, 994 (7th Cir. 2004) ("A demand is legally impossible for jurisdictional purposes when it runs up against a statutory or contractual cap on damages or when the theories of damages employ double counting." (citations omitted)).

Plaintiff seeks "at least $170, 474.81" in past-due disability benefit payments. (Compl. § 17.) In its opening memorandum, MONY argues that the claim for unpaid disability benefits was at most only $63, 800 at the time plaintiff filed suit. MONY cites the following provisions of the policy ("you" refers to plaintiff):

Notice of Claim - You must give [MONY] written notice of your claim by the end of 30 days, or as soon as ...

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