## Facts

- John and Betty Freeland insured a Pontiac Trans Sport minivan under an auto policy issued by Liberty Mutual Fire Insurance Co.
- The policy provided $100,000 single-limit bodily injury liability coverage and UM/UIM coverage of $12,500 per person and $25,000 per accident.
- The Freelands loaned the minivan to their son, John Freeland Jr., who drove it with his wife and three children.
- On March 7, 2007, the son ran a red light and collided with a police cruiser; the son and his wife died, and the children were seriously injured.
- The son had no separate auto insurance and was treated as an uninsured motorist for UM/UIM purposes.
- Liberty Mutual offered the $25,000 per-accident UM/UIM limit under the policy.
- The Freelands sought a declaration that the UM/UIM selection was invalid under Ohio law and that UM/UIM coverage therefore equaled $100,000 “by operation of law,” making the disputed additional coverage $75,000 beyond the $25,000 already offered.

## Issues

1. Whether the federal courts had diversity jurisdiction under 28 U.S.C. § 1332(a) when the object of the declaratory judgment action was worth exactly $75,000 rather than an amount exceeding $75,000.
2. How to calculate the amount in controversy in an insurance declaratory judgment action where part of the coverage is undisputed.

## Decision

- The Sixth Circuit held that the amount in controversy was $75,000 (the difference between $100,000 sought and $25,000 conceded), which does not satisfy § 1332(a)’s requirement that the amount “exceed” $75,000.
- The court vacated the district court’s summary judgment for Liberty Mutual.
- The court remanded with instructions to dismiss the case for lack of subject-matter jurisdiction.

## Legal Principles

- Federal courts must independently confirm subject-matter jurisdiction, even if no party contests it.
- In declaratory judgment actions, the amount in controversy is measured by the value of the object of the litigation.
- In insurance coverage declaratory actions, the object is the value of the disputed coverage, not the face amount of the policy and not amounts the insurer already concedes.
- Section 1332(a) requires an amount in controversy that exceeds $75,000; a dispute placing exactly $75,000 in controversy is insufficient.
- Speculative or contingent future claims cannot be used to increase the amount in controversy beyond the value of the present dispute.

## Conclusion

Because the declaratory judgment action concerned only $75,000 in disputed UM/UIM coverage, the case fell short of § 1332(a)’s jurisdictional minimum; the Sixth Circuit vacated the merits judgment and required dismissal for lack of diversity jurisdiction.


Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250 (6th Cir. 2011)