IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 02-30149
Summary Calendar
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HARTFORD INSURANCE GROUP,
Plaintiff-Appellant,
versus
LOU-CON INC.,
Defendant-Appellee.
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Appeal from the United States District Court
For the Eastern District of Louisiana
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June 21, 2002
Before DAVIS, BENAVIDES and CLEMENT, Circuit Judges.
PER CURIAM:
Plaintiff-Appellant The Hartford Insurance Group d/b/a Pacific
Insurance Company (Hartford) appeals the district court’s dismissal
of its action for declaratory judgment against Defendant-Appellee
Lou-Con, Inc. (Lou-Con). After reviewing the record and the
arguments of counsel, we affirm the judgment of the district court.
I.
In September 1998, Murphy Oil USA, Inc. (Murphy Oil), a client
of Lou-Con, was sued by a number of its employees for damages
resulting from asbestos exposure. Lou-Con performed work at Murphy
Oil’s refinery in Meraux, Louisiana during the time period alleged
in the complaint, and several current and former Lou-Con employees
joined the suit as plaintiffs. Pursuant to certain alleged
contractual agreements between Murphy Oil and Lou-Con, Murphy Oil
demanded that Lou-Con defend and indemnify it for the Lou-Con
employees’ claims.
The complaint against Murphy Oil seeks damages for asbestos
exposure spanning back more than 30 years, and six separate
insurance companies provided coverage to Lou-Con throughout this
period. During the relevant time frame, Hartford had issued Lou-
Con two $1 million general liability insurance policies and two $5
million umbrella liability insurance policies which provided
continuous coverage from May 1996 until May 1998. On August 12,
2001, Lou-Con demanded that Hartford provide defense and indemnity
for the asbestos claims that arose during the policy terms, but
Hartford denied its request.
On September 13, 2001, Lou-Con filed suit for declaratory
judgment in Louisiana state court, seeking a declaration that all
of its insurers, including Hartford, must defend and indemnify it
in the asbestos litigation. Lou-Con later dismissed this action
without prejudice. Shortly before Lou-Con dismissed its petition
for declaratory judgment, Murphy Oil sued Lou-Con in Louisiana
state court asserting breach of contract claims and demanding
defense and indemnity in the asbestos suit. Lou-Con has since
named Hartford as a third party defendant in the state court
action.
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In December 2001, Hartford filed the instant petition for a
declaration that it has no duty to defend or indemnify Lou-Con or
Murphy Oil in the asbestos litigation. The district court
dismissed the case for lack of federal subject matter jurisdiction,
finding that a sufficient amount in controversy did not exist.
Hartford appeals the district court’s judgment.
II.
We review dismissals for lack of subject matter jurisdiction
de novo, applying the same standard as that applied by the district
court. See St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d
1250, 1252 (5th Cir. 1998). As the party invoking federal
diversity jurisdiction, Hartford bears the burden of establishing
the amount in controversy by a preponderance of the evidence. See
id. In considering whether Hartford has met this burden, we must
first examine the complaint to determine whether it is facially
apparent that the claims exceed the jurisdictional amount. See id.
If the amount in controversy is not apparent, we may then rely on
“summary judgment” type evidence. Id. In examining such evidence,
“the jurisdictional facts must be judged as of the time the
complaint is filed . . . .” Id.
III.
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28 U.S.C. § 1332 confers federal diversity jurisdiction on
civil actions where the matter in controversy exceeds the sum or
value of $75,000.00. In an action for declaratory relief, the
amount in controversy is “the value of the right to be protected or
the extent of the injury to be prevented.” Leininger v. Leininger,
705 F.2d 727, 729 (5th Cir. 1983). In the instant lawsuit,
Hartford seeks declaratory judgment regarding the insurance
coverage it may owe to Lou-Con.
The parties disagree on the value of the right that Hartford
seeks to protect. Hartford asserts that it filed the instant suit
to protect itself from liability up to the limits of its general
liability insurance policy. Accordingly, it claims that the amount
in controversy is concurrent with the policy limits, or $1 million.
Lou-Con denies that it seeks to recover the policy limits and
contends that the amount in controversy should be based on the
actual value of the underlying claim. The district court agreed
with Lou-Con, found that the actual claim did not exceed
$75,000.00, and held that the amount in controversy did not exist.
Since Hartford’s petition neither sets forth the policy limits
nor gives any indication of the amount in controversy, the district
court based its determination of the jurisdictional amount on the
information in Lou-Con’s demand letter, which sought a total of
$261.42 from Hartford for defense costs in connection with the
claim of former Lou-Con employee Columbus Tullos (Tullos). Tullos,
who worked for Lou-Con from 1970 to 1997, is the only known
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plaintiff whose claims may be covered by Hartford’s policies that
were in effect from 1996 to 1998. The amount Lou-Con seeks from
Hartford for Tullos’ claim comprises less than 1 percent of the
$30,056.00 in total defense costs that Lou-Con seeks from all its
insurers. Even taking into consideration the possible statutory
penalties and attorney’s fees and the chance that Hartford may
ultimately be liable for 1 percent of the damages in the underlying
asbestos litigation, the district court did not find that Hartford
established by a preponderance of the evidence that this single
claim gives rise to an amount in controversy that meets the
jurisdictional threshold. Hartford now contends that the district
court erred by failing to automatically set the amount in
controversy at the policy limits.
To restate the issue, the question on appeal is whether, in a
declaratory judgment action concerning the applicability of an
insurance policy to a particular occurrence, the amount in
controversy is to be measured by the policy limits or by the value
of the underlying claim. Hartford asks us to begin our analysis
with C.E. Carnes & Co. v. Employers' Liab. Assur. Corp., Ltd., 101
F.2d 739 (5th Cir. 1939), in which the plaintiff insurer sought
declaratory judgment that its automotive liability policy over the
insured’s truck did not extend to the hauling and unloading of
butane gas. In determining the amount in controversy, the court
held that the “amount involved is not, as appellants contend, what
individual defendants claim by way of damages. . . . The amount in
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controversy is the value of that which is sought to have declared
free from doubt– the policy for $25,000.” We do not read this
case, as Hartford urges, to announce a rule that the policy limits
determine the amount in controversy. Carnes simply held that
numerous individual claims against an insurer may be aggregated to
reach the policy limit.
Carnes has also been cited for the proposition that when a
claim exceeds the policy limits, the policy limits, rather than
the larger value of the claim, determine the amount in controversy.
In other words, if an insurance policy limits the insurer’s
liability to a sum below the jurisdictional threshold, the fact
that a claimant wants more money does not increase the amount in
controversy. See Payne v. State Farm Mut. Auto. Ins. Co., 266 F.3d
63, 65 (5th Cir. 1959) (holding that the jurisdictional amount was
controlled by limitation of liability in policy and not by the
larger amount of damages). In the instant case, although
Hartford’s policy limit is $1 million, Lou-Con seeks a much smaller
amount of damages. Since we are not faced with the possibility
that the claims will likely exceed the policy limits, we do not
find that Carnes and its progeny are dispositive.
We recognize that under certain circumstances the policy
limits will establish the amount in controversy. Specifically, the
policy limits are controlling “in a declaratory action . . . as to
the validity of the entire contract between the parties.” 14B
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CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND
PROCEDURE: JURISDICTION 3D § 3710 (3d ed. 1998); see also Waller v.
Prof’l Ins. Corp., 296 F.2d 545, 547 (5th Cir. 1961) (holding that
when the validity of a contract or a right to property is called
into question in its entirety, the value of the property controls
the amount in controversy). However, in declaratory judgment cases
that involve the applicability of an insurance policy to a
particular occurrence, “the jurisdictional amount in controversy is
measured by the value of the underlying claim– not the face amount
of the policy.” 14B CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H.
COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 3D § 3710 (3d ed. 1998).
We find that the instant case falls into the latter category.
Hartford seeks a judicial declaration that its policy does not
extend to Lou-Con employees who sustained asbestos-related injuries
while working for Murphy Oil. It is not seeking to void the entire
insurance contract. Accordingly, the district court properly
measured the jurisdictional amount in controversy by the value of
the underlying claim.
The most recent case in the Fifth Circuit to address the
amount in controversy in a declaratory judgment action involving
insurance coverage is St. Paul Reinsurance Co., Ltd. v. Greenberg,
134 F.3d at 1250. The plaintiff insurance company in Greenberg
sought a declaration of liability arising from its denial of the
insured’s claim under his homeowner’s policy for loss suffered when
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his home was destroyed by arson. We stated that the amount in
controversy in an action for declaratory judgment is “the value of
the right to be protected or the extent of the injury to be
prevented.” Id. at 1253. We further explained that, when an
insurer seeks a declaratory judgment regarding the coverage
provided by an insurance policy, the “value of the right to be
protected” is the “plaintiff’s potential liability under the
policy,” plus potential attorneys’ fees, penalties, statutory
damages and punitive damages. Id. at 1253 (quotations omitted).
Hartford points out that Greenberg held the insurer’s potential
liability to be equal to the $35,000.00 policy limit. However, we
did not automatically set the amount in controversy at that amount.
Rather, we recognized that Greenberg actually sought to recover
the policy limit. Accordingly, we allowed $35,000.00, attorney’s
fees, and 18 percent per annum statutory damages to be taken into
account for purposes of determining the amount in controversy.
Unlike the insurer in Greenberg which established that it
faced a good faith claim up to its policy limits, Hartford has
provided no evidence that its potential liability is anywhere near
the $1 million limit of its general liability policy. The only
evidence available is (1) that Lou-Con seeks $261.42 in defense
costs from Hartford and (2) that Tullos may be covered by
Hartford’s policy for less than two of the twenty-seven years
during which he worked for Lou-Con and allegedly suffered asbestos-
related injury. Based on this information, we cannot conclude that
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Hartford’s potential liability will meet the jurisdictional
threshold.
IV.
Since Hartford has failed to establish a sufficient amount in
controversy by a preponderance of the evidence, we find that the
district court properly dismissed its petition for lack of subject
matter jurisdiction. Accordingly, the judgment of the district
court is affirmed.
AFFIRMED.
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