Court Opinion

ID: 1086592
Source: CourtListenerOpinion
Date Created: 2013-10-23 17:25:58.050366+00
Date Added: 2024-06-11T12:53:07.590864
License: Public Domain

FILED
                                                 United States Court of Appeals
                    UNITED STATES COURT OF APPEALS       Tenth Circuit

                           FOR THE TENTH CIRCUIT                       October 23, 2013

                                                                     Elisabeth A. Shumaker
                                                                         Clerk of Court
WALTER T. LACEY, JR.,

             Plaintiff-Appellant,

v.                                                        No. 13-6129
                                                  (D.C. No. 5:12-CV-00892-M)
HOMEOWNERS OF AMERICA                                    (W.D. Okla.)
INSURANCE COMPANY,

             Defendant-Appellee.

                            ORDER AND JUDGMENT*

Before GORSUCH, ANDERSON, and HOLMES, Circuit Judges.

      Plaintiff-appellant Walter T. Lacey, Jr., appearing pro se and in forma

pauperis, appeals from the district court’s April 25, 2013, order denying his motion

styled “Motion for New Trial and Objection to Order Refusing to Recuse,” which he

filed challenging the district court’s order dismissing his complaint under

*
      After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Fed. R. Civ. P. 8(a) and 12(b)(6) for failure to properly plead and state a claim upon

which relief may be granted. He has also filed several motions in this court. We

conclude that the district court lacked subject matter jurisdiction and should have

dismissed the complaint without prejudice on that basis. Accordingly, we vacate the

district court’s orders and remand for entry of an order dismissing the complaint

without prejudice for lack of jurisdiction.

                                     I. Background

      On August 16, 2012, appellant filed this suit against his homeowner’s

insurance company, alleging that defendant-appellee violated the Oklahoma

Insurance Code when it increased his insurance premium by $509 for the October 31,

2010, through October 31, 2011, renewal period, even though no coverages were

increased and no risks had changed. R. Vol. 1, at 5-6. He alleged that he paid

appellee $709 for the period from October 31, 2009, through October 31, 2010, and

that appellee could have renewed his coverage for $990 or $998, rather than the new

total of $1314 he was forced to pay. Id. at 5-6, 9.1

      On October 12, 2012, appellee moved to dismiss the complaint under

Rule 12(b)(6), arguing that the complaint failed to satisfy the requirements of

Rule 8(a) to include a statement of the court’s jurisdiction, a short and plain
1
      An attachment to the complaint shows that the 2009-2010 premium was $791,
not $709, but adding $509 to either amount does not equal the asserted total of
$1314. See R. Vol. 1, at 5, 12. The apparent mathematical error in the dollar
amounts alleged in the complaint is insignificant, however, and since it has no effect
on our legal analysis, below, we need not resolve it.

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statement of the claim showing that appellant was entitled to relief, and a demand for

the relief sought. After briefing was completed, the district court entered an order on

March 6, 2013, granting appellee’s motion to dismiss. The court reasoned that the

complaint failed to satisfy the requirements of Rule 8(a)(1)-(3) to set forth a

statement of the court’s jurisdiction, a short and plain statement of the claim showing

that appellant was entitled to relief, and a demand for the relief sought. R. Vol. 1,

at 79-80. The court further concluded that appellant “has not set forth sufficient

factual allegations in his Complaint to state any claim for relief.” Id. at 80.

However, the court did not enter a judgment on a separate document pursuant to

Fed. R. Civ. P. 58(a).

      Appellant subsequently filed several motions in the district court for relief

from the court’s March 6 decision, and the court denied them all expressly or by

implication in orders filed on March 26, April 4, and April 25, 2013. Appellant filed

his notice of appeal on May 21, 2013. He also filed a motion for leave to proceed in

forma pauperis on appeal, which the district court granted.

                                     II. Discussion

      Because the district court did not enter a judgment on a separate document

pursuant to Rule 58 after dismissing the complaint in its order dated March 6, 2013,

the judgment was deemed entered 150 days later, on August 5, 2013.

See Medical Supply Chain, Inc. v. Neoforma, Inc., 508 F.3d 572, 573 (10th Cir. 2007)

(discussing the timing considerations now appearing in Rule 58(c)(2)(B)).

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Appellant’s time to appeal expired thirty days later, on September 3, 2013. See Fed.

R. App. P. 4(a)(A). Because appellant filed his notice of appeal before that date, on

May 21, 2013, his notice of appeal is effective, and we have jurisdiction over his

appeal. See Constien v. United States, 628 F.3d 1207, 1211-12 (10th Cir. 2010)

(discussing Rule 58).

      Because appellant appears pro se, we construe his pleadings liberally.

Haines v. Kerner, 404 U.S. 519, 520 (1972) (per curiam). We “have tried to discern

the kernel of the issues []he wishes to present on appeal.” de Silva v. Pitts, 481 F.3d
1279, 1283 n.4 (10th Cir. 2007). He argues that the complaint stated a claim in

diversity for a violation of the regulation of insurance premiums under state law, for

breach of contract by fraudulent inducement, for actionable fraud, or for breach of

fiduciary duties by appellee’s agent. Aplt. Opening Br. at 3.

      “On every appeal, ‘the first and most fundamental question is that of

jurisdiction,’ both of this court and of the district court from which appeal is taken.”

Estate of Harshman v. Jackson Hole Mountain Resort Corp., 379 F.3d 1161, 1163

(10th Cir. 2004) (quoting Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453

(1900)). The court should “examine the face of the complaint to determine whether a

party has adequately presented facts sufficient to establish diversity jurisdiction.”

Gaines v. Ski Apache, 8 F.3d 726, 729 (10th Cir. 1993). “However, where the

pleadings are inadequate, we may review the record to find evidence that diversity

exists.” Id.

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      Under 28 U.S.C. § 1332(a), a plaintiff asserting diversity jurisdiction must

allege that the parties are citizens of different states and must seek more than $75,000

in damages. See Conrad v. Phone Directories Co., Inc., 585 F.3d 1376, 1379

(10th Cir. 2009). “If the district court lacked jurisdiction, we have jurisdiction on

appeal, not of the merits but merely for the purpose of correcting the error of the

lower court in entertaining the suit.” Estate of Harshman, 379 F.3d at 1163 (internal

quotation marks omitted).

      Appellant’s complaint does not allege appellee’s citizenship and does not

include a demand for the relief sought. An affidavit filed by appellee shows that it

“is a Texas corporation with its principal place of business in Irving, Texas.” R.

Vol. 1, at 34. Thus, it appears the parties are diverse. But based on the allegations in

the record, the most compensatory damages appellant could have sought was $523,

the difference between his 2009 premium of $791 and the alleged 2010 premium of

$1314. See R. Vol. 1, at 5, 12, 16. And his allegation that appellee could have

provided coverage for $990 or $998 instead of $1314 suggests that the possible

compensatory damages would be even less than $523. See id. at 6. The rest of the

more than $75,000 in damages he must seek would have to come from punitive

damages.

      Under Oklahoma law, punitive damages may be sought in a “proper case”

alleging a breach of an insurance contract. See Combs v. Shelter Mut. Ins. Co.,

551 F.3d 991, 999 (10th Cir. 2008) (internal quotation marks omitted). But “[t]o

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obtain punitive damages, a plaintiff is required to show not only all the elements of

actionable fraud, but evil intent or such aggravating circumstances as to be deemed

equivalent to such intent.” Id. at 1000 (internal quotation marks omitted).

Appellant’s complaint does not begin to show that appellee acted with “evil intent”

or the equivalent, to support a claim for punitive damages under Oklahoma law.

See id. And in any event, under Supreme Court and Tenth Circuit law, the amount of

punitive damages appellant would have to show to reach the threshold for federal

diversity jurisdiction would be grossly excessive when compared to the possible

compensatory damages and would violate the Due Process Clause of the Fourteenth

Amendment. See Haberman v. The Hartford Ins. Grp., 443 F.3d 1257, 1271-72

(10th Cir. 2006) (upholding punitive damages award in 20:1 ratio to compensatory

damages, under Supreme Court’s non-rigid guideposts established in State Farm

Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 425 (2003), and noting

Court’s holding that “few awards exceeding a single-digit ratio between punitive and

compensatory damages, to a significant degree, will satisfy due process”). As a

result, it is “legally certain,” even under our “very strict” standard for dismissing a

complaint based on the amount in controversy, that the facts appellant alleged could

not support a demand for more than $75,000 in damages, which is required to meet

the statutory threshold for diversity jurisdiction. See Woodmen of World Life Ins.

Soc’y v. Manganaro, 342 F.3d 1213, 1216 (10th Cir. 2003). We conclude that the

district court lacked jurisdiction over the complaint.

                                           -6-
      The district court’s order dismissing the complaint under Rule 12(b)(6) did not

state that the dismissal was with prejudice. See R. at 81. However, a dismissal under

Rule 12(b)(6) must be presumed to be with prejudice. See Rule 41(b) (“any dismissal

not under this rule—except one for lack of jurisdiction, improper venue, or failure to

join a party under Rule 19—operates as an adjudication on the merits”). But

“dismissals for lack of jurisdiction should be without prejudice because the court,

having determined that it lacks jurisdiction over the action, is incapable of reaching a

disposition on the merits of the underlying claims.” Brereton v. Bountiful City Corp.,

434 F.3d 1213, 1218 (10th Cir. 2006). As a result, the district court’s orders

addressing the merits of appellant’s complaint must be vacated. See id.

      Appellant’s motion for leave to proceed on appeal in forma pauperis is

granted. Appellant’s August 7, 2013, “Motion for Judgement,” August 7, 2013,

motion for attorney’s fees, and August 16, 2013, “Objection to Withdrawal of

Payment” and request for just decision are denied. The district court’s orders are

vacated and the case is remanded for entry of an order dismissing the complaint

without prejudice for lack of jurisdiction.

                                                Entered for the Court

                                                Stephen H. Anderson
                                                Circuit Judge

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