Dugan v. Union Mutual Fire Insurance Company

Background

Union Mutual Fire Insurance Company removed Timothy Dugan’s action from the Supreme Court of the State of New York, County of Westchester, to the U.S. District Court for the Southern District of New York. Union Mutual asserted that the federal court had diversity jurisdiction under 28 U.S.C. § 1332 because the parties were completely diverse and the amount in controversy exceeded $75,000.

Dugan’s complaint alleged that Union Mutual violated an insurance policy by refusing to defend and indemnify him in a personal-injury action brought by Karen Weeks. The opinion does not state the value of the defense and indemnification Dugan sought. The underlying personal-injury complaint also did not state a specific damages amount.

Jurisdictional Standard

A defendant removing a case based on diversity jurisdiction bears the burden of showing, by a preponderance of the evidence, that the amount in controversy exceeds $75,000. When a complaint and state-court practice do not specify a damages amount, the defendant must provide facts or evidence supporting that threshold. Federal courts construe removal rules narrowly and resolve doubts against removal.

For a lawsuit seeking declaratory or injunctive relief concerning insurance coverage, the amount in controversy is measured by the value of the underlying claim. New York law does not allow a personal-injury complaint to state a specific damages amount, but that does not eliminate the removing defendant’s burden to provide evidence showing that the jurisdictional amount is met.

Court’s Analysis

The Court concluded that Union Mutual’s only allegation concerning the amount in controversy was that it exceeded $75,000. Union Mutual provided no written indication of the value of the insurance coverage, no evidence showing the value of Weeks’s underlying claim, and no other information establishing the jurisdictional amount. The Court also reviewed the electronic dockets in both state-court proceedings and found no written indication of the amount in controversy.

Because Union Mutual failed to establish that the amount in controversy exceeded $75,000, the Court concluded that removal was improper.

Disposition

Judge Philip M. Halpern ordered that the action be REMANDED to the Supreme Court of the State of New York, County of Westchester. The Clerk was directed to send the Order to that court and close the federal action. All pending matters were terminated.