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DESIGN CONSULTANTS ENGG. CORP. v. SECURITY INS. CO

January 20, 1970

DESIGN CONSULTANTS ENGINEERING CORPORATION, a corporation
v.
SECURITY INSURANCE COMPANY OF HARTFORD, a corporation


Rosenberg, District Judge.


The opinion of the court was delivered by: ROSENBERG

ROSENBERG, District Judge.

 Presently before me for consideration is the defendant's motion to dismiss for failure of the plaintiff in this diversity action to meet the jurisdictional amount required by 28 U.S.C. § 1332, *fn1" and for failure of the plaintiff to comply with the requirements of the insurance contract which indicates a procedure for establishing a loss and furthering a claim.

 This suit is an action brought against an insurance company, which issued a commercial blanket bond policy, to recover damages allegedly sustained by the plaintiff.

 The first ground which the defendant asserts in its petition for dismissal is the fact that the limit of liability established by the policy is $10,000. Since the language of 28 U.S.C. § 1332 requires that liability be in excess of $10,000 to establish the requisite diversity jurisdiction, the defendant alleges that since the terms of the policy clearly limit its liability to no more than $10,000, diversity jurisdiction does not exist.

 Generally, under such circumstances, an allegation such as the defendant makes here, if true, would justify dismissal of the action. "A claim in the even amount of $10,000 does not satisfy the jurisdictional requirement." Fratto v. Northern Insurance Company of New York, 242 F. Supp. 262, 268 (W.D. Pa. 1965), affirmed 359 F.2d 842, C.A. 3, 1965. However, courts have adopted the position that where the insurance carrier is derelict in its fiduciary duty towards its insured, the liability of the carrier may exceed the policy limits, and extend all liability of the insured. Gedeon v. State Farm Mutual Auto. Insurance Co., 342 F.2d 15, C.A. 3, 1965; Ripepi v. American Insurance Companies, 349 F.2d 300, C.A. 3, 1965. The plaintiff has contended that the defendant's dereliction of duty was the proximate cause of the plaintiff suffering losses in excess of the policy limits. On these grounds the plaintiff has set forth a case of damages in excess of the jurisdictional amount required by 28 U.S.C. § 1332 and should not be precluded from asserting his claim in the Federal Courts.

 As the second ground urging dismissal, the defendant alleges that the plaintiff failed to comply with the provisions of Section 7 of the policy which require, inter alia, that "No action shall lie against the Underwriter unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this Bond, nor until ninety days after the required proofs of loss have been filed with the Underwriter * * *"

 It appears that on July 18, 1968, the plaintiff filed the defendant's verified proof of loss, Part I, together with the supporting documents. On August 23, 1968, the plaintiff filed Part 2 of the defendant's verified proof of loss. The present suit was initiated on November 11, 1968.

 From the terms of the bond, it is not clear what proofs are required to be filed at least ninety days prior to the filing of suit, and any fault for the ambiguity must fall on the defendant who wrote the policy. "Since one who speaks or writes, can, by exactness of expression, more easily prevent mistakes in meaning, than one with whom he is dealing doubts arising from ambiguity of language are resolved against the former in favor of the latter." Restatement of Contracts, Section 236, Comment on Clause (d).

 For these reasons, the motion of the defendant to dismiss will be denied.

 SUPPLEMENTAL MEMORANDUM

 Rosenberg, District Judge.

 Presently before me for consideration is the defendant's petition for a certificate granting leave to petition the United States Court of Appeals for the Third Circuit for a review of the order of this Court dated January 20, 1970, in which the defendant's ...


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