Submitted: November 22, 2016
from United States District Court for the District of South
Dakota - Sioux Falls
RILEY, Chief Judge,  WOLLMAN and BENTON, Circuit Judges.
BENTON, Circuit Judge.
Peterson was injured in a car accident while driving a loaner
vehicle from Billion Empire Motors, Inc. Peterson sued
Travelers,  Billion's insurer, for coverage under
the commercial insurance policy. The district
court dismissed for failure to state a claim.
Having jurisdiction under 28 U.S.C. § 1291, this court
insured Peterson's vehicle under a commercial dealership
policy from Travelers. After investigating the accident,
Travelers told Peterson she was not insured under the policy.
Peterson sued, alleging she is entitled to $5, 000 in auto
medical coverage. She also asserted claims for bad faith,
fraud, and unfair trade practice, seeking punitive damages
and attorney's fees.
moved to dismiss for lack of subject matter jurisdiction and
failure to state a claim. Peterson moved for partial summary
judgment. Finding Peterson not insured under the policy, the
district court dismissed. It denied Peterson's
post-judgment motions for reconsideration and leave to amend
the complaint. Peterson appeals. This court reviews de novo
dismissals under Rule 12(b)(6). In re K-tel Intern. Inc.
Secs. Litig., 300 F.3d 881, 888-89 (8th Cir. 2002).
argues the district court lacked subject matter jurisdiction
because the amount in controversy does not exceed $75, 000.
That court did not address this issue. "It is axiomatic
that a court may not proceed at all in a case unless it has
jurisdiction." Crawford v. F. Hoffman-La Roche
Ltd., 267 F.3d 760, 764 (8th Cir. 2001). "If the
defendant challenges the plaintiff's allegations of the
amount in controversy, then the plaintiff must establish
jurisdiction by a preponderance of the evidence."
Kopp v. Kopp, 280 F.3d 883, 884-85 (8th Cir. 2002),
citing McNutt v. General Motors Acceptance Corp.,
298 U.S. 178, 188-89 (1936). "[A] complaint that alleges
the jurisdictional amount in good faith will suffice to
confer jurisdiction, but the complaint will be dismissed if
it 'appear[s] to a legal certainty that the claim is
really for less than the jurisdictional amount.'"
Id. at 884, quoting Larkin v. Brown, 41
F.3d 387, 388 (8th Cir. 1994). "The legal certainty
standard is met where the 'legal impossibility of
recovery [is] so certain as virtually to negative the
plaintiff's good faith in asserting the claim.'"
Schubert v. Auto Owners Ins. Co., 649 F.3d 817, 822
(8th Cir. 2011), quoting JTH Tax, Inc. v. Frashier,
624 F.3d 635, 638 (4th Cir. 2010).
seeks only $5, 000 in medical damages. To satisfy the
jurisdictional amount, she relies on her request for tort
damages, punitive damages, and attorney's fees. South
Dakota law-which the parties agree controls this diversity
action-"consistently recognize[s] emotional distress
damages in tort actions." Stabler v. First State
Bank of Roscoe, 865 N.W.2d 466, 479 (S.D. 2015). See
Bell v. Allstate Life Ins. Co., 160 F.3d 452, 455 (8th
Cir. 1998) ("State law controls the construction of
insurance policies when a federal court is exercising
diversity jurisdiction."). South Dakota allows punitive
damages if malice exists. See Bierle v. Liberty Mut. Ins.
Co., 792 F.Supp. 687, 691 (D.S.D. 1992).
"[P]unitive damages are included in the amount in
controversy, " but "the existence of the required
amount must be supported by competent proof."
OnePoint Sols., LLC v. Borchert, 486 F.3d 342, 348
(8th Cir. 2007), quoting Larkin, 41 F.3d at 388-89.
"Statutory attorney fees do count toward the
jurisdictional minimum for diversity jurisdiction."
Crawford, 267 F.3d at 766, citing Missouri State
Life Ins. Co. v. Jones, 290 U.S. 199, 202 (1933).
alleges fraud, bad faith, and unfair trade practice. She
seeks attorney's fees under S.D. § 58-12-3, which
allows recovery where the insurer "refused to pay the
full amount of . . . loss" and "such refusal is
vexatious or without reasonable cause." S.D. §
58-12-3. Although she does not allege facts showing that her
tort or punitive damages or attorney's fees would exceed
$75, 000, it is not legally impossible that she could recover
at least that amount. See Tripp v. Western Nat. Mut. Ins.
Co., 664 F.3d 1200, 1202 (8th Cir. 2011) (affirming
award of $65, 000 in attorney's fees under S.D. §
58-12-3). The district court had jurisdiction over the
alleges she is insured for auto medical coverage under the
policy. Travelers disagrees. Insurance contract
interpretation is a question of law reviewed de novo.
Noran Neurological Clinic, P.A. v. Travelers Indem.
Co., 229 F.3d 707, 709 (8th Cir. 2000); National
Farmers Union Prop. & Cas. Co. v. Universal Underwriters
Ins. Co., 534 N.W.2d 63, 64 (S.D. 1995). "The
existence of the rights and obligations of parties to an
insurance contract are determined by the language of the
contract, which ...