Opinion
Civil Action No. 00-0258-S
July 11, 2000
JUDGMENT
It is hereby ORDERED, ADJUDGED, and DECREED that Defendants Cash America International, Inc., and Mr. Payroll Corporation's Amended Motion to Dismiss is GRANTED, Defendants Elk Food Centers, Inc., and Wade Jernigan's Amended Motion to Dismiss is GRANTED, and that this action be and hereby is DISMISSED WITH PREJUDICE, each party to bear its own costs.
ORDER
This cause is before the Court on Defendants Cash America International, Inc., and Mr. Payroll Corporation's Motion to Dismiss (Doc. 3); Defendants Elk Food Centers, Inc., and Wade Jernigan's Motion to Dismiss and Supporting Brief (Doc. 6); Plaintiff Star Insurance Company's Response to Defendants Cash America International, Inc., and Mr. Payroll Corporation's Motion to Dismiss (Doc. 8); Defendants Cash America International, Inc., and Mr. Payroll Corporation's Amended Motion to Dismiss (Doc. 9); Plaintiff Star Insurance Company's Response to Defendants Elk Food Centers, Inc., and Wade Jernigan's Motion to Dismiss (Doc. 12); Defendants Cash America International, Inc., and Mr. Payroll Corporation's Reply in Support of their Motion to Dismiss (Doc. 13); Defendants Elk Food Centers, Inc., and Wade Jernigan's Amended Motion to Dismiss and Supporting Brief (Doc. 15); Plaintiff Star Insurance Company's Response to Defendants Elk Food Centers, Inc., and Wade Jernigan's Amended Motion to Dismiss (Doc. 20); Defendants Cash America International, Inc., and Mr. Payroll Corporation's Reply Brief in Support of their Amended Motion to Dismiss (Doc. 21); and Plaintiff Star Insurance Company's Response to Defendants Cash America International, Inc., and Mr. Payroll Corporation's Reply Brief in Support of their Amended Motion to Dismiss (Doc. 22). Upon consideration of all matters presented, and for the reasons set forth herein, Defendants Amended Motions to Dismiss are granted and this action is hereby due to be dismissed.
Plaintiff Star Insurance Company ("Plaintiff") filed this action pursuant to the Federal Declaratory Judgment Act, 29 U.S.C. § 2201, et seq., seeking a declaration that it does not owe insurance coverage for defense or indemnity to Defendants Cash America International, Inc., Mr. Payroll Corporation, Elk Food Centers, Inc., and Wade Jernigan ("Defendants"), under a commercial general liability insurance policy issued by Plaintiff for claims asserted in a class action lawsuit pending in the Circuit Court of Marengo County, Alabama, styled Hazel Matthews, et al. v. Cash America International, Inc., et al., CV-99-018. The allegations in the underlying action state claims against Defendants for conduct arising out of Defendants alleged practice of extending unlawful "payday" loans in violation of the Alabama Small Loan Act, Ala. Code § 5-18-1, et seq, which applies to loans of $749 or less. The commercial general liability policy was issued to Defendant Elk Food Centers, Inc., and was in full force and effect at the time the underlying state action was filed in Marengo County. Plaintiff seeks a declaration that it owes no coverage to Defendants for the allegations contained in the underlying state action because of certain exclusions contained in the policy.
Defendants in this case are also the defendants in the underlying state court action; as such, when discussing either case, the Court will simply use the term "Defendants" throughout this Order. However, Plaintiff in this case is not a party to the underlying state action. Therefore, the Court will refer to the plaintiffs in the underlying state court action as "the plaintiffs."
Defendants have filed Motions to Dismiss asking the Court to exercise its discretionary authority to refrain from entertaining this action brought pursuant to the Declaratory Judgment Act and seeking an order dismissing Plaintiff's complaint. Defendants contend that the Court should refrain from hearing this action because there is a declaratory judgment action pending in Marengo County Circuit Court which involves issues identical to the issues raised in this case. Defendants have also filed Amended Motions to Dismiss asking the Court to dismiss Plaintiff's complaint for lack of subject matter jurisdiction because, according to Defendants, Plaintiff cannot satisfy the requisite amount in controversy necessary to confer diversity jurisdiction on this Court.
DISCUSSION
This action is brought pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, which states, in pertinent part:
In a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration. . . .28 U.S.C. § 2201(a). Under this Act, the Court has discretion whether to entertain a declaratory judgment action. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942). In Brillhart, the Supreme Court, reversing the appellant court, held that, "[a]lthough the District Court had jurisdiction of the suit under the Federal Declaratory Judgments Act, . . . it was under no compulsion to exercise that jurisdiction." Id.
The Declaratory Judgment Act, however, does not "of itself, confer jurisdiction upon the federal courts; a suit brought under the Act must state some independent source of jurisdiction, such as the existence of diversity or the presentation of a federal question." Borden v. Katzman, 881 F.2d 1035, 1037 (11th Cir. 1989) (citing Skelly Oil Co. v. Phillips Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950)). In this case, Plaintiff asserts that the independent source of jurisdiction is predicated on diversity of citizenship. As stated above, however, Defendants contend that Plaintiff cannot satisfy the requisite amount in controversy necessary to confer diversity jurisdiction on this Court. Specifically, Defendants argue that, because the individual plaintiffs in the underlying state action seek only a return of interest charges and principal on loans of $749 or less and because the claims of purported class members cannot be aggregated form the purpose of satisfying the requisite amount in controversy, the value of the underlying claim is less than $75,000, and therefore Plaintiff's complaint must be dismissed for lack of subject matter jurisdiction. Since it must be determined whether this Court has jurisdiction over the matters in this action before it can be determined whether the Court should exercise its discretionary authority, the Court will first address Defendants' amended motions to dismiss.
It is undisputed that there is complete diversity of citizenship between the parties.
Original jurisdiction in civil matters may be based on complete diversity of the parties' citizenship and an amount in controversy which exceeds $75,000, exclusive of interest and costs. Darden v. Ford Consumer Finance Company, 200 F.3d 753, 755 (11th Cir. 2000) (citing 28 U.S.C. § 1332(a)). In class action lawsuits, the claims for compensatory damages of the individual members of the putative class cannot be aggregated to meet the requisite amount in controversy requirement for diversity jurisdiction. Darden, 200 F.3d at 756 (citing Snyder v. Harris, 394 U.S. 332, 336, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969); Zahn v. International Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 511, 38 L.Ed.2d 511 (1973)). There must be at least one individual plaintiff in a class action law suit with a damage claim greater than $75,000 for a federal court to have diversity jurisdiction. Id. Federal courts are without jurisdiction where none of the plaintiffs presents a claim of the requisite amount. See Zahn, 414 U.S. at 299, 94 S.Ct. at 511.
In this case, Plaintiff seeks a declaration that it does not owe insurance coverage for the claims in the underlying complaint because of certain exclusions contained in the insurance policy. The complaint in the underlying state action alleges that Defendants have violated the Alabama Small Loan Act Ala Code § 5-18-1, et seq, in the making of and collecting on loans made in the amounts of $749.00 or less, to the plaintiffs and plaintiff class members. See Attachment, Defendants Elk Food Centers, Inc., and Wade Jernigan's Motion to Dismiss and Supporting Brief (Doc. 6). The plaintiffs in the state action seek a declaration that Defendants are in violation of the Small Loan Act and seek the return of interest charges and principal on the illegal loans — loans of $749 or less. Id. at pages 6-8. The plaintiffs in the underlying state action do not seek punitive damages, and they specifically aver that "the total aggregate amount of damages sought in this case is less than $74,000.00 per class member." Id. at page 4. In the Prayer for Relief, the plaintiffs in the underlying state action ask that the Circuit Court of Marengo County enter an order requiring Defendants to make "full and complete restitution to [p]laintiffs and [p]laintiff class members for all funds collected" on loans in violation of Alabama law and pay prejudgment interest on all restitution amounts. Id. at page 8. This is the only monetary relief that the plaintiffs seek in their complaint.
As set forth above, the claims for compensatory damages of individual members of the putative class cannot be aggregated to meet the requisite amount in controversy requirement; there must be at least one individual plaintiff in the class action with a damage claim greater than $75,000 for a federal court to have diversity jurisdiction. Darden, 200 F.3d at 756. Here, it is clear from the allegations of the underlying complaint, as outlined above, that no individual class member is seeking damages in excess of the required jurisdictional amount of $75,000.00. Given the nature of the claims contained in the underlying complaint and given that the plaintiffs claims cannot be aggregated for purposes of reaching the requisite amount in controversy, the Court finds that requisite amount in controversy is lacking and that this Court is without jurisdiction over the matters in this case.
Accordingly, pursuant to Federal Rule of Civil Procedure 12(b)(1), Defendants Cash America International, Inc., and Mr. Payroll Corporation's Amended Motion to Dismiss (Doc. 9) is GRANTED, Defendants Elk Food Centers, Inc., and Wade Jernigan's Amended Motion to Dismiss (Doc. 15) is GRANTED, and this action is due to be DISMISSED for lack of subject matter jurisdiction. The Court will by separate document enter judgment in accordance with this Order.
Because the Court has determined that it lacks subject matter jurisdiction in this case, Defendants Cash America International, Inc., and Mr. Payroll Corporation's Motion to Dismiss (Doc. 3), and Defendants Elk Food Centers, Inc., and Wade Jernigan's Motion to Dismiss (Doc. 6) are deemed MOOT.