Travelers Property Casualty Company of America v. Colony Insurance Company
- Rearden
- 1:25-cv-02455
- U.S. District Court · Southern District of New York
- 3
In Travelers v. Colony, Judge Rearden ordered Travelers to substantiate the $75,000 jurisdictional threshold or face dismissal.
Travelers must provide additional facts supporting the amount-in-controversy requirement. Colony is affected because the case may be dismissed for lack of subject-matter jurisdiction if Travelers cannot do so, but the order does not decide the insurance-coverage dispute.
What happened
Travelers Property Casualty Company of America sued Colony Insurance Company, asking the court to declare that Colony had certain duties to defend and indemnify additional insureds. Travelers relied on federal jurisdiction based on the parties’ diversity and alleged that more than $75,000 was at stake.
Judge Rearden found that Travelers’ allegation was not enough because the complaint did not explain the likely costs of defending the underlying action or paying the underlying claim. The court said that an insurance coverage case must include facts showing a reasonable probability that the amount at stake exceeds $75,000.
The court ordered Travelers to file an affidavit by May 19, 2025, adequately alleging the required amount. Judge Rearden stated that if Travelers could not truthfully and plausibly do so, the complaint would be dismissed for lack of subject-matter jurisdiction without further notice.
The detailed version
- Travelers Property Casualty Company of America v. Colony Insurance Company · No. 1:25-cv-02455
- Rearden
- May 12, 2025
Background
Travelers Property Casualty Company of America brought a declaratory-judgment action against Colony Insurance Company. Travelers asked the court to declare that Colony owed a primary and non-contributing duty to defend the additional insureds, including duties related to prosecuting Benchmark’s third-party complaint against Hallen, and that Travelers was entitled to recover defense and indemnity costs incurred for the additional insureds.
The complaint invoked diversity jurisdiction, which is federal jurisdiction based on the parties’ diversity and the amount in dispute. For the required amount in controversy, Travelers alleged only that the amount exceeded $75,000 and that the underlying action was worth more than $75,000.
Jurisdictional Deficiency
The court held that these allegations were insufficient. For declaratory relief concerning insurance coverage, the amount in controversy is measured by the value of the underlying claim. The complaint did not allege facts about the cost of defending the underlying action or the cost of indemnifying the relevant party for the underlying claim. Without those allegations, the court could only speculate that more than $75,000 was at stake, which was impermissible.
Order
The court ordered Travelers to file, by May 19, 2025, an affidavit that adequately alleges the amount-in-controversy requirement. The court did not dismiss the complaint in this order. It stated that if Travelers could not truthfully and plausibly allege that diversity jurisdiction was proper, the complaint would be dismissed for lack of subject-matter jurisdiction without further notice to either party.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.