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United States District Court Eastern District of Louisiana Western World Ins. Co. v. Flom

United States District Court, E.D. Louisiana

January 9, 2019


         SECTION: "S" (4)



         IT IS HEREBY ORDERED that defendants' 12(b)(1) Motion to Dismiss or Alternatively Motion to Stay, Rec. Doc. 4, is DENIED.


         Plaintiff, Western World Insurance Company ("WW"), invoking the court's diversity jurisdiction, has filed a complaint for declaratory relief, seeking a declaratory judgment that it owes no defense and indemnity to its insured, Noah N. Flom and NNF Properties, (hereinafter, collectively "Flom"), for a mold claim brought in state court by a Flom tenant. The tenant, Jessica Wilkes, alleges damages from mold exposure in a Flom property ("state court suit").[1]WW contends that the claims in the state court suit are excluded by a mold exclusion in the subject policy. Notably, WW is not a party in the underlying state court damage petition.

         In the instant motion, Flom has moved to dismiss the declaratory judgment action, arguing (1) that this court lacks jurisdiction, because the allegations of the underlying petition do not support a finding that the amount in controversy is facially apparent; and (2) that this court should abstain from ruling on the case and stay it pending resolution of the state court action. WW opposes the motion.

         For the reasons which follow, the motion is denied.


         1. 12(b)(1) Motion to Dismiss/Amount in Controversy

         "Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to challenge the subject matter jurisdiction of the district court to hear a case.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). Pursuant to 28 U.S.C. § 1332, both complete diversity of citizenship and an amount in controversy of at least $75, 000.00 is required to establish jurisdiction over the subject matter. Stiftung v. Plains Mktg., L.P., 603 F.3d 295, 297 (5th Cir. 2010).

         In an action for declaratory or injunctive relief, the amount in controversy is "the value of the right to be protected or the extent of the injury to be prevented.” St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1252-53 (5th Cir.1998). The "value of the right to be protected is plaintiff's potential liability under that policy.” Id. at 1253 (internal quotations omitted). Thus, to determine the amount in controversy in this case, the court must consider whether WW's potential liability exceeds $75, 000, which is determined with reference to the state court petition against Flom. See Etheridge v. Piper Aircraft Corp., 559 F.2d 1027, 1028 (5th Cir. 1977). If it appears that the value of a potential judgment against Flom, plus the amount WW would spend providing a defense to Defendant in state court is greater than $75, 000, then the amount in controversy is met.

         This burden can be satisfied either by showing that it is “facially apparent” that the plaintiff's claims exceed the jurisdictional amount, or by setting forth the facts in dispute that support a finding that the jurisdictional amount is satisfied. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995). If the “facially apparent” test is not met, the court may consider summary judgment type evidence relevant to the amount in controversy. Id. at 1336.

         In the instant case, WW alleged in its complaint for declaratory judgment that it is facially apparent from the petition that its potential liability exceeds $75, 000. Flom has countered arguing that the amount in controversy is not facially apparent, and thus WW must come forward with summary judgment-type evidence to establish it, which it has failed to do.

         A review of the state court petition reveals that plaintiff Wilkes alleges she suffered damages as a result of mold and fungal exposure in a property owned by Flom. Specifically, Wilkes alleges that she began to experience respiratory problems and irritation on both arms in the form of rashes and lesions after moving into the leased property. Over the course of several months, she went to several doctors to evaluate the lesions and rashes. Due to her declining health, she missed many days of work and eventually was unable to work. She experienced asthma attacks, constantly wheezed, and developed additional lesions on her arm. She continued to seek medical treatment, biopsies, lung scans, and different tests from multiple practitioners when her condition did not improve. A professional was hired to conduct a mold test of the property, which revealed a significant amount of mold spores her the ...

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