Guardian Life Insurance Co. of America v. Muniz

United States Court of Appeals,

Eleventh Circuit.

No. 95-4827.

Non-Argument Calendar.

GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant,

v.

Estevan M. MUNIZ, Defendant-Appellee.

Aug. 6, 1996.

Appeal from the United States District Court for the Southern
District of Florida. (No. 95-8210-CIV-JAG), Jose A. Gonzalez, Jr.
Judge.

Before ANDERSON, EDMONDSON and BARKETT, Circuit Judges.

PER CURIAM:

The Guardian Life Insurance Company of America ("Guardian")

filed this action in the district court, seeking cancellation of a

life insurance policy issued to Estevan M. Muniz on the basis of

alleged misrepresentations in the insurance application. The

complaint alleges diversity of citizenship, and that more than

$50,000 is involved. See 28 U.S.C. § 1332. The face value of the

life insurance policy is $100,000.

Muniz filed a motion to dismiss the complaint for failure to

meet the minimum amount in controversy requirement. The district

court granted the motion. In its order dismissing the case, the

district court rejected Guardian's argument that the amount in

controversy is $100,000, the face value of the policy. The court

stated:

[T]he condition precedent to liability under the policy at
issue has not even arguably occurred—[Muniz] is still alive.
Thus, under no circumstances could [Guardian] be held liable
for the full face amount of the policy. It is therefore
 legally certain that the amount in controversy in this case is
below the requisite amount and this Court has no jurisdiction.

The district court failed to address New York Life Ins. Co. v.

Swift, 38 F.2d 175 (5th Cir.1930), which is binding authority on

the same subject.1 In that case, an insurance company filed suit

to cancel two life insurance policies, each with a face value of

$10,000, on the basis of false representations in the applications.

See id. at 176. The district court dismissed the case for failure

to meet the amount in controversy requirement (which, at the time,

was $3,000). "Apparently the district court reached the conclusion

that the amount involved was to be measured by the loan value, cash

surrender value, or paid-up value of the policies, none of which

had accrued in any amount at the time the suit was filed." Id.

The former Fifth Circuit reversed, holding that the face value of

the policies constituted the jurisdictional amount. The court

explained:

The policies in suit are contracts by which the insured
agrees to pay the premiums and the insurer agrees to pay the
full face value of the policies on the death of the insured,
an event bound to happen. With the uncertainty of life, it
may occur at any time, and is an ever-present liability, which
the insurer can do nothing to avert, except by seeking relief
from a court of equity to cancel the policies on legal
grounds. The policies are not voidable at the option of the
insurer, nor is it optional with the insurer to compel the
insured to accept either the loan or cash surrender value of
the policies or to take policies of paid-up insurance. The
only fixed and definite liability of the insurer is to pay the
face of the policy. That amount measures the loss that
plaintiff will suffer if the policies are not canceled. The
right to cancel the policies for fraud in their procurement is
the right to be protected.

1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th
Cir.1981) (en banc), this court adopted as binding precedent all
of the decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981.
Id. at 176-77.2

The district court should not have dismissed the complaint.

REVERSED and REMANDED.3

2
Muniz concedes that Swift is indistinguishable from the
case at bar.
3
Appellant's request for oral argument is DENIED.