The United States Court of Appeals for the Eighth Circuit answers that question in Peterson v. Travelers Indemnity Company, No. 16-1146 (8th Cir. 2017).
Lori L. Peterson (“Peterson”) was injured in a car accident while driving a loaner vehicle from Billion Empire Motors, Inc. Peterson sued Travelers Indemnity Company (“Travelers”) Billion’s insurer for coverage under the commercial insurance policy. After investigating the accident, Travelers told Peterson she was not insured under the policy. Peterson sued, alleging she is entitled to $5,000 in auto medical coverage. She also asserted claims for bad faith, fraud, and unfair trade practice, seeking punitive damages and attorney’s fees.
Travelers moved to dismiss for lack of subject matter jurisdiction and failure to state a claim. Peterson moved for partial summary judgment. Travelers argued the district court lacked subject matter jurisdiction because the amount in controversy did not exceed $75,000. That court did not address this issue. Peterson asked for only $5,000 in medical damages. To satisfy the jurisdictional amount, she relied on her request for tort damages, punitive damages, and attorney’s fees. South Dakota law—which controls this diversity action—consistently recognized emotional distress damages in tort actions. Although she did not allege facts showing that her tort or punitive damages or attorney’s fees would exceed $75,000, it is not legally impossible that she could recover at least that amount. However, there must be competent proof that the threshold amount could potentially be reached.
Peterson alleged she was insured for auto medical coverage under the policy. Travelers disagreed. The declarations page on the policy states that ‘Insurance only applies to a coverage for which a Covered Auto Symbol is shown.’ Medical Payments was listed as optional coverage. There is no covered auto symbol next to it. Travelers believes this shows the policy does not cover auto medical payments. Peterson maintained the attached Auto Medical Pay Endorsement modified the policy and provided coverage. Under established law, the declarations page controls. The Court pointed out that the declarations page clearly communicates there is no auto medical coverage.
Peterson contended the district court erred in dismissing her remaining claims. But each required underlying coverage. The complaint alleged coverage under only the auto medical coverage provision of the policy. Because she was not insured under that provision, the district court properly dismissed her remaining claims. The Court considered her coverage arguments and did not abuse its discretion in denying her motions to reconsider or amend. The judgment was affirmed.
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