United States District Court, D. Kansas
MEMORANDUM AND ORDER
W. LUNGSTRUM, UNITED STATES DISTRICT JUDGE
matter comes before the Court on defendant's motion to
dismiss for lack of subjection matter jurisdiction (Doc. #
7). For the reasons set forth below, the Court
denies the motion.
insurer, a Minnesota corporation with its principal place of
business in Minnesota, issued an automobile insurance policy
to defendant, a Kansas resident, with limits of $100, 000 per
person and $300, 000 per accident. Plaintiff alleges
defendant subsequently purchased a vehicle; that she did not
add the vehicle to the policy within the required time
period; defendant was then involved in an accident while
driving the new vehicle; defendant sought to add the vehicle
to the policy while fraudulently concealing the fact of the
accident; plaintiff issued an endorsement adding the new
vehicle to the policy; defendant then submitted a claim for
the accident; and defendant discovered the fraudulent
concealment and rescinded the endorsement. By this suit,
plaintiff seeks a declaratory judgment declaring that
plaintiff has no duty to indemnify plaintiff for damages from
the accident and that the policy endorsement is rescinded.
amended complaint, plaintiff invokes the Court's
diversity jurisdiction under 28 U.S.C. § 1332. In her
motion to dismiss, defendant argues that this Court lacks
subject matter jurisdiction under Section 1332 because the
amount in controversy does not exceed $75, 000 as required.
See Id. Defendant argues (and submits evidence to
the effect) that she purchased the vehicle for $13, 042.10,
that the adjuster determined the vehicle to be a total loss
and offered the sum of $8, 328 to defendant, that the parties
reached an agreement to settle the claim for $10, 000 before
plaintiff attempted to rescind the policy endorsement
covering the vehicle, and that defendant threatened to bring
suit in state court if plaintiff did not pay her demand of
$10, 000. Thus defendant argues that the amount in
controversy is only $10, 000. Plaintiff responds that because
it seeks rescission of the policy with respect to this
vehicle, the amount in controversy is the policy limit of
actions seeking declaratory or injunctive relief, it is well
established that the amount in controversy is measured by the
value of the object of the litigation.” See Hunt v.
Washington State Apple Advertising Comm'n, 432 U.S.
333, 347 (1977). The Tenth Circuit follows the “either
viewpoint rule, ” by which the amount in controversy
may be met by either the value to the plaintiff or the cost
to the defendant of the requested declaratory or injunctive
relief. See Lovell v. State Farm Mutual Auto. Ins.
Co., 466 F.3d 893, 897 (10th Cir. 2006).
have generally held that if the suit concerns only the
applicability of an insurance policy to a particular
occurrence, the amount in controversy is measured by the
value of the underlying claim against the insurer; but if the
validity of the policy is at issue-for instance, because the
insurer sues to cancel the policy for fraud-the amount in
controversy is the face value of the policy, and the fact of
a present claim against the policy is irrelevant to the
inquiry. See 14AA Chas. A. Wright, et al.,
Federal Practice and Procedure § 3710 (4th ed.
2011) (citing cases); see also, e.g., Evanston
Ins. Co. v. Sun West Acquisition Corp., 2014 WL 988764,
at * 3-6 (M.D. Fla. Mar. 13, 2014) (citing cases, including
cases decided by the Fifth, Seventh, Eighth, and Eleventh
Circuits); Infinity Ins. Co. v. Sevilla Guerrero,
2007 WL 2288324, at *3 (E.D. Cal. Aug. 8, 2007) (citing
cases, including cases decided by the Seventh and Eighth
case, plaintiff seeks rescission of the policy covering the
new vehicle, based on its allegation of fraud by defendant.
Thus, under the prevailing rule, the amount of the policy
limit-measuring plaintiff's potential liability on a
future claim under the policy- is the value to plaintiff of
the declaratory relief sought in this action, and thus
represents the amount in controversy for the purpose of
determining the Court's diversity jurisdiction. Defendant
has not cited any authority to support her argument in this
context based on the value of her underlying claim; nor has
defendant disputed the prevailing rule discussed above or
offered any reason why that rule should not be applied in
this case. Accordingly, the Court concludes that it
does have subject matter jurisdiction in this case.
also appears to argue that the Court should decline to
exercise jurisdiction over plaintiff's declaratory
judgment claim because the state court should be permitted to
resolve the matter of defendant's $10, 000 claim.
Plaintiff argues: “There are [sic] a long line
of cases beginning with Brillhart v. Excess Ins. Co. of
America, 316 U.S. 491 (1942), that make it clear a
federal court should refrain from exercising its discretion
under the Declaratory Judgment Act in favor of actual or
potential state court litigation involving the same parties
and issues.” As plaintiff's points out, however,
Brillhart involved an existing state-court
proceeding, and the Supreme Court made no pronouncement about
“potential” state-court suits. See Id.
at 494. In Wilton v. Seven Falls Co., 515 U.S. 277
(1995), the Supreme Court reaffirmed Brillhart to
the extent that a district court has “discretion in
determining whether and when to entertain an action under the
Declaratory Judgment Act, even when the suit otherwise
satisfied subject matter jurisdictional prerequisites,
” and it noted Brillhart's guidance
concerning cases in which another suit is pending in state
court, but it did not address the exercise of that discretion
in light of a potential state-court action. See
Id. at 283. The Tenth Circuit has dicussed
Brillhart and Wilton in the context of
existing parallel proceedings. See United States v. City
of Las Cruces, 289 F.3d 1170, 1180-81 (10th Cir. 2002).
Defendant has not cited any authority extending
Brillhart's guidance to cases involving only the
potential for parallel proceedings. Nor has
defendant offered any reasons why this Court should decline
to exercise jurisdiction over plaintiff's suit for
rescission, which necessarily involves the validity of the
policy and not merely the denial of plaintiff's insurance
claim, when no state-court case has been initiated.
Accordingly, the Court rejects defendant's suggestion
that the Court should decline to exercise jurisdiction in
this case, and it therefore denies defendant's motion to
dismiss in its entirety.
THEREFORE ORDERED BY THE COURT THAT defendant's motion to
dismiss for lack of subject matter jurisdiction (Doc. # 7) is
 Defendant did not file a reply brief
in support of her ...