United States District Court, D. South Carolina, Florence Division
Bryan Harwell United States District Judge.
matter is before the Court on Defendant Daisy Frederick's
("Frederick") motion to dismiss [ECF No. 14]. For
the reasons set forth below, the Court denies Defendant
Frederick's motion to dismiss.
Background and Procedural History
instant lawsuit is a declaratory judgment and breach of
contract action brought by Plaintiff LM General Insurance
("LM General") against Defendant Daisy Frederick.
LM General seeks an Order finding that Frederick breached an
agreement to settle a personal injury claim, or
alternatively, for an Order declaring that LM General
complied with Frederick's demand letter, or
alternatively, that Frederick's demand letter is invalid.
April 29, 2015, in Anson County, North Carolina, Defendant
Frederick was involved in a motor vehicle accident with
Daniel Lee McDowell (“McDowell”). Compl. at
¶ 4. At the time, Frederick was operating a vehicle
owned Christine Howard (“Howard”), and McDowell
was operating his own vehicle. Id. Plaintiff LM
General insured McDowell's vehicle with a policy in
effect at the time of the accident (the
“Policy”). Id. at ¶ 5. The Policy
has liability limits of $50, 000 per person, $100, 000 per
accident, and $50, 000 in property damage. Id.;
see Policy [ECF No. 1-1]. After the accident,
Frederick hired counsel from the Anastopoulo Law Firm to
represent her for her bodily injury claim resulting from the
accident. Compl. at ¶ 6; see Letter of
Representation [ECF No. 1-2]. Howard's automobile
insurer, Allstate Insurance, paid $5, 211.60 for property
damage to her vehicle, which it subsequently recouped from LM
General. Compl. at ¶¶ 7-8.
February 16, 2016, Frederick's counsel sent a demand
letter to LM General on Frederick's behalf, requesting
the policy limits. Id. at ¶ 9; see
Demand Letter [ECF No. 1-3]. The demand letter contained
numerous conditions and requirements, including requiring an
affidavit from McDowell and receipt of the policy proceeds by
certified check no later than March 1, 2016.Compl. at ¶
February 29, 2016, LM General responded to the demand letter,
tendering checks for the $50, 000 bodily injury limit and the
remaining $44, 788.40 property damage limit, the requested
affidavit from McDowell, and a draft covenant not to execute
against McDowell to be signed by Frederick. Compl. at ¶
10; see Response to Demand Letter [ECF No. 1-4].
March 1, 2016, Frederick's counsel received LM
General's checks and documents, but on March 4, 2016,
Frederick's counsel returned the checks with a letter
stating that LM General failed to accept Frederick's
offer of compromise by failing to tender the policy limits by
certified check and include the requested affidavit by the
deadline. Compl. at ¶¶ 11-12; see Proof of
Delivery [ECF No. 1-5]; see Mar. 4, 2016 Letter [ECF
No. 1-6]. On March 30, 2016, LM General sent Frederick's
counsel a letter stating that it complied with the demand by
tendering the policy limits and McDowell's affidavit.
Compl. at ¶ 13; see Mar. 30, 2016 Letter [ECF
April 1, 2016, Frederick filed a lawsuit against McDowell in
South Carolina state court. Compl. at ¶ 14. After a
trial from January 29 to 30, 2018, a $5 million verdict was
rendered against McDowell, which was in excess of
McDowell's insurance coverage under the LM General
policy. Compl. at ¶ 15. As of the filing of the instant
federal lawsuit, there are post-trial motions still pending
in the underlying state court action. Id.
8, 2018, LM General filed its complaint in this case,
asserting diversity jurisdiction and alleging causes of
action for breach of contract and a declaratory judgment.
Compl. at ¶ 3, pp. 7-8. LM General contends that it
“complied with all essential terms” of the demand
letter and that the parties had a valid contract, which
Frederick breached by rejecting the payment of policy limits
without good cause. Compl. at ¶¶ 11-12. As relief,
LM General asks the Court “for an Order finding that
the Defendant breached the [Contract], or alternatively, for
an Order declaring that LM General complied with [the] demand
letter, or alternatively, that the demand letter is invalid[,
] and any other relief” the Court deems just and
proper.” Id. at 8.
August 1, 2018, Frederick filed a motion to dismiss the
action. LM General filed its response on August 15, 2018.
Frederick then filed a Reply.
Frederick moves to dismiss this action arguing: 1) the Court
lacks subject matter jurisdiction because the amount in
controversy is not met and the matter is not ripe for
adjudication; 2) the complaint fails to state a valid claim;
3) LM General lacks standing to bring this action; 4) LM
General has failed to join indispensable parties; and 5) LM
General's claims were waived and/or have already been
Subject Matter Jurisdiction
argues the Court lacks subject matter jurisdiction because
the amount in controversy does not exceed $75, 000.00 and the
matter is not ripe for adjudication.
Amount in Controversy
28 U.S.C. § 1332(a), district courts have original
jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75, 000.00. 28
U.S.C. § 1332(a). Courts have typically applied the
“legal certainty” test in determining whether the
amount in controversy requirement is met. St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58
S.Ct. 586, 590, 82 L.Ed. 845 (1938); Shanaghan v.
Cahill, 58 F.3d 106, 112 (4th Cir.1995). Under this
test, a plaintiff asserting federal jurisdiction has the
burden of proving to a “legal certainty” that the
claim is not less than the jurisdictional amount.
Shanaghan, 58 F.3d at 112. When a plaintiff seeks
declaratory relief, the amount in controversy is the
"value of the object of the litigation."
Francis v. Allstate Ins. Co., 869 F.Supp.2d 663, 668
(D. Md. 2012).
case, LM General has alleged a breach of contract claim and,
alternatively, seeks declaratory relief. LM General claims
that it had an agreement with Frederick to settle
Frederick's personal injury claim with LM General's
insured (McDowell) in exchange for payment of approximately
$94, 000.00 in insurance proceeds. On the breach of contract
claim, LM General seeks either specific performance of the
agreement to settle, which would involve the payment of $94,
000.00 in insurance proceeds, or damages in the amount of $4,
905, 211.60, which is the difference between the amount
agreed upon to settle the underlying lawsuit and the verdict
in the underlying lawsuit See [LM General's
Motion for Default Judgment and/or Summary Judgment, ECF No.
8 at 8]. On its claim for declaratory relief, LM General
seeks a declaration that LM General complied with
Frederick's demand letter, or alternatively, that
Frederick's demand letter is invalid.
minimum, the object of the litigation in this case is the
$94, 000.00 in insurance proceeds that LM General offered to
pay in response to Frederick's demand letter.
Additionally, the amount of monetary damages sought on the
breach of contract ($4, 905, 211.60) claim far exceeds the
jurisdictional amount. LM General has demonstrated to a ...