Lori Peterson v. The Travelers Indemnity Co., 2017 U.S. App. LEXIS 15183

Background

Peterson was injured while driving a loaner vehicle from Billion Empire Motors and sued Travelers (Billion’s insurer) seeking $5,000 in auto medical payments plus tort, punitive damages, and attorney’s fees for alleged bad faith, fraud, and unfair trade practices.
Travelers investigated and denied that Peterson was insured under the commercial Garage Coverage policy; Peterson sued for coverage and related tort claims.
Travelers moved to dismiss for failure to state a claim and contested subject-matter jurisdiction; Peterson moved for partial summary judgment. The district court found no auto medical coverage and dismissed the complaint, denying reconsideration and leave to amend.
On appeal the Eighth Circuit reviewed de novo the Rule 12(b)(6) dismissal and reviewed denial of post-judgment relief for abuse of discretion.
The court addressed (1) whether the amount-in-controversy exceeded $75,000 for diversity jurisdiction and (2) whether the policy provided auto medical payments coverage and thus supported Peterson’s contract-based and attendant tort claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Amount in controversy for diversity jurisdiction	Peterson contends claims for tort damages, punitive damages, and statutory attorney’s fees could push controversy over $75,000 despite $5,000 medical demand	Travelers argues the complaint’s damages demand ($5,000) shows amount in controversy is below $75,000	Court found it not legally impossible Peterson could recover ≥ $75,000 (attorney fees and punitive damages possible); federal jurisdiction existed
Existence of auto medical payments coverage under the policy	Peterson argues the Auto Medical Pay Endorsement provides medical payments coverage despite no covered-auto symbol on declarations page	Travelers argues declarations page controls: ‘‘Medical Payments’’ lacked a covered-auto symbol so no coverage	Court held the declarations page clearly disclaimed auto medical coverage and the endorsement did not modify that; no medical-payments coverage existed
Viability of bad faith, fraud, and unfair trade practice claims absent coverage	Peterson argues tort claims are independently viable or that coverage exists so torts survive	Travelers argues tort claims require an underlying contractual coverage obligation to trigger insurer duties	Court held each tort/bad-faith claim required underlying coverage; dismissal of coverage claim required dismissal of ancillary tort claims
Denial of motions for reconsideration and leave to amend	Peterson argued the district court should reconsider, allow amendment, or grant relief under Rules 59/60 to raise new coverage arguments	Travelers opposed; district court found no mistake, inadvertence, or excusable neglect and that arguments were previously considered	Court affirmed denial as within district court’s discretion; no abuse of discretion shown

Key Cases Cited

In re K-tel Intern. Inc. Secs. Litig., 300 F.3d 881 (8th Cir. 2002) (standards for Rule 12(b)(6) review)
Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760 (8th Cir. 2001) (amount-in-controversy and attorney-fee inclusion principles)
Kopp v. Kopp, 280 F.3d 883 (8th Cir. 2002) (plaintiff bears burden by preponderance when amount-in-controversy challenged)
McNutt v. General Motors Acceptance Corp., 298 U.S. 178 (1936) (burden to establish jurisdictional facts)
OnePoint Sols., LLC v. Borchert, 486 F.3d 342 (8th Cir. 2007) (punitive damages included in amount-in-controversy but require competent proof)
Tripp v. Western Nat. Mut. Ins. Co., 664 F.3d 1200 (8th Cir. 2011) (attorney’s-fee awards under S.D. statute can be substantial and relevant to jurisdiction)
Noran Neurological Clinic, P.A. v. Travelers Indem. Co., 229 F.3d 707 (8th Cir. 2000) (insurance contract interpretation reviewed de novo)
Munroe v. Cont’l W. Ins. Co., 735 F.3d 783 (8th Cir. 2013) (declarations page controls when it clearly communicates coverage)