American Family Mutual Insurance Company v. Vein Centers for Excellence, Inc. and St. Louis Heart Center

American Family Mutual Insurance Company (“American Family”) filed a

complaint for declaratory judgment against its insured, Vein Centers for Excellence,

Inc. (“Vein Centers”), disputing American Family’s duty under certain policies to

defend and indemnify Vein Centers in a class action lawsuit. St. Louis Heart Center,

Inc. (“St. Louis Heart”) was the class representative in the underlying suit against

Vein Centers and was later joined as a defendant in the declaratory action. The

district court concluded American Family’s 1 insurance policies did not cover the

claims against Vein Centers in the class action lawsuit and awarded summary

judgment in favor of American Family. On appeal, St. Louis Heart argues that

subject matter jurisdiction is lacking and that summary judgment in favor of

American Family was improper. We affirm.

I. Background

In 2011, St. Louis Heart filed a class action petition against Vein Centers for

sending unsolicited advertisements via facsimile to multiple recipients, alleging a

violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227.2

The district court granted St. Louis Heart’s motion for class certification on

December 11, 2013. Vein Centers subsequently moved to decertify the class and the

district court granted that motion in 2017.

The merits of the class action are not the subject of this appeal. Rather, the

issue presented is whether the insurance policies of Vein Centers obligated its

insurance provider, American Family, to defend and indemnify the lawsuit.

1The Honorable Jean C. Hamilton, United States District Judge for the Eastern

District of Missouri.

2The class action petition also included claims for common law conversion and

violations of the Missouri Merchandising Practices Act, which were voluntarily

dismissed.

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Vein Centers tendered the lawsuit to American Family for defense and

indemnification under two insurance policies: a Businessowners Policy and a

Commercial Liability Umbrella Policy. American Family agreed to provide a defense

to Vein Centers subject to a full reservation of rights.

Both policies contained an exclusion for the “Distribution of Material in

Violation of Statutes.” Under the Businessowners Policy,3 the relevant portion of this

exclusion barred coverage for:

“Bodily injury”, “property damage”, or “personal and advertising injury”

arising directly or indirectly out of any action or omission that violates

or is alleged to violate:

(1) The Telephone Consumer Protection Act (TCPA), including any

amendment of or addition to such law[.]

In 2015, American Family filed a complaint for declaratory judgment seeking

a declaration that coverage did not exist for the claims alleged in the underlying

lawsuit. American Family later amended its complaint in 2016, adding St. Louis

Heart as an additional defendant.

St. Louis Heart moved to dismiss the declaratory action, claiming the district

court lacked subject matter jurisdiction because the amount in controversy did not

exceed $75,000 as required for diversity jurisdiction under 28 U.S.C. § 1332. St.

Louis Heart contended the class members’ claims were improperly aggregated to

satisfy the amount-in-controversy threshold. The district court rejected this position

and denied the motion to dismiss.

3The Umbrella Policy contained a substantially similar exclusion.

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The parties filed cross-motions for summary judgment in 2017. American

Family argued that neither the Business nor Umbrella policies provided coverage for

the TCPA claim in part because both explicitly excluded coverage for violations of

the TCPA. St. Louis Heart conceded the TCPA exclusion was enforceable under the

Umbrella Policy. However, St. Louis Heart contended the exclusion in the

Businessowners Policy never took effect because American Family failed to properly

notify Vein Centers of the provision’s addition when the policy was renewed. On this

basis, St. Louis Heart argued Missouri law dictated it was entitled to indemnification

under the Businessowners Policy.

The district court awarded summary judgment in favor of American Family.

St. Louis Heart timely appealed both the district court’s denial of its motion to

dismiss for lack of subject matter jurisdiction and the district court’s summary

judgment order.

II. Discussion

We begin our discussion with the jurisdictional question raised in St. Louis

Heart’s motion to dismiss.

A. Subject Matter Jurisdiction

Subject matter jurisdiction of the district courts where based on diversity of

citizenship of the parties is governed by 28 U.S.C. § 1332(a)(1), which provides:

“The district courts shall have original jurisdiction of all civil actions where the

matter in controversy exceeds the sum or value of $75,000, exclusive of interest and

costs, and is between citizens of different States.”

St. Louis Heart argues the district court lacked subject matter jurisdiction

under 28 U.S.C. § 1332 because the $75,000 amount-in-controversy requirement was

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not met. “The existence of subject-matter jurisdiction is a question of law that this

court reviews de novo.” ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters, 645 F.3d

954, 958 (8th Cir. 2011). However, we review the district court’s factual findings

made in conjunction with its amount-in-controversy ruling for clear error. Scottsdale

Ins. Co. v. Universal Crop Prot. All., LLC, 620 F.3d 926, 930–31 (8th Cir. 2010).

Typically, complaints need only allege the jurisdictional amount in good faith

and will be dismissed only if it “appear[s] to a legal certainty that the claim is really

for less than the jurisdictional amount.” Scottsdale, 620 F.3d at 931 (alteration in

original) (quoting Kopp v. Kopp, 280 F.3d 883, 884 (8th Cir. 2002)). However, “[i]f

the defendant challenges the plaintiff’s allegations of the amount in controversy, then

the plaintiff must establish jurisdiction by a preponderance of the evidence.” Id.

(quoting Kopp, 280 F.3d at 884–85). St. 4 Louis Heart’s challenge required American

Family to prove, by a preponderance of evidence, that the amount in controversy did

not appear to a legal certainty to be $75,000 or less.

“[T]he amount in controversy is measured by the value to the plaintiff of the

right sought to be enforced.” Federated Mut. Ins. Co. v. Moody Station & Grocery,

821 F.3d 973, 977 (8th Cir. 2016) (quoting Schubert v. Auto Owners Ins. Co., 649

F.3d 817, 821 (8th Cir. 2011)). This value is assessed at the time of filing the action.

Scottsdale, 620 F.3d at 931. “Subsequent events reducing the amount in controversy

do not destroy diversity jurisdiction,” but they may “be relevant to prove the existence

or nonexistence of diversity jurisdiction at the time of filing.” Id. In measuring the

4When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6), courts

typically look only to the pleadings and determine whether they state a plausible

claim for relief. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 677–80 (2009); Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 554–56 (2007). But a motion to dismiss for lack of

subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) raises a factual challenge

to the court’s jurisdiction, and courts may look to evidence outside the pleadings and

make factual findings. See Davis v. Anthony, Inc., 886 F.3d 674, 679 (8th Cir. 2018).

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value of the plaintiff’s right to be enforced, this Court has recognized a “general rule

[] that ‘individual class members’ distinct claims for actual damages may not be

aggregated to satisfy the . . . amount-in-controversy requirement for diversity

jurisdiction.’” Kessler v. Nat’l Enters., Inc., 347 F.3d 1076, 1078 (8th Cir. 2003)

(omission in original) (quoting Crawford v. Hoffman–La Roche Ltd., 267 F.3d 760,

765 (8th Cir. 2001)).

Application of the foregoing legal standards convinces us the district court did

not err in concluding American Family satisfied its burden of establishing the

minimum amount in controversy for the reasons set forth below.

“In a declaratory judgment action such as this one, wherein an insurer sues an

insured to determine its obligation to defend and indemnify, the amount in

controversy . . . ordinarily equals the probable costs of defense and indemnification

of the underlying litigation less any applicable deductible.” Scottsdale, 620 F.3d at

932. An adverse judgment against Vein Centers would have entitled St. Louis Heart

to an award far exceeding the threshold, as evidenced by St. Louis Heart’s motion for

summary judgement requesting $17,605,500 plus prejudgment interest. American

Family’s insurance policies created the potential for a single indemnity obligation to

Vein Centers in the millions of dollars. While the 5 coverage limit is not the measure

of the amount in controversy, the indemnification amount is, and in this case that

amount clearly exceeds the jurisdictional threshold. And that is to say nothing of the

costs of defending the underlying action, which would have likely exceeded $75,000.

On appeal, St. Louis Heart does not argue the potential indemnification was

inaccurately calculated. Instead, it argues the cost of indemnification was only

5The Businessowners Policy contained a liability limit of $2,000,000 per

occurrence and/or $4,000,000 in the aggregate, and the Umbrella Policy contained a

liability limit of up to $1,000,000.

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arrived at by improperly aggregating the claims of all the class plaintiffs. It is true

that the class members here cannot aggregate the indemnification value of their

claims to satisfy diversity jurisdiction. “[W]here [plaintiffs’] interests are distinct,

and their only relationship is that ‘they form a class of parties whose rights or

liabilities arose out of the same transaction, or have a relation to a common fund or

mass or property sought to be administered, such distinct demands or liabilities

cannot be aggregated.’” Crenshaw v. Great Cent. Ins. Co., 482 F.2d 1255, 1259 (8th

Cir. 1973) (quoting Eagle Star Ins. Co. v. Maltes, 313 F.2d 778, 780 (3d Cir. 1963)).

But that is not what occurred here. “From [American Family’s] perspective, there is

only one claim—by its insured,” Vein Centers, “for the sum of defense and indemnity

costs.” Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 539 (7th Cir. 2006).

American Family relies only on its own potential indemnification liability and

defense costs to satisfy the jurisdictional threshold, which distinguishes this case from

the various cases cited by St. Louis Heart. As our 6 sister circuit explained, “the antiaggregation

rule does not apply to a federal declaratory-judgment action between a

single plaintiff and a single defendant, just because the unitary controversy between

6See Crenshaw, 482 F.2d at 1259–60 (holding two separate and distinct

plaintiffs could not aggregate their claims); Siding & Insulation Co., Inc. v. Acuity

Mut. Ins. Co., 754 F.3d 367, 368–69, 372–73 (6th Cir. 2014) (holding class members

could not aggregate their claims to satisfy the amount in controversy threshold in a

declaratory judgment against an insurer); CE Design Ltd. v. Am. Econ. Ins. Co., 755

F.3d 39, 44–45 (1st Cir. 2014) (holding class plaintiffs in an action alleging violation

of the TCPA could not aggregate their claims or view the amount in controversy from

the perspective of the defendant insurer); Travelers Prop. Cas. v. Good, 689 F.3d 714

(7th Cir. 2012) (holding diversity jurisdiction did not exist where the insured

defendant in a class lawsuit assigned its right to class plaintiffs, and the insurance

companies in turn brought a declaratory action against the class claimants regarding

coverage obligations); Friedman v. New York Life Ins. Co., 410 F.3d 1350 (11th Cir.

2005) (holding the district court did not have diversity jurisdiction over a class action

brought by insured class members because the insureds’ claims could not be

aggregated to satisfy the amount in controversy threshold).

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these parties reflects the sum of many smaller controversies. No more need be said

on this subject.” Meridian, 441 F.3d at 539.

Subject matter jurisdiction over this action was proper under 28 U.S.C.

§ 1332(a)(1).

B. Summary Judgment

We next address St. Louis Heart’s argument that summary judgment in favor

of American Family was improper. The district court granted summary judgment

after concluding the “Distribution of Material in Violation of Statutes” provision was

a valid exclusion from the Businessowners Policy. St. Louis Heart appeals this

conclusion, arguing the exclusion constituted a constructive nonrenewal of the

Businessowners Policy, for which American Family failed to provide notice.

American Family does not dispute their obligation to provide notice of the

constructive nonrenewal. Instead, they claim they sufficiently demonstrated

compliance with the notice obligation. We agree.

“We . . . review de novo the district court’s resolution of cross-motions for

summary judgment viewing the evidence in the light most favorable to the

nonmoving party and giving the nonmoving party the benefit of all reasonable

inferences.” Fed. Ins. Co. v. Great Am. Ins. Co., 893 F.3d 1098, 1102 (8th Cir. 2018)

(omission in original) (quoting LaCurtis v. Express Med. Transporters, Inc., 856 F.3d

571, 576 (8th Cir. 2017)). “Summary judgment is required ‘if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.’” Id. (quoting LaCurtis, 856 F.3d at 576–77).

Under Missouri law, which both parties agree controls in this diversity case,

“[n]o notice of nonrenewal of a commercial casualty insurance policy shall be

effective unless mailed or delivered by the insurer to the named insured at least sixty

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days prior to the effective date of the nonrenewal.” Mo. Rev. Stat. § 379.883(2). An

insurer’s “tendering of a policy with a significant change in coverage constitute[s] a

constructive nonrenewal,” triggering notice requirements. Resolution Tr. Corp. v.

Am. Cas. Co., 874 F. Supp. 961, 967 (E.D. Mo. 1995) (applying Missouri law).

Missouri law recognizes a presumption as to receipt of mailed materials.

Specifically, “[t]here is a presumption that a letter duly mailed has been received by

the addressee.” Ins. Placements, Inc. v. Utica Mut. Ins. Co., 917 S.W.2d 592, 595

(Mo. Ct. App. 1992) (citing Shelter Mut. Ins. Co. v. Flint, 837 S.W.2d 524, 528 (Mo.

Ct. App. 1992)). This presumption of receipt by the addressee can be triggered even

in the absence of direct proof that a particular letter was mailed. See id. at 595–96

(citing same). In circumstances where the customary volume of mail would render

proof impractical or infeasible, the purported sender may rely on “evidence of the

settled custom and usage of the sender in the regular and systematic transaction of its

business” to establish the presumption. Id. at 595 (citing same).

In light of this legal framework, American Family is entitled to the presumption

that Vein Centers received notice of the policy exclusion. To establish compliance

with the notice requirements under Missouri law, American Family offered the

deposition testimony of Ms. Deborah Woodcock, one of its corporate representatives.

Ms. Woodcock testified that American Family mailed a Coverage Summary Letter

(“CSL”) to Vein Centers more than sixty days prior to the Businessowners Policy

renewal date. Ms. Woodcock further testified that it was American Family’s standard

business practice to include with the CSL a Policyholder Communication (“PLC”),

which is a notification of changes made to an insured’s policy. Ms. Woodcock went

on to identify an internal communication sent to American Family agents and staff,

which indicated current holders of the Businessowners Policy would be sent a PLC

notification setting forth the newly instituted “Distribution of Material in Violation

of Statutes” exclusion. While Ms. Woodcock could not produce an actual copy of

this PLC addressed to Vein Centers, her testimony established it was likely mailed

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to Vein Centers as part of American Family’s custom and procedure of transacting

business. This evidence creates the presumption that Vein Centers received notice

of the exclusion.

The presumption of a letter’s receipt is not unassailable. When a purported

sender presents evidence that a letter was mailed, the presumption of receipt “may be

rebutted by evidence it was not, in fact, received.” Id. (citing Williams v. Northeast

Mut. Ins. Ass’n, 72 S.W.2d 166, 167 (Mo. Ct. App. 1934)). If the presumption is

rebutted with evidence of non-receipt, the question of receipt is left “for the

determination of the jury under all of the facts and circumstances of the case.” Id.

However, St. Louis Heart has made no such rebuttal.

St. Louis Heart failed to submit any evidence which would indicate Vein

Centers did not, in fact, receive the CSL and PLC. Instead, St. Louis Heart argues

Ms. Woodcock’s testimony was insufficient to establish the presumption of receipt

in the first place. It highlights the lack of definitive proof that the PLC was sent and

notes that Ms. Woodcock did not personally send the documents and lacks personal

knowledge as to whether the documents were sent. But Missouri law does not require

direct proof or personal knowledge of mailing; only “evidence of the settled custom

and usage of the sender in the regular and systematic transaction of its business.”

Flint, 837 S.W.2d at 528 (quoting Hills v. McComas Rentals, Inc., 779 S.W.2d 297,

299 (Mo. Ct. App. 1989)). Speculation that American Family’s normal business

procedures were not followed in this case is not the same as affirmative evidence that

Vein Centers did not receive the documents. In short, St. Louis Heart has not

provided a sufficient evidentiary basis to rebut the presumption that Vein Centers

received notice.

Summary judgment in favor of American Family was proper because St. Louis

Heart has not provided any evidence that adequate notice of the exclusion was not

provided to Vein Centers.

We affirm both the district court’s finding of jurisdiction and its summary

judgment order in favor of American Family.7



We grant American Family’s motion 7 to supplement its Supplemental

Appendix.