## Facts

- Pacific Mutual issued Joseph H. Beaman a health and accident policy on December 28, 1961.
- The policy provided $200 per month for “total disability” caused by accident for as long as total disability continued, and $100 per month for “partial disability” for a like period.
- “Total disability” was defined as inability to perform every duty pertaining to any gainful occupation; “partial disability” as inability to perform one or more important daily duties of the insured’s occupation.
- Beaman suffered an industrial accident on or about November 26, 1962, and claimed resulting permanent total disability within the policy definition.
- Pacific Mutual paid $200 per month for 24 months, then discontinued payments after receiving a physician’s report stating Beaman was able to do light work.
- Payments were stopped in January 1965.
- Beaman sued in federal court seeking declaratory relief that he was permanently totally disabled and sought $69,884, calculated by multiplying the monthly benefit by his asserted life expectancy.

## Issues

1. In a diversity action over a disability policy paying monthly benefits only while total disability continues, is the amount in controversy measured by the projected value of all future potential benefits based on life expectancy, or by benefits accrued and allegedly withheld as of suit?

## Decision

- The Fourth Circuit affirmed dismissal for lack of subject-matter jurisdiction.
- The amount in controversy was limited to accrued, allegedly unpaid installments (and not the projected lifetime stream of contingent future payments).
- Because the recoverable amount was less than $10,000, the federal court lacked diversity jurisdiction.

## Legal Principles

- For disability policies providing periodic payments conditioned on continued disability, the amount in controversy generally includes only installments already due and allegedly wrongfully withheld, not speculative future installments.
- The doctrine of anticipatory breach does not apply to such unilateral, condition-dependent payment obligations so as to permit a lump-sum claim for all future potential benefits.
- The Declaratory Judgment Act does not create jurisdiction; a declaratory claim must still satisfy diversity requirements, including the jurisdictional amount measured by the legally cognizable value of the dispute.

## Conclusion

Because the insurer’s obligation to pay future disability benefits was contingent on continued total disability and not subject to anticipatory breach treatment, only accrued unpaid installments counted toward the jurisdictional minimum; the shortfall required dismissal for lack of diversity jurisdiction.


Beaman v. Pac. Mut. Life Ins. Co., 369 F.2d 653 (4th Cir. 1966)