NIAGARA FIRE INSURANCE COMPANY, Great American Insurance Company and Firemans Fund Insurance Company, Appellants, v. DYESS FURNITURE CO., Inc., et al., Appellees

United States Court of Appeals for the Fifth Circuit1961-06-30No. No. 18746

292 F.2d 232

Summary · law.co

Holding. The district court's dismissal for lack of subject-matter jurisdiction is affirmed because three separate insurance companies with distinct policy obligations and proportionate, several liability cannot aggregate their individual claims to satisfy the jurisdictional amount requirement under federal diversity jurisdiction.

Three insurance companies incorporated in New York and California sued five furniture-related corporations incorporated in Alabama, Mississippi, and Florida in federal court seeking a declaratory judgment regarding windstorm damage coverage. Each insurer had issued a separate policy covering the same property and loss, with each policy containing a contributing insurance clause that limited that particular insurer's participation to a fixed percentage of any total loss. The defendants claimed a windstorm loss of approximately $15,867.86 and submitted separate claims to each insurer, with the amount claimed from any single insurer falling below $10,000, though the aggregate of all three claims exceeded that threshold.

The district court dismissed the complaint for lack of subject-matter jurisdiction, and the appellate court affirmed. The court held that because each insurance company held separate and distinct policy obligations and was only proportionately and severally liable for its own percentage share of any loss, the three claims could not be aggregated to satisfy the federal jurisdictional amount requirement. The policies' contributing clauses and percentage limitations demonstrated that the insurers were not jointly liable but rather each bore independent liability only to the extent of their respective policy percentages.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Aggregation of claims by multiple plaintiffs to meet federal jurisdictional amount
Whether insurers under separate contributing policies with percentage limitations are jointly liable or severally liable
Diversity jurisdiction requirements when multiple plaintiffs sue in federal court

Procedural posture

The defendants moved to dismiss for lack of subject-matter jurisdiction in the district court, which granted the motion, and the insurance company plaintiffs appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

RIVES, Circuit Judge.

The sole question argued in the district court or in this Court concerns the aggregation of claims to make the jurisdictional amount. Diversity of citizenship has not been questioned. The plaintiffs in the district court were two insurance companies incorporated under the laws of New York, with their principal places of business in the City of New York, and a third insurance company incorporated under the laws of California with its principal place of business in San Francisco, California. The defendants were five corporations, three organized under the laws of Alabama, one under the laws of Mississippi and one under the laws of Florida. By way of precau tion, the plaintiffs move in this Court for leave to amend their complaint so as to aver that the principal place of business of each of the defendants was in the state of its incorporation. The defendants interpose no objection to such an amendment. The plaintiffs’ motion for leave to amend their complaint is granted. See 28 U.S.C.A. § 1653. Kaufman v. Western Union Telegraph Co., 5 Cir., 1955, 224 F.2d 723, 725.

The complaint sought a declaratory judgment as to whether the defendants had sustained a loss by windstorm covered by policies of insurance issued by the plaintiffs, and as to the amount of any such loss. According to the complaint, on January 1, 1960, each of the three plaintiffs issued a separate policy of insurance naming the five defendants as insureds and insuring them against all direct loss by windstorm to property located at 121 Beauregard Street, Mobile, Alabama. The policy issued by Niagara Fire Insurance Company was in the amount of $16,250; the policy of Great American Insurance Company in the amount of $32,500; and the policy of Fireman’s Fund Insurance Company in the amount of $16,250. Each policy contained a “Contributing Insurance Clause” permitting other insurance and providing for the insurer to contribute with such other insurance to the payment of any loss. Each policy provided that it participates to the extent of a certain percentage of the whole, Niagara’s policy fixing 25%, Great American’s 50%, and Fireman’s Fund’s 25%.

The complaint alleged that Albert W. Dyess, President of all the defendant corporations, had presented a separate claim and proof of loss to each of the plaintiffs, claiming that on May 6, 1960, a loss occurred to the contents of the aforementioned building at about 10:30 o’clock P. M. caused by windstorm, and that the whole loss was $15,867.86, of which amount the defendants claimed from Niagara $3,966.96, from Great American $7,933.93, and from Fireman’s Fund $3,966.97. The plaintiff insurance companies denied that the loss claimed was a direct loss by windstorm, and insisted that the amount of the whole loss and damage was less than the amount claimed.

The amount claimed from all three insurers exceeds $10,000, but the amount claimed from any one insurer is less than $10,000. The question is whether the amounts claimed from the separate insurers can be aggregated to make up the jurisdictional amount of $10,000. 28 U.S.C.A. § 1332. The district court granted the defendants’ motion to dismiss the complaint. We agree.

The facts that the three insurance companies issued identical policies, except as to amounts, and that each policy contained a contributing clause and limited its participation to a certain percentage of the whole do not make the companies jointly liable. To the contrary, “ * * * they are each proportionately and severally liable for the loss at the ratio which the amount of their respective policies bears to the whole insurance * * Louisville Fire & Marine I. Co. v. St. Paul Fire & M. I. Co., 1949, 252 Ala. 532, 41 So.2d 585, 587.

The law has been too long settled to require extensive discussion that when two or more plaintiffs, having separate and distinct demands, unite in a single suit for convenience of litigation, their claims cannot be aggregated to make up the jurisdictional amount. Walter v. Northeastern R. Co., 1893, 147 U.S. 370, 373, 13 S.Ct. 348, 37 L.Ed. 206; Troy Bank of Troy, Ind., v. G. A. Whitehead & Co., 1911, 222 U.S. 39, 40, 41, 32 S.Ct. 9, 56 L.Ed. 81; Pinel v. Pinel, 1916, 240 U.S. 594, 596, 36 S.Ct. 416, 60 L.Ed. 817; Clark v. Paul Gray, Inc., 1939, 306 U.S. 583, 589, 59 S.Ct. 744, 83 L.Ed. 1001; Thomson v. Gaskill, 1942, 315 U.S. 442, 447, 62 S.Ct. 673, 86 L.Ed. 951; Century Insurance Co. v. Mooney, 10 Cir., 1957, 241 F.2d 910.

The judgment is

Affirmed.