* Honorable Frank J. Magill, Senior Circuit Judge, United States Court of Appeals

for the Eighth Circuit, sitting by designation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 31 1998 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation,

Plaintiff-Counter Defendant - Appellee,

v. No. 97-6271 EUGENE NARVAEZ,

Defendant-CounterClaimant - Appellant.

Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. CIV-96-1845-L)
Robert M. Behlen, Oklahoma City, Oklahoma, for Defe ndant-Appellant. Timothy D. Cain (Joseph T. Acquaviva, Jr. with him on the brief), of Wilson, Cain & Acquaviva, Oklahoma City, Oklahoma, for Plai ntiff-Appellee.

Before PORFILIO, MAGILL, * and LUCERO, Circuit Judges.-2-

MAGILL, Circuit Judge.
After Eugene Narvaez was assaulted while entering h is van, he filed a claim for exactly $50,000 in uninsured motorist ben efits under his auto insurance policies with State Farm Mutual Auto Insurance Comp any (State Farm). State Farm denied Narvaez's claim and filed this action f or a declaratory judgment that Narvaez's injuries were not covered by the policies . The district court granted State Farm's motion for summary judgment, and Narva ez appeals. Because the district court did not have subject matter jurisdic tion over this matter, we reverse and remand with directions to dismiss.

I. On July 2, 1996, Narvaez was attacked and beaten in a motel parking lot in Oklahoma City as he was entering his van. The assa ilant stole Narvaez's van, and Narvaez sustained severe head injuries. At the tim e of the assault, Narvaez held two auto insurance policies with State Farm. Each policy provided uninsured motorist coverage of up to $25,000 per injured pers on for injuries arising out of the operation, maintenance, or use of an uninsured motor vehicle. Narvaez made a claim for $50,000, the sum of the policy limits f or each of the two policies. After an investigation, State Farm concluded that t he uninsured motorist coverage of its policies did not cover Narvaez's injuries, a nd denied Narvaez's claim.-3-

On October 29, 1996, State Farm filed a declaratoryjudgment action in the district court seeking a declaration that the unins ured motorist provisions of its insurance policies with Narvaez did not cover Narva ez's injuries. Responding to the district court's concern that the claim for $50 ,000 in uninsured motorist coverage failed to meet the minimum amount in contr oversy required for diversity jurisdiction--an amount in excess of $50,000--State Farm filed an amended complaint that also sought a declaration that State Farm did not owe "interest on the unpaid insurance policies." Am. Compl. at 1, r eprinted inApp. at 39. In an amended answer, Narvaez counterclaimed, without further explanation, for the recovery of "interest upon insurance contract benef its previously paid to him under the 'medical-payments' provisions of the insu rance contract." Answer and Countercl. to Am. Compl. at 1, reprinted in App. at 41. After discovery, the district court granted State Farm's motion for summ ary judgment, and Narvaez now appeals.

II. Although neither party has challenged the district court's jurisdiction, "[i]nsofar as subject matter jurisdiction is concerned, it has long been recognized that a federal court must, sua sponte, satisfy itse lf of its power to adjudicate in every case and at every stage of the proceedings." Tafoya v. Department of-4-

Justice , 748 F.2d 1389, 1390 (10th Cir. 1984). We "must r igorously enforce Congress' intent to restrict federal jurisdiction i n controversies between citizens of different states." Miera v. Dairyland Ins. Co. , Nos. 97-2048, 97-2135, 1998 WL 226272, at *2 (10th Cir. May 7, 1998). "[T]he burden of proving jurisdiction is on the party asserting it," Gibson v. Jeffers , 478 F.2d 216, 221 (10th Cir. 1973), and we review the district court's subject matter j urisdiction over this matter de
novo. See Rosette Inc. v. United States , 141 F.3d 1394, 1395 (10th Cir. 1998). When this action was filed, 28 U.S.C. § 1332 provid ed for diversity jurisdiction "where the matter in controversy excee ds the sum or value of $50,000, exclusive of interest and costs." 28 U.S. C. § 1332(a) (1994) (emphasis added). The Supreme Court has held that when decid ing whether the amount in controversy is adequate, "the sum claimed by the pl aintiff controls if the claim is apparently made in good faith." Saint Paul MercuryIndem. Co. v. Red Cab Co. , 303 U.S. 283, 288 (1938) (footnote omitted). In other words, "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." Id. at 289. Where insurance coverage is denied, the maximum "am ount in controversy is the maximum limit of the insurer's liability und er the policy." Farmers Ins. Co. v. McClain , 603 F.2d 821, 823 (10th Cir. 1979) (quotations an d emphasis omitted). Accordingly, the dispute between State F arm and Narvaez over $50,000-5-

in uninsured motorist benefits, alone, is inadequat e to confer subject matter jurisdiction. State Farm argues that its claim that it did not ow e interest on the unpaid uninsured motorist benefits can be included in calc ulating the amount in controversy because it is a substantive part of Narvaez's insurance claims. We disagree. Section 1332 provides that the amount in controversy must be met without considering "interest and costs." 28 U.S.C . § 1332. The purpose of excluding interest is "to prevent the delaying of asuit merely to accumulate the necessary amount for federal jurisdiction." Branin v. Melikian , 396 F.2d 153, 155 (3d Cir. 1968) (denial of Pet. for Reh'g en banc). Thus, interest is not counted if it "was an incident arising solely by virtue of a d elay in payment" of the underlying amount in controversy. Id. at 154. Here, if State Farm was ultimately obligated to pay Narvaez the uninsured motorist ben efits, the interest on the unpaid policies would arise solely by virtue of State Farm's delay in paying the insurance claim. This is precisely the type of int erest that § 1332 prohibits us from considering. See Principal Mut. Life Ins. Co. v. Juntunen , 838 F.2d 942, 943 (7th Cir. 1988) (per curiam) (interest from the date insurance benefits were due until the date of payment is not considered in amount in controversy because it "is a sum that becomes due because of delay in p ayment"). Thus, in1 At oral argument, State Farm admitted that it was worth less than $25,000. -6- determining the amount in controversy, we will not consider State Farm's claim that it does not owe interest on the unpaid policie s. State Farm next argues that, in calculating the amo unt in controversy, we should consider Narvaez's counterclaim for intereston medical payments. The counterclaim, standing alone, is worth less than th e jurisdictional amount, 1 but State Farm argues that it can be aggregated with th e claim in its complaint to reach the jurisdictional threshold. We need not de cide whether the value of an insufficient counterclaim can be added to the value of an insufficient claim to calculate the amount in controversy, compare Geoffrey E. Macpherson, Ltd. v. Brinecell, Inc. , 98 F.3d 1241, 1245 n.2 (10th Cir. 1996) (counterc laim can be considered when, standing alone, it satisfies the a mount in controversy requirement) with14A Charles A. Wright, Arthur R. Miller & Edward H . Cooper, Federal Practice and Procedure § 3706, at 118 (1985) ("On balance, however, aggregating two insufficient claims in the claim-counterclaim situation seems to be too large a step for the federal courts to take under the existing jurisdiction statutes, especially in the diversity of citizenshi p context." (emphasis added)), because Narvaez's counterclaim was inadequately ple aded and subsequently abandoned, and Narvaez all but admitted that it was concocted solely to obtain federal jurisdiction.-7-

State Farm has failed to carry its burden of showin g that the medical interest counterclaim was not meritless to a legal certainty, see Saint Paul Mercury Indem. , 303 U.S. at 289 (legal certainty test), because n either party alleged facts explaining the basis of the countercl aim, and we cannot determine what the medical payments were for, why the medical payments were overdue, how long the payments were overdue, or, most import antly for jurisdictional purposes, the amount of payments that were overdue and upon which interest purportedly accrued. See Gibson , 478 F.2d at 221 ("Although allegations in the complaint need not be specific or technical in natu re, sufficient facts must be alleged to convince the district court that recover able damages will bear a reasonable relation to the minimum jurisdictional f loor." (footnote omitted)). Additionally, because the counterclaim was never li tigated and was not the subject of any discovery and its merits were not ar gued in the parties' motions for summary judgment or on appeal, the counterclaim was abandoned. See Phillips v. Calhoun , 956 F.2d 949, 950 n.2 (10th Cir. 1992). Althoughdismissed claims may be considered in determining the amount in controve rsy, see Geoffrey E. MacPherson , 98 F.3d at 1244-45 (a party may voluntarily dismi ss a claim to permit the district court to enter a final judgmentin its favor without affecting the amount in controversy), we will not consider the ab andoned medical interest counterclaim in the circumstances of this case beca use its prompt abandonment-8-

without any development leads us to believe that itwas not actually in controversy. Indeed, counsel who raised the counte rclaim admitted at oral argument that it was "somewhat trivial" and "really was calculated to allow the district court to hear the case." See Emland Builders, Inc. v. Shea , 359 F.2d 927, 929 (10th Cir. 1966) (claims must be "asserted by [ the plaintiff] in good faith, as jurisdiction cannot be conferred or established by colorable or feigned allegations solely for such purpose"); cf. Flast v. Cohen , 392 U.S. 83, 100 (1968) (cases are nonjusticiable when they are "feigned or collusive in nature"). Accordingly, because the amount actually in controversy is exact ly $50,000, the limit of Narvaez's policies, the district court lacked subje ct matter jurisdiction. Finally, State Farm invokes 28 U.S.C. § 1653 and as ks this Court to allow it to add an additional claim to its complaint that , when added to the uninsured motorist claim, would state the jurisdictional amou nt. Section 1653 provides that "[d]efective allegations of jurisdiction may be ame nded, upon terms, in the trial or appellate courts." 28 U.S.C. § 1653 (1994). Howev er, § 1653 does not "empower federal courts to amend a complaint so as to produc e jurisdiction where none actually existed." Newman-Green, Inc. v. Alfonzo-L arrain , 490 U.S. 826, 831 (1989). Accordingly, we cannot permit State Farm t o add a new claim to satisfy the amount in controversy because subject matter ju risdiction never actually existed over the present action. Cf. Brennan v. University of Kan. , 451 F.2d-9-

1287, 1289 (10th Cir. 1971) (§ 1653 "concerns defec ts of form, not substance," and therefore does not authorize court to add a fed eral claim to preserve jurisdiction).
We REMAND this matter to the district court for purposes of dismissing the case for lack of jurisdiction.