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Annie Wiggins v. North American Equitable Life Assurance Company, 644 F.2d 1014, 4th Cir. (1981)
Annie Wiggins v. North American Equitable Life Assurance Company, 644 F.2d 1014, 4th Cir. (1981)
2d 1014
This suit on an insurance policy in the face amount of $8000 was instituted in a
state court but removed to the district court by the insurer on the ground of
diversity of citizenship with the requisite amount in controversy. The district
court granted defendant's motion to strike the prayer for punitive damages but
then denied plaintiff's motion to remand the case to state court. After trying the
merits, non-jury, the district court awarded judgment to the insurer except for
the return of premiums. Plaintiff appeals. We reverse and remand the case with
instructions to remand it to the state court. In our view the $10,000
jurisdictional amount was clearly never present, even when suit was instituted,
and the district court lacked jurisdiction to decide the controversy on the
merits.
I.
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insurance policy in the amount of $8,000 naming plaintiff, Annie Wiggins, his
mother, the principal beneficiary. In August 1969, Smith disappeared from his
home, and his whereabouts remain unknown. Premiums were paid on the
policy by Mrs. Wiggins until October 1977 when, in a proceeding brought by
her, the insured was declared by the Circuit Court of Baltimore City to have
died on or about the latter part of August 1969, as a result of alcoholism and
hepatitis. Plaintiff thereafter made a claim for the death benefit under the
policy, but defendant refused to pay (other than a return of the premiums) on
the ground that the insured had made material misrepresentations in his
application for insurance.
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7. That as a result of the company's refusal to pay the benefits due to Annie
Wiggins, she has suffered extreme hardship and has been put through extra
expense.
WHEREFORE PLAINTIFF PRAYS:
For removal of a state court action to a district court, 28 U.S.C. 1441 requires
that the action be one of which a district court of the United States has "original
jurisdiction." Here jurisdiction is said to lie under 28 U.S.C. 1332 on the
ground that it is between citizens of different states a fact not at issue and
involves a controversy exceeding the sum of $10,000, exclusive of interest and
costs. It is the latter requirement on which this case turns.
10 has been further recognized that while good faith is a salient factor, it alone does
(I)t
not control; for if it appears to a legal certainty that the plaintiff cannot recover the
jurisdictional amount, the case will be dismissed for want of jurisdiction ....
However, the legal impossibility of recovery must be so certain as virtually to
negative the plaintiff's good faith in asserting the claim.
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In this case, our consideration of Maryland law, which the parties concede is
the law to be applied, persuades us that plaintiff, as a matter of "legal certainty,"
could not recover punitive damages in this action. If this be true, it follows that
at most $9,0001 was the amount in controversy and the requisites for diversity
jurisdiction were not satisfied.
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281 Md. at 638-39, 381 A.2d at 22 (emphasis added). Our examination of Food
Fair Stores and St. Paul at Chase cited in the quotation from General Motors
Corp. discloses that they do hold that punitive damages may never be recovered
in pure breach of contract suits.2 Consequently, since we must accept this
statement as the applicable Maryland law, we are ineluctably led to conclude
that plaintiff could not recover punitive damages as she claimed and that
therefore the instant case involves a controversy over only $9,000. It follows
that the district court never had jurisdiction so that its judgment on the merits
must be reversed, and it should return the case to the Superior Court of
Baltimore City.
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The amount payable under the policy decreased slightly each year. The
maximum payable in the event that the insured died during the first year of the
policy was $8000. Plaintiff's declaration also alleged "extreme hardship" and
"extra expense" resulting from the insurer's refusal to pay. While Maryland
does permit the recovery of certain consequential damages resulting from the
breach of an insurance contract, e. g., the loss of a vehicle resulting from the
insurer's refusal to defend and to pay for a loss insured against, "(o)rdinarily a
plaintiff in an action on an insurance policy cannot recover special damages for
the detention of money due to him under the policy beyond what the law allows
as interest." Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co. v.
Messenger, 181 Md. 295, 301, 29 A.2d 653, 656 (1943). In any event, even if
plaintiff could recover for her "extra expense" under Maryland law, such
damages would be included within her claim for compensatory damages which,
her declaration alleges, amount to only $9000
The Maryland cases do provide for recovery of punitive damages where the
defendant maliciously breaches the contract. The malice required, however,
consists of "an evil or rancorous motive influenced by hate; the purpose being
to deliberately and wilfully injure the plaintiff." Food Fair Stores, supra, 275
Md. at 55, 338 A.2d at 46, quoting Siegman v. Equitable Trust Co., 267 Md.
309, 314, 297 A.2d 758, 760 (1972). Even liberally construed, plaintiff's
declaration does not allege such malice