United States District Court, E.D. Kentucky, Northern Division, Ashland
MEMORANDUM OPINION AND ORDER
R. Wilhoit. Jr, United States District Judge
matter is before the Court upon Defendant Frontier Housing,
Inc.'s Motion To Dismiss [Docket No 8], The motion has
been fully briefed by the parties [Docket Nos. 10, 11 and 12]
and for the reasons stated herein, the Court finds that this
matter is not subject to dismissal.
case arises from a construction contract between Defendants
Frontier Housing, Inc. ("Frontier") and Stephen and
Pamela Burton ("The Burtons") for the construction
of their home in West Liberty, Kentucky. The original
contract set the price of constriction around $200, 000.
However, a result of alleged change orders and upgrades, the
legitimacy of which are hotly contested by the Burtons, the
ultimate price of the construction was upwards of $400, 000.
According to Frontier, the Burtons owe it $250, 000.
According to the Burtons, they owe Frontier about $17, 000.
The matter resulted in litigation, to-wit, Frontier filed a
mechanics lien against the Burton's property as well as a
Complaint in Morgan Circuit Court, styled Frontier
Housing Inc., v. Stephen Burton and Pamela Burton,
Commonwealth of Kentucky, Morgan Circuit Court, Civil Action
No. 15-CI- 0062. In response to the Complaint filed against
them, the Burtons asserted a counterclaim against Frontier,
In addition to the injunctive relief, the Burtons seek
damages for fraud, violations of the Kentucky Consumer
Protection Act, breach of contract, tortious breach of
contract, intentional and/or negligent misrepresentation,
intentional and/or negligent infliction of emotional
distress, abuse of process, and slander of title, as well as
punitive damages in conjunction with their claims. The
counterclaim does not specify a dollar amount in damages.
Insurance Company ("Owners") issued a policy of
general liability insurance Policy No. 52454382,
("Policy") to Frontier. Pursuant to that policy,
Owners instigated this declaratory judgment action, seeking a
judicial determination as to whether it owes a duty of
defense or indemnity to Frontier for the Burtons
argues that this action must be dismissed because this Court
lacks jurisdiction. Specifically, Frontier contends that this
matter does not involve an amount in controversy sufficient
to establish federal subject matter jurisdiction.
courts are courts of limited jurisdiction. Subject matter
jurisdiction in federal court may be based upon either the
assertion of a federal cause of action or a creature known as
"diversity jurisdiction." Setting forth the
requirements of diversity jurisdiction, 28 U.S.C, § 1332
provides that federal jurisdiction may be based upon the fact
the parties are from different states, but only if the amount
in controversy exceeds $75, 000. 28 U.S.C. § 1332(a).
case, there is no dispute as to the diversity of citizenship
of the parties. Frontier's urging of dismissal for lack
of jurisdiction, rests solely upon its argument that the
amount in controversy does not meet the jurisdiction
threshold of $75, 000. Frontier maintains that the amount in
controversy in this instance is hourne of the Burton's
counterclaim, which, in its estimation, simply does not add
up to $75, 000.
Court agrees that it is the counterclaim which is the
touchstone of this case. In its Complaint, Owners states
quite plainly that it seeks a declaratory judgement with
regard to its obligation to defend and/or indemnify Frontier
with regard to the claims alleged by the Burtons. However,
the amount in controversy is not as apparent as Frontier
of opinion as to the amount in controversy in Kentucky often
arise in light of Kentucky Rule of Civil Procedure 8.01
prohibiting ad damnum clauses which states:
In any action for unliquidated damages the prayer for damages
in any pleading shall not recite any sum as alleged damages
other than an allegation that damages are in excess of any
minimum dollar amount necessary to establish the jurisdiction
of the court....
Burton's counterclaim is silent as to a dollar amount,
which begs the question of how to measure the amount in
controversy. Further complicating the issue is the fact that
this a declaratory judgment action, asking not whether the
insurance policy issued by Owners to Frontier in valid, but,
rather, tasking this Court to determine the applicability of
a policy of insurance to a particular occurrence, in this