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Williams v. Horace Mann Insurance Co.

United States District Court, E.D. California

June 20, 2016



          MORRISON C. ENGLAND, Jr., District Judge.

         Plaintiff Nicole Williams ("Williams") filed this suit against her insurer, Defendant Horace Mann Insurance Company ("HMIC"), alleging that it breached its obligations under her insurance policy by failing to pay her theft claim up to the maximum amount of available coverage. Federal jurisdiction is premised on diversity of citizenship between the parties.[1] Currently before this Court is HMIC's Motion to Dismiss without prejudice for lack of subject matter jurisdiction (ECF. No. 8), pursuant to Federal Rule of Civil Procedure 12(b)(1). For the following reasons, the Motion to Dismiss is GRANTED.


         Williams filed for Chapter 7 bankruptcy protection on February 26, 2015. In March, as a part of her bankruptcy proceedings, Williams submitted documents that reported only $3, 225.00 in personal property. Effective May 19, 2015, Williams purchased an insurance policy with HMIC which included personal property coverage of up of $23, 300.00 for theft. On June 5, 2015, Williams filed a criminal report with the City of Manteca Police Department alleging her home was burglarized. She demanded a $23, 500.00 payout from HMIC. HMIC refused on grounds that the representations Williams made in her bankruptcy case dictated otherwise.[2] Based on those representations, HMIC offered to pay only the $3, 225.00 Williams had herself represented as the value of her personal property.

         The instant lawsuit alleges that HMIC was contractually obligated to pay Williams the maximum amount of its available coverage. As indicated above, Williams invokes the diversity jurisdiction of this court on grounds that she is a citizen of the State of California and HMIC's business is located in the State of Illinois. According to the Complaint, Williams seeks to recover "the sum of $23, 500.00." Pl.'s Compl. ¶ 16. Williams also argues that judicial estoppel should not operate to limit any recovery against her HMIC policy, and therefore preemptively attacks the validity of that defense as already raised by HMIC. The Complaint does not state the judicial estoppel can itself provide the basis for federal jurisdiction.

         HMIC now requests, as indicated above, that Williams' case be dismissed due to lack of subject matter jurisdiction. HMIC alleges first and foremost that Williams has failed to allege $75, 000.00 amount in controversy threshold for invoking diversity jurisdiction. HMIC further argues that judicial estoppel prevents Williams from recovering, in any event, more than the amount she claimed her personal property was worth in bankruptcy. In opposing HMIC's Motion, Williams completely fails to respond to the argument that she fails to meet the amount in controversy requirement that must be met, stating only that this Court "has subject matter jurisdiction.... to determine whether federal bankruptcy schedules can be used as judicial estoppel in a later civil proceeding..." Pl.'s Opp., ECF No. 9-1, 1: 21-23.


         Federal courts are courts of limited jurisdiction, and are presumptively without jurisdiction over civil actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The burden of establishing the contrary rests upon the party asserting jurisdiction. Id . Because subject matter jurisdiction involves a court's power to hear a case, it can never be forfeited or waived. United States v. Cotton, 535 U.S. 625, 630 (2002). Accordingly, lack of subject matter jurisdiction may be raised by either party at any point during the litigation, through a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1).[4] Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); see also Int'l Union of Operating Eng'rs v. Cnty. of Plumas, 559 F.3d 1041, 1043-44 (9th Cir. 2009). Lack of subject matter jurisdiction may also be raised by the district court sua sponte. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). Indeed, "courts have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party." Id .; see Fed.R.Civ.P. 12(h)(3) (requiring the court to dismiss the action if subject matter jurisdiction is lacking).

         There are two types of motions to dismiss for lack of subject matter jurisdiction: a facial attack and a factual attack. Thornhill Publ'g Co. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). Thus, a party may either make an attack on the allegations of jurisdiction contained in the nonmoving party's complaint, or may challenge the existence of subject matter jurisdiction in fact, despite the formal sufficiency of the pleadings. Id.

         When a party makes a facial attack on a complaint, the attack is unaccompanied by supporting evidence, and it challenges jurisdiction based solely on the pleadings. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). If the motion to dismiss constitutes a facial attack, the Court must consider the factual allegations of the complaint to be true, and determine whether they establish subject matter jurisdiction. Savage v. Glendale High Union Sch. Dist. No. 205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003). In the case of a facial attack, the motion to dismiss is granted only if the nonmoving party fails to allege an element necessary for subject matter jurisdiction. Id . However, in the case of a facial attack, district courts "may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment." Safe Air for Everyone, 373 F.3d at 1039.

         In the case of a factual attack, "no presumptive truthfulness attaches to plaintiff's allegations." Thornill, 594 F.2d at 733 (internal citation omitted). The party opposing the motion has the burden of proving that subject matter jurisdiction does exist, and must present any necessary evidence to satisfy this burden. St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). If the plaintiff's allegations of jurisdictional facts are challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the mere assertion that factual issues may exist. Trentacosta v. Frontier P. Aircraft Ind., Inc., 813 F.2d 1553, 1558 (9th Cir. 1987) (quoting Exch. Nat'l Bank of Chi. v. Touche Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976)). Furthermore, the district court may review any evidence necessary, including affidavits and testimony, in order to determine whether subject matter jurisdiction exists. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988); Thornhill, 594 F.2d at 733. If the nonmoving party fails to meet its burden and the court determines that it lacks subject matter jurisdiction, the court must dismiss the action. Fed.R.Civ.P. 12(h)(3).

         A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be "freely given" where there is no "undue delay, bad faith or dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment...." Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Not all of these factors merit equal weight. Rather, "the consideration of prejudice to the opposing party... carries the greatest weight." Id . (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that "the complaint could not be saved by any amendment." Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) ("Leave need not be granted where the amendment of the complaint... constitutes an exercise in futility....")).


         It is undisputed that Williams is a citizen of California and HMIC is a citizen of Illinois. To satisfy jurisdiction based on diversity of citizenship, the amount in controversy here must exceed the sum of $75, 000. See 28 U.S.C. ยง 1332. If the amount is unclear, the party invoking jurisdiction must demonstrate, by a preponderance of the evidence, that the jurisdictional threshold is in fact met. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1118 (9th Cir. 2004) (citing Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003)); see Gaus v. Miles Inc., 980 F.2d 564, 567 (holding the plaintiff's conclusory request for the jurisdictional requirement was insufficient because he plaintiff "offered no facts whatsoever to support" the court's jurisdiction). If ...

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