United States District Court, D. Nevada
M. Navarro, Chief Judge United States District Judge.
March 16, 2019, the Court issued an Order to Show Cause
requiring Plaintiff Progressive Northern Insurance Company
(“Progressive”) to show that the Court has
diversity jurisdiction over this action. (Minute Order, ECF
No. 17). Specifically, the Court required Progressive to show
that the amount in controversy exceeds the jurisdictional
requirement of $75, 000.00. (Id.). Plaintiff filed
its Response on March 26, 2019. (Resp., ECF No. 20). For the
reasons stated herein, the Court finds that the amount in
controversy is not met, and therefore the Court dismisses the
case without prejudice.
action concerns Progressive's request for a declaration
regarding its rights and obligations towards Defendant
Ricardo Pena-Guzman (“Guzman”) under the
parties' automobile policy. (Compl, ECF No. 1). The
policy at issue has liability limits of $15, 000.00 per
person and $30, 000.00 per accident. (Id. ¶ 8).
On or about August 19, 2016, Guzman informed Progressive that
he had been involved in an automobile accident. (Id.
¶ 10). Progressive initiated an investigation but
alleges that Guzman failed to cooperate. (Id. ¶
16). At the conclusion of the investigation, Progressive
determined that the accident was staged, and therefore
Guzman's claim was fraudulent. (Id. ¶ 20).
Based on Guzman's conduct, Progressive alleges that
Guzman violated his general duties under the agreement and
the “Fraud or Misrepresentation” clause.
(Id. ¶ 19-22). Progressive therefore requests a
declaration that it “owes no coverage under the
policy” and “is not obligated to defend any
person or entity in connection with any subsequent lawsuit
arising from the accident.” (See Id. 8:1-11).
Alternatively, Progressive requests a declaration that it
owes only the statutorily required minimum of $15, 000.00 per
person and $30, 000.00 per accident. (Id.).
courts are courts of limited jurisdiction, possessing only
those powers granted by the Constitution and statute. See
United States v. Marks, 530 F.3d 799, 810 (9th Cir.
2008). District courts have jurisdiction in two instances.
First, district courts have subject matter jurisdiction over
civil actions that arise under federal law. 28 U.S.C. §
1331. Second, district courts have subject matter
jurisdiction over civil actions where no plaintiff is a
citizen of the same state as a defendant and the amount in
controversy exceeds $75, 000. 28 U.S.C. § 1332(a).
may raise the question of subject matter jurisdiction sua
sponte at any time during an action. United States
v. Moreno-Morillo, 334 F.3d 819, 830 (9th Cir. 2003).
Regardless of who raises the issue, “when a federal
court concludes that it lacks subject matter jurisdiction,
the court must dismiss the complaint in its entirety.”
Arbaugh v. Y & H Corp., 546 U.S. 500, 514
Order to Show Cause, the Court cited Elhouty v. Lincoln
Benefit Life Co., 886 F.3d 752, 756 (9th Cir. 2018),
which states that when a policy's validity is at issue,
the policy limit constitutes the amount in controversy. The
parties' policy in this case has liability limits of $15,
000.00 per person and $30, 000.00 per accident. Under
Elhouty, Progressive's claim therefore falls
short of the federally mandated amount in controversy.
Response, Progressive attempts to distinguish this case from
Elhouty by arguing that it is not seeking to
invalidate the policy altogether but rather only seeks a
declaration “on whether or not there is a duty to
defend and indemnify its insured Guzman against a potential
underlying tort action . . ..” (Resp. 3:24-4:2, ECF No.
21). By tethering its requested declaration to the specific
underlying accident and not the policy in general,
Progressive argues that the amount in controversy equals
“the value of the potential underlying tort
actions.” (Id. 4:2-3). According to
Progressive, the amount in controversy is therefore comprised
of: (1) the $30, 000.00 bodily injury limit; (2) the $10,
000.00 property damage limit; and (3) reasonable
attorney's fees, which Progressive estimates at over $45,
000.00. (Id. 6:5-12).
support of this position, Progressive cites Budget
Rent-A-Car, Inc. v. Higashiguchi, in which the Ninth
Circuit stated “[b]ecause the applicability of 
liability coverage to a particular occurrence is at issue,
the amount in controversy is the value of the underlying
potential tort action.” 109 F.3d 1471, 1473 (9th Cir.
1997). In quoting this rule, however, Progressive ignores the
preceeding sentence clarifying that the policy limits control
the amount in controversy if “the validity of the
entire insurance policy is at issue, or if the value of
the underlying tort claims exceeds the liability
ceiling.” Id. (emphasis added).
on the Complaint, the Court is not convinced that
Progressive's declaratory relief claim is limited to the
underlying accident and not the policy as a whole. Notably,
Progressive's requested relief contains broad language,
such as “Progressive owes no coverage under the
policy.” Furthermore, the entire basis for
Progressive's claim is that Guzman violated the express
terms of the contract and therefore is not entitled to
coverage. Regardless, the Court does not need to decide the
scope of Progressive's requested declaratory relief to
resolve the present jurisdictional inquiry. By
Progressive's own admission, the value of the underlying
tort claim exceeds the liability ceiling. Therefore, the
policy limit controls the amount in controversy. See
Higashiguchi, 109 F.3d at 1473; State Farm Mut.
Auto. Ins. Co. v. Garcia, No. 2:13-CV-02099-GMN, 2014 WL
3421641, at *2 (D. Nev. July 9, 2014). The Court dismisses
this action without prejudice for failure to satisfy the
amount in controversy.
IS HEREBY ORDERED that this case is dismissed
without prejudice for ...