United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN CHIEF JUDGE
Annie Tovares filed an action against the defendants
Gallagher Bassett Services, Inc., and Praetorian Insurance
Company alleging bad faith and misrepresentation in violation
of South Dakota law. (Docket 1). The complaint also seeks
attorney's fees and punitive damages. Id. The
defendants separately filed motions to dismiss the complaint
pursuant to Fed. R. Civ. 12(b)(1), asserting plaintiff's
damages would not exceed the jurisdictional threshold of $75,
000 required by 28 U.S.C. § 1332(a). (Dockets 11 &
12). Plaintiff resists the motions. (Docket 15). Defendants'
motions were referred to United States Magistrate Judge
Daneta Wollmann pursuant to 28 U.S.C. § 636(b)(1)(B) and
the standing order of March 9, 2015. Magistrate Judge
Wollmann issued a report and recommendation
(“R&R”) concluding the court should deny
defendants' motions to dismiss. (Docket 25 at p. 8).
Defendant Praetorian Insurance Company
(“Praetorian”) timely filed objections to
Magistrate Judge Wollmann's R&R. (Docket 26).
Plaintiff filed a response to those objections. (Docket 27).
court reviews de novo those portions of the report
and recommendation which are the subject of objections.
Thompson v. Nix, 897 F.2d 356, 357-58 (8th Cir.
1990); 28 U.S.C. § 636(b)(1). The court may then
“accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate
judge.” 28 U.S.C. § 636(b)(1). The court completed
a de novo review of those portions of the R&R to
which objections were filed. The court finds the magistrate
judge's report and recommendation is an appropriate
application of the law to the issue presented by the parties.
For the reasons stated below, the defendant's objections
are overruled and the report and recommendation of the
magistrate judge is adopted as amended.
Praetorian Insurance Company's objections to the report
and recommendation are summarized as follows:
1. The magistrate judge erred when she emphasized the word
“alleged.” (Docket 26 ¶ 1).
2. The magistrate judge erred when she included Praetorian as
being involved in the denial of the claim letter sent to
3. The magistrate judge erred when she used the emphasized
language as supportive of plaintiff's claims.
Id. ¶ 2.
4. The magistrate judge erred when she stated Praetorian had
access to the video of plaintiff's fall and refused to
provide a copy to plaintiff's counsel. Id.
5. The magistrate judge erred when she stated Praetorian made
the payment of $3, 225.12 to plaintiff, or that an agency
relationship existed with Gallagher Bassett Services, Inc.
(“Gallagher”). Id. ¶ 4.
6. The magistrate judge erred when she stated Ms. Tovares
incurred $806.28 in attorney's fees based on
Praetorian's unreasonable denial of the claim for
benefits. Id. ¶ 5.
7. The magistrate judge erred when she stated the denial of
benefits was unreasonable. Id.
8. The magistrate judge erred when she referenced Forshee
v. Waterloo Industries, Inc., 178 F.3d 527, 531 (8th
Circuit 1999), in support of the analysis of plaintiff's
emotional distress damages claim. Id. ¶ 6.
9. The magistrate judge erred when she referenced Jordan
v. State Auto Insurance Companies, CIV 16-4053, 2016 WL
7235688 (D.S.D. December 13, 2016), in support of
plaintiff's claims. Id. ¶ 7.
10. The magistrate judge erred when she referenced Torres
v. Travelers, CIV. No. 01-5056 (D.S.D. 2001), in support
of plaintiff's claims. Id. ¶ 8.
11. The magistrate judge erred when she found plaintiff
alleged facts to support her punitive damages claim so as to
exceed the jurisdictional minimum. Id. ¶ 9.
12. The magistrate judge erred when she relied on SDCL §
58-12-3 to conclude plaintiff would be entitled to
attorney's fees which would count toward the
jurisdictional minimum. Id. ¶ 10.
13. The magistrate judge erred when she relied on SDCL §
58-33-5, because the attorney's fees of $806.28 were
already incurred and cannot support the jurisdictional
minimum. Id. ¶ 11.
Tovares filed her complaint as a diversity action pursuant to
28 U.S.C. § 1332. (Docket 1 ¶ 5). For a case to
qualify as a diversity action plaintiff must satisfy two
elements: (1) that the parties are “citizens of
different States”; and (2) that the amount “in
controversy exceeds the sum or value of $75, 000, exclusive
of interest and costs.” 28 U.S.C. § 1332(a).
Defendants move to dismiss the complaint pursuant to Fed. R.
Civ. 12(b)(1), asserting plaintiff's damages cannot meet
the $75, 000 requirement of § 1332(a). (Dockets 11 &
Rule 12(b)(1) motion to dismiss, a defendant has the right to
challenge the “lack of subject-matter jurisdiction . .
. .” Fed.R.Civ.P. 12(b)(1). While considering a Rule
12(b)(1) motion to dismiss for lack of subject matter
jurisdiction, the court must “accept all factual
allegations in the pleadings as true and view them in the
light most favorable to the nonmoving party.” Great
Rivers Habitat Alliance v. Federal Emergency Management
Agency, 615 F.3d 985, 988 (8th Cir. 2010). The court
“has authority to consider matters outside the
pleadings when subject matter jurisdiction is challenged
under Rule 12(b)(1). . . . This does not . . . convert the
12(b)(1) motion to one for summary judgment.”
Harris v. P.A.M. Transp., Inc., 339 F.3d 635, 638
(8th Cir. 2003). “The district court may take judicial
notice of public records and may thus consider them on a
[Rule 12(b)(1)] motion to dismiss.” Stahl v. U.S.
Department of Agriculture, 327 F.3d 697, 700 (8th Cir.
Supreme Court instructed trial courts to apply the
“legal certainty” test to determine whether the
amount in controversy element has been met.
The rule governing dismissal for want of jurisdiction in
cases brought in the federal court is that, unless the law
gives a different rule, the sum claimed by the plaintiff
controls if the claim is apparently made in good faith. . . .
[I]f, from the face of the pleadings, it is apparent, to a
legal certainty, that the plaintiff cannot recover the amount
claimed or if, from the proofs, the court is satisfied to a
like certainty that the plaintiff never was entitled to
recover that amount, and that his claim was therefore
colorable for the purpose of conferring jurisdiction, the
suit will be dismissed. Events occurring subsequent to the
institution of suit which reduce the amount recoverable below
the statutory limit do not oust jurisdiction.
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S.
283, 288-89 (1938).
statement in the complaint that her damages exceed $75, 000
is adequate, unless that declaration is challenged by the
opposing party through a Rule 12(b)(1) motion. Scottsdale
Ins. Co. v. Universal Crop Protection Alliance, LLC, 620
F.3d 926, 931 (8th Cir. 2010). If a challenge is made,
plaintiff must prove the jurisdictional amount in controversy
by a preponderance of the evidence. Id. “When
the pleadings are inconclusive to establish the amount in
controversy, [the court] may look to other evidence in the
record.” Dupraz v. Aventis CropScience USA Holding,
Inc., 153 F.Supp.2d 1102, 1104 (D.S.D. 2001).
point in the litigation, defendants have not answered the
complaint and their Rule 12(b)(1) motions challenge only the
$75, 000 damages threshold required by § 1332(a). For
purposes of resolving defendants' motions only, the
allegations of the complaint are deemed true. Great
Rivers Habitat Alliance, 615 F.3d at 988. Those facts
are as follows.
issued a worker's compensation insurance policy to Ms.
Tovares' employer, Menard, Inc. (“Menards”).
(Docket 1 ¶ 6). Praetorian delegated its claim
administration services to Gallagher. Id. ¶ 7.
Both defendants understood that Praetorian would act as the
principal and Gallagher would act as Praetorian's agent
in performing claim administration duties. Id.
¶ 8. Those duties included good faith and fair dealing,
processing paperwork relating to claims, investigating
claims, obtaining medical reports, monitoring treatment,
verifying coverage, adjusting, settling and defending claims
and issuing checks for payment of benefits. Id.
Gallagher performed all claim administration services for
claims submitted under Menards' worker's compensation
policy, including Ms. Tovares' claim. Id.
¶¶ 9-10. Gallagher knew it had the duty to handle
claims in good faith and Praetorian knew it would remain
responsible for Gallagher's violations of that duty.
Id. ¶¶ 11 & 12.
March 19, 2014, while working at Menards in Rapid City South
Dakota, Ms. Tavares fell sideways and landed hard on a
concrete floor, bruising her left hip and arm. Id.
¶ 13. Menards received actual notice of her fall and the
incident was recorded on one of its security cameras.
Id. ¶ 14.
the next week, Ms. Tovares began experiencing intermittent
ringing in her ears, blurry vision, light-headedness and
headaches. Id. ¶ 15. On March 26, 2014, she
went to the Rapid City Regional Hospital emergency room.
Id. After obtaining her history of the work-related
fall, the attending physician prescribed a CT scan of Ms.
Tovares' head in order to rule out the presence of
internal bleeding or other brain injuries. Id.
¶ 16. The CT scan was negative for internal bleeding.
Id. ¶ 17. Her attending physician noted the
“most likely cause of her symptoms is . . . [her] head
injury.” Id. ¶ 18. Ms. Torvares was
referred to an eye doctor to address her blurry vision.
Id. ¶ 19. The eye examination disclosed no