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Owners Insurance Co. v. Matson

United States District Court, S.D. Illinois

December 16, 2019

OWNERS INSURANCE COMPANY, Plaintiff,
v.
KEITH MATSON, STACY MATSON, and MATSON FARMS, INC., Defendants.

          MEMORANDUM AND ORDER

          Hon. Reona J. Daly United States Magistrate Judge.

         This matter comes before the Court on Defendants' Motion to Dismiss (Doc. 15) pursuant to Federal Rule of Civil Procedure 12(b)(1). Plaintiff timely filed a response (Doc. 16).

         Background

         This is a declaratory judgment action in which Plaintiff seeks a declaration that it owes no duty to defend or indemnify Matson Farms, Inc. in a lawsuit currently pending in the Circuit Court for the Fourth Judicial Circuit, Jasper County, Illinois.[1] The state court case was filed by Keith Matson against Matson Farms, Inc. seeking damages arising out of a leak in a storage tank that allowed fertilizer owned by Matson Farms, Inc. to escape, allegedly causing property damage to property owned by Keith Matson. The farm insurance policy, number 42-648-255-03, was issued to Matson Farms, Inc. for coverage commencing on March 15, 2014 and expiring Match 15, 2015.

         According to the complaint, Owners Insurance Company, was and is an Ohio mutual company with its principal place of business in Lansing, Michigan, and therefore, a citizen of Ohio and Michigan. Defendant Matson Farms, Inc. is an Illinois corporation with its principal place of business in Jasper, Illinois and, therefore, a citizen of Illinois. Defendants Keith and Stacy Matson are natural persons residing and domiciled in Illinois and are owners of real property and improvements located in Jasper County, Illinois, and, therefore, are citizens of Illinois. Plaintiff asserts this Court possesses original jurisdiction of this civil action because the matter in controversy exceeds $75, 000 and there is diversity of citizenship pursuant to 28 U.S.C. § 1332(a). There is no contest that there is diversity of citizenship between the parties.

         Defendants ask the Court to dismiss this case for lack of subject matter jurisdiction arguing the amount in controversy does not exceed the sum or value of $75, 000 as required by 28 U.S.C. § 1332(a). The prayer for relief in the underlying state court case seeks the amount of $73, 000 for compensation of damaged property. Defendants assert the amount in controversy is measured by the value of the object of the litigation. Additionally, Defendants point out a declaratory judgment matter involving the same occurrence, insurance policy, and parties at issue in Plaintiff's Complaint was filed in Jasper County No. 2014-CH-16. Defendants assert the issue raised in this Complaint should be included as part of the state chancery case, rather than as a separate matter in a different venue.

         Standard

         Rule 12(b)(1) requires dismissal if the Court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The Seventh Circuit has stated that although a plaintiff may easily defeat a Rule 12(b)(6) motion to dismiss for failure to state a claim, the same is not true for a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. Bastien v. AT & T Wireless Services, Inc., 205 F.3d 983, 990 (7th Cir. 2000). The Court must “accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff.” St. John's United Church of Christ v. City of Chicago, 502 F.3d 616, 625 (7th Cir.2007) (citation omitted). Yet, a court may receive and weigh evidence outside the allegations in the complaint to determine if it has subject matter jurisdiction over the case. Id. In any event, the plaintiff has the burden of proving that subject matter jurisdiction exists. Id.

         Analysis

         Amount in Controversy

         In actions seeking declaratory relief, the Court begins its analysis by looking at the amount in controversy sought in the underlying Court case. Chase v. Shop "N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997) (stating that “the starting point in determining the amount in controversy is typically the face of the complaint, where the plaintiff indicates the claim's value in her request for relief.”). This is not, however, the end of the inquiry. The jurisdictional minimum in diversity cases is not just the amount sought by the plaintiff but the amount at stake to either party to the suit. BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d 548, 553 (7th Cir. 2002). A liability insurer's potential outlay for indemnity counts toward amount-in-controversy diversity jurisdiction criterion in an insurer's action seeking declaration of no duty to defend or indemnify. Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 539 (7th Cir. 2006). “Only if it is “legally certain” that the recovery (from plaintiff's perspective) or cost of complying with the judgment (from defendant's) will be less than the jurisdictional floor may the case be dismissed.” Id. at 543.

         Defendants argue the amount in controversy is not met because the relief sought in the state court action is only $73, 000. Plaintiff argues when taking into consideration the cost of defense, in addition to the $73, 000, the minimum amount-in-controversy required for federal jurisdiction is established as a matter of law. The Court finds the stakes of the suit exceed the $75, 000 minimum and the case is properly in federal court under the diversity jurisdiction.

         Forum Shopping

         Defendants argue the issues raised in this case should be decided by the state court in the declaratory judgment filed in Jasper County No. 2014-CH-16 because at issue in that case is a coverage dispute matter involving the same occurrence, insurance policy, and parties in this case. Defendants claim Plaintiff is “judge shopping” by filing this claim in federal court and that for purposes of judicial economy, this matter ...


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