Tanir, Inc. v. Peleus Insurance Company

Background

Tanir, Inc. and 2769A East 15th Street, LLC sued Peleus Insurance Company. The plaintiffs asked for a declaratory judgment—a court ruling defining the parties’ rights—stating that Peleus must provide defense and indemnity coverage to them as additional insureds in a lawsuit pending in state court. The plaintiffs invoked diversity jurisdiction under 28 U.S.C. § 1332 and alleged that the dispute involved more than $75,000.

The complaint also alleged that the relevant Peleus policies had primary coverage limits of $2 million per occurrence and $4 million in the aggregate, plus excess coverage limits of $1 million per occurrence and $1 million in the aggregate.

Court’s Analysis

The court explained that, in a declaratory action involving whether an insurance policy applies to a particular event, the amount in controversy is measured by the value of the underlying claim—not by the face amount of the insurance policy. The complaint did not allege the value of the underlying claim. The court also found no such information in the attached state-court complaint. As a result, the court could only speculate that defending the state-court action and indemnifying the plaintiffs would exceed $75,000, which was insufficient.

Order

Judge Jesse M. Furman ordered the plaintiffs to amend their complaint by May 24, 2024, to adequately allege that the amount-in-controversy requirement for diversity jurisdiction is satisfied. If the plaintiffs cannot truthfully and plausibly allege that diversity jurisdiction is proper, the complaint will be dismissed for lack of subject matter jurisdiction without further notice. The order did not decide whether Peleus owes coverage; it addressed only whether the complaint adequately established federal jurisdiction.