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State Farm Mut. Auto. Ins. Co. v. Powell

June 24, 1996

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

v.

HERBERT POWELL, APPELLANT



Appeal from the United States District Court for the Western District of Pennsylvania

(Civil Action No. 94-604)

Before: SLOVITER, Chief Judge, and SAROKIN and OAKES *fn*, Circuit Judges

SAROKIN, Circuit Judge.

Submitted Under Third Circuit LAR 34.1(a)

May 23, 1996

Filed June 24, 1996)

Appellee State Farm Mutual Automobile Insurance Company ("State Farm"), an Illinois corporation, filed an action for a declaratory judgment in federal district court, seeking a declaration regarding its obligations to appellant Herbert Powell ("Powell") under insurance policies it had issued to him for underinsured motorist coverage. The district court ultimately granted summary judgment in favor of State Farm.

On appeal, we dismiss this matter for lack of jurisdiction. While State Farm alleged diversity jurisdiction under 28 U.S.C. 1332(a), we conclude that the amount in controversy does not exceed $50,000.

I.

On May 11, 1991, Powell was struck by a vehicle owned by Kenneth Wagner, sustaining personal injuries. He received $25,000 from Wagner's insurance company, which was the maximum amount of coverage under Wagner's policy.

Powell then sought coverage under policies he had purchased from State Farm. Under Pennsylvania law, an insured may "stack" his coverage for uninsured or underinsured motorist coverage; that is "[t]he limits of coverages available . . . shall be the sum of the limits for each motor vehicle as to which the injured person is an insured." 72 Pa. Cons. Stat. Ann. Section(s) 1738(a). At the time he sought coverage, both Powell and State Farm believed that Powell had purchased three policies from State Farm which could be applied to the accident, each of which provided for $50,000 coverage per person. Powell thus sought $150,000 from State Farm to compensate him for his injuries from the accident.

State Farm refused to provide him with the requested coverage because Powell had executed a waiver of his stacking rights in exchange for a reduction in his monthly premiums from $18 to $11. The language of the waiver signed by Powell reads as follows:

By signing this waiver, I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.

Appendix at 51-52. *fn1 State Farm believed that, based upon the language, Powell was entitled to a total of only $50,000 from State Farm, and it entered into a settlement with Powell to pay this amount on November 4, 1993. *fn2 Powell, however, maintained that his signature on ...


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