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March 15, 2002


The opinion of the court was delivered by: Haight, Senior District Judge.



The amended complaint in this diversity action alleges that plaintiff is entitled to disability benefits that Equitable has improperly refused to pay. It is undisputed that under a Disability Income Insurance Policy Equitable issued to Scherer in 1987 (the "Policy"), Scherer is entitled to a monthly payment of $5,031 during such time as she is "totally disabled" within the meaning of the Policy. The Policy also excuses Scherer from paying premiums while she is disabled. Her premium payment is $1,415 twice yearly. The Policy contains a ninety-day "elimination period" after Scherer becomes totally disabled before she is entitled to payment of benefits or waiver of premiums. Scherer avers that she has been continuously totally disabled since January of 1995.

Equitable paid Scherer benefits under the Policy after she initially claimed she was totally disabled. In March of 1997, however, Equitable ceased payments and, in March of 1998, delivered to Scherer its final refusal to pay under the Policy. Following this refusal Scherer brought suit against Equitable for breach of contract in New York Supreme Court on April 15, 1998 (the "State Action"). That case went to trial before a jury which rendered a verdict against plaintiff on May 3, 2001. Plaintiffs appeal of that judgment is pending.

Scherer submitted a new claim of total disability under the Policy on August 31, 2001. In response, Equitable informed plaintiff that she owed $7,075.25 in unpaid premiums as of September 1999. On November 1, 2001, Equitable also informed plaintiff by letter that it would be adjudicating plaintiffs new claim "with a start date of May 3, 2001" but that it would cancel the policy if she did not pay the outstanding premiums by November 19, 2001. On November 17, 2001, plaintiff filed the instant suit seeking a declaratory judgment that the premiums are not due and that she was disabled from April 16, 1998 to November 19, 2001. Plaintiff filed an amended complaint as of right on December 27, 2001. The amended complaint seeks disability payments of $5,031 per month from April 16, 1998 to November 19, 2001, as well as an accelerated payment of future benefits under the Policy for the remaining period of her life expectancy. On the date she filed her complaint, plaintiff also brought an Order to Show Cause seeking a temporary restraining order ("TRO") and a preliminary injunction preventing defendant from canceling the Policy for non-payment of premiums pending an adjudication on the merits of this suit. The Court initially granted the TRO but by Memorandum Opinion and Order reported at 2001 WL 1568327 (S.D.N.Y. Dec.5, 2001), familiarity with which is assumed, denied plaintiffs request for a preliminary injunction because plaintiff could not demonstrate the requisite irreparable harm.

In its memorandum opposing plaintiffs request for injunctive relief defendant, inter alia, challenged this Court's subject matter jurisdiction. Defendant argued that plaintiffs claim cannot meet the $75,000 jurisdictional threshold imposed by 28 U.S.C. § 1332 (a) because the most plaintiff can recover if she prevails is $10,062 in benefits, for the two months beginning ninety days after May 3, 2001, and the September 2001 premium payment of $1,415. After reviewing defendant's papers which revealed this basis for dismissal, the Court converted defendant's memorandum to a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and set a briefing schedule. The motion is now fully submitted and, for the reasons set forth below, granted.


When a question is raised about the validity of diversity jurisdiction, the proponent of jurisdiction, in this case the plaintiff, carries the burden of showing that "it appears to a "reasonable probability' that the claim is in excess of the statutory jurisdictional amount." Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir. 1994) (citation omitted). Unless it appears to a "legal certainty" that plaintiffs good faith claim is for less than the jurisdictional amount, dismissal is not warranted. See St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938). "If the right of recovery is uncertain, the doubt should be resolved . . . in favor of the subjective good faith of the plaintiff." Tongkook, 14 F.3d at 785-86 (internal quotations omitted). The amount in controversy is measured as of the date the complaint is filed. See Chase Manhattan Bank, N.A. v. American National Bank and Trust Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir. 1996).

The amended complaint in the present case alleges that Scherer is owed disability benefits of $5,031 per month from April 16, 1998 (the day after she filed the State Action) or, alternatively, July 12, 1998 (90 days after she instituted that suit) to November 17, 2001, the date she instituted the present lawsuit, for a total of more than $200,000. In addition, plaintiff contends that as a result of defendant's complete repudiation of the Policy, defendants must pay her a lump sum payment equal to monthly disability benefits for her life expectancy, an amount which plaintiff does not quantify. The amended complaint also requests an award of punitive damages resulting from defendant's alleged bad faith denial of plaintiffs claim and treble damages for defendant's alleged deceptive practices under New York State General Business Law § 349.

Defendant contends that the bulk of the damages plaintiff seeks are not attainable. As a preliminary matter, defendant argues that New York law prohibits an award of accelerated future benefits under an insurance contract except under special circumstances not shown here. Moreover, defendant maintains that plaintiff is barred from seeking disability benefits in this lawsuit from the period between April 16, 1998 and May 3, 2001 because the question of her entitlement to benefits during that period was already adjudicated by the jury in the State Action. As a result, by defendant's calculation, if plaintiff were to prevail on her claim the most she would be able to recover would be only a fraction of the $75,000 necessary to satisfy the requisite jurisdictional amount.

A. Future Benefits

In New York,*fn1 a plaintiff who sues an insurer for failing to pay benefits under an insurance policy may recover only those benefits that have already accrued, not future benefits to which she may become entitled. See Teig v. First Unum Insurance Co., 282 A.D.2d 669, 723 N.Y.S.2d 707 (2d Dep't 2001) ("Contrary to the plaintiffs contentions, he cannot recover a lump sum award for future benefits under his disability insurance policies."); Gordon v. Continental Casualty Co., 91 A.D.2d 987, 457 N.Y.S.2d 844, 846 (2d Dep't 1983) ("[P]laintiff is not entitled to a lump-sum money judgment, nor to a declaration to that effect, with respect to defendant's future obligations arising under the contract although he may be entitled to a money judgment (or declaration) as to accrued installments."); Berlly v. The United States Life Insurance Co., No. 00 Civ. 1999, 2001 WL 40771, *2 (S.D.N.Y. Jan. 16, 2001) ("Turning to New York law, it is well-established that a plaintiff cannot recover anticipatory breach benefits under a disability insurance policy.").

A narrow exception to this rule arises if the plaintiff can show that the insurer has anticipatorily breached the insurance contract by completely repudiating it. As many New York courts have articulated, "[a]bsent special circumstances . . . New York does not apply the doctrine of anticipatory breach where there is an alleged repudiation of an executory contract for the payment of money only." Romar v. Alli, 120 A.D.2d 420, 501 N.Y.S.2d 877, 878 (1st Dep't 1986). However, "[a] plaintiff can recover a judgment regarding future benefits if, for example, the plaintiff is able to show that the insurer completely repudiated the contract." Brauner v. Provident Life & Cas. Ins. Co., No. 97-Cv-3556, 1998 WL 812612, *2 (E.D.N.Y. March 24, 1998).

Courts applying New York law are in accord that the mere denial of benefits under an insurance contract is not tantamount to complete repudiation. See, e.g., Brauner, id.; Wurm v. Commercial Ins. Co. of Newark, New Jersey, 2001 WL 1263363 (Sup.Ct.N.Y.Co. Sept. 5, 2001). Something more than refusal of a claim by the insurer is necessary to demonstrate the ...

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