Liberty Mutual Fire Insurance Company v. Glick
3:19-cv-03138
C.D. Ill.Aug 19, 2019Background
- Liberty Mutual filed a declaratory judgment action seeking a ruling that its policy issued to Kellie Glick provides no coverage and no duty to defend in an underlying wrongful-death suit filed by Kaci Clayton as special administrator for Kenzie Schuler.
- Underlying complaint alleges Glick’s negligent babysitting on Jan. 29, 2018 caused the infant’s death; underlying claim pleads damages “in excess of $50,000.”
- Liberty Mutual’s complaint pleads diversity jurisdiction: corporation organized under Wisconsin law with principal place of business in Massachusetts; defendants alleged Illinois citizens; amount in controversy alleged to exceed $75,000.
- Clayton moved to dismiss under Fed. R. Civ. P. 12(b)(1), arguing Liberty Mutual’s citizenship and amount-in-controversy allegations are bare and unsupported.
- Court considered both facial and factual attacks: Liberty Mutual submitted a corporate declaration verifying state of incorporation and principal place of business and argued that potential indemnity plus defense costs exceed $75,000.
- Court denied the motion: Liberty Mutual sufficiently pled corporate citizenship and proved by preponderance that the amount in controversy exceeds $75,000 (indemnity exposure plus defense costs), so diversity jurisdiction exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of corporate citizenship allegations for diversity | Liberty Mutual alleged state of incorporation (Wisconsin) and principal place of business (Massachusetts); supported by declaration | Clayton: allegations are bare, lack affidavit showing personal knowledge; insufficient to establish citizenship | Allegations satisfy a facial challenge; declaration establishes citizenship by preponderance if treated as factual attack — jurisdiction established |
| Sufficiency of amount-in-controversy allegation | Liberty Mutual: potential indemnity exposure plus cost of defending the underlying wrongful-death suit make controversy exceed $75,000; submitted evidence of defense costs and nature of claim | Clayton: underlying complaint only seeks "in excess of $50,000," so bare allegation of >$75,000 unsupported | Plaintiff must prove amount by preponderance when challenged; indemnity value plus likely defense costs meet amount — not legally certain claim is below jurisdictional threshold |
| Effect of underlying complaint’s "in excess of $50,000" designation | Liberty Mutual: that figure may reflect Illinois procedural filing categories, not the true value; similar cases show larger recoveries | Clayton: uses the filed ad damnum to argue amount is below $75,000 | Court accepted explanation that Rule 222/filing practice can produce a $50,000 designation and looked to indemnity and defense costs; $50,000 label not dispositive |
| Standard of review on Rule 12(b)(1) jurisdictional attack | Liberty Mutual: court may consider evidence beyond pleadings and resolve disputed jurisdictional facts by preponderance | Clayton: challenges pleadings as conclusory | Court applied appropriate standards: accept factual allegations for facial attack; consider evidence and decide contested facts by preponderance for factual attack |
Key Cases Cited
- Alicea-Hernandez v. Catholic Bishop of Chicago, 320 F.3d 698 (7th Cir. 2003) (standard for considering Rule 12(b)(1) attacks and allowing the court to examine evidence beyond the complaint)
- Wise v. Wachovia Sec., LLC, 450 F.3d 265 (7th Cir. 2006) (corporate citizenship rules for diversity jurisdiction)
- Casio, Inc. v. S.M. & R. Co., Inc., 755 F.2d 528 (7th Cir. 1985) (complaint must allege state of incorporation and principal place of business)
- Thomas v. Guardsmark, LLC, 487 F.3d 531 (7th Cir. 2007) (plaintiff must identify each party’s citizenship; condemns naked jurisdictional statements)
- McMillian v. Sheraton Chicago Hotel & Towers, 567 F.3d 839 (7th Cir. 2009) (amount-in-controversy: when undisputed, accept plaintiff’s good-faith allegation; when challenged, plaintiff must produce competent proof)
- Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006) (plaintiff must prove jurisdictional facts by preponderance when defendant disputes them; defense costs and potential indemnity count toward amount in controversy)
- Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (U.S. 1977) (in declaratory-judgment actions, amount in controversy measured by value of the object of the litigation)
- America’s MoneyLine, Inc. v. Coleman, 360 F.3d 782 (7th Cir. 2004) (explains measuring amount in controversy in declaratory judgment context)