                                                                         F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                                      PUBLISH
                                                                        October 18, 2006
                        UNITED STATES COURT OF APPEALS                Elisabeth A. Shumaker
                                                                          Clerk of Court
                                  TENTH CIRCUIT



 LOIS LOVELL,

          Plaintiff-Appellant,
 v.                                                        No. 04-1429


 STATE FARM MUTUAL
 AUTOMOBILE INSURANCE
 COMPANY, an Illinois corporation,

          Defendant-Appellee.


             APPEAL FROM THE UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF COLORADO
                         (D.C. No. 02-RB-1152 (PAC))


Michael G. Sawaya (Donald J. Banovitz with him on the briefs), Sawaya, Rose &
Sawaya, P.C., Denver, Colorado for Plaintiff-Appellant.

Heather Perkins (Michael S. McCarthy and Michael S. Freeman with her on the briefs),
Faegre & Benson, LLP, Denver, Colorado for Defendant-Appellee.


Before KELLY and BRISCOE, Circuit Judges, and JOHNSON, District Judge.*


JOHNSON, District Judge.




      *
         The Honorable William P. Johnson, District Court Judge, District of New Mexico,
sitting by designation.
                                       I. BACKGROUND

       Plaintiffs below, Lois Lovell and Floyd Gibson,1 brought a putative class action

lawsuit in Colorado state court seeking reimbursement from their automobile insurer,

State Farm Mutual Automobile Insurance Company (“State Farm”), for the diminution in

value of their vehicles. Lovell and Gibson were involved in separate automobile

collisions in which their vehicles were damaged. Each vehicle was insured by State Farm

and it reimbursed Lovell and Gibson for repairs to their respective vehicles, but Lovell

and Gibson sought additional reimbursement for the diminished value of their vehicles.

In their First Amended Class Action Complaint, Lovell and Gibson alleged that the

Colorado Auto Reparations Act, hereinafter referred to as the “No Fault Act,” mandates

that insurers provide diminished value compensation through collision insurance.2

       Lovell and Gibson alleged that State Farm, with knowledge of its statutory

obligation to provide diminished value compensation through collision insurance, failed

to pay diminished value compensation, and in some insurance contracts expressly

excluded diminished value as a covered loss. They also alleged that State Farm failed to

inform policyholders of diminished value coverage and failed to establish proper

procedures for handling the diminution in value component of claims.



       1
           Gibson is not a party to this appeal.
       2
        The No Fault Act in effect at the time of Lovell’s and Gibson’s collisions,
codified at Colo. Rev. Stat. § 10-4-701 et seq. (2003), was repealed by sunset effective
July 1, 2003. The relevant terms of the No Fault Act, Colo. Rev. Stat. § 10-4-710, were
reenacted and recodified effective July 1, 2003 at Colo Rev. Stat. § 10-4-621 (2005).

                                                   -2-
       Lovell and Gibson brought their action on behalf of themselves and all others who

were not informed or notified of their diminished value coverage and who were not paid

diminished value compensation by State Farm. They sought declaratory relief in the form

of a declaration that all automobile policies issued by State Farm in which the insureds

selected collision coverage include diminished value coverage. They also sought a

declaration that a failure to inform policyholders of diminished value coverage and the

failure to pay diminished value claims is contrary to Colorado law, and that it is State

Farm’s obligation to give notice to insureds of the element of diminished value coverage,

to evaluate all claims to determine if diminution in value is owed, and to pay diminution

in value if owed. Lovell and Gibson sought equitable and injunctive relief to require

State Farm to notify its insureds of diminished value coverage and to establish a

procedure to handle claims in order to honor its obligation to pay diminution in value.

       State Farm removed the action to federal court alleging removal jurisdiction on the

basis of diversity of citizenship under 28 U.S.C. § 1441and 28 U.S.C. § 1332. After

removing the case to federal court, State Farm filed a motion to dismiss under Fed. R.

Civ. P. 12(b)(6) arguing that Lovell’s and Gibson’s insurance policies expressly stated

that their collision coverage did not include payment for any diminished value of the

vehicles after repair, and that these provisions were entirely consistent with the No Fault

Act. In response, Gibson and Lovell argued that the No Fault Act requires insurers to

offer collision coverage, that collision coverage under the No Fault Act must include




                                             -3-
coverage for losses resulting from the diminution of value of an insured vehicle, and thus

policy exclusion of diminished value compensation is void as against public policy.

       Plaintiff Gibson subsequently moved for remand arguing that the district court

lacked subject matter jurisdiction because the amount in controversy requirement of 28

U.S.C. § 1332 was not met.3 He stated that the damages he sought for diminished value

could not be more than $9,000.00, the full value of his vehicle before his automobile

accident. He argued that the amount in controversy must be met by each Plaintiff, and

that the Plaintiff class members’ damages could not be aggregated to meet the amount in

controversy requirement.

       In response to the motion to remand, State Farm argued that the amount in

controversy requirement was met because its costs of compliance with any declaratory or

injunctive relief may be considered to determine the amount in controversy, this amount

would far exceed the $75,000.00 requirement and the costs may be aggregated among the

class of plaintiffs because the class has a common interest in the relief such that it could

only benefit the class as a whole. State Farm also urged that the amount in controversy

requirement is met because the cost of compliance for any single plaintiff would exceed

$75,000.00.

       By Memorandum Opinion and Order, the district court denied Gibson’s motion to

remand concluding that it had subject matter jurisdiction over the case and granted State




       3
           Lovell did not join in the motion to remand.

                                               -4-
Farm’s motion to dismiss. The district court entered judgment for State Farm on

September 20, 2004.

       Lovell appeals the district court’s dismissal of her claims on the merits but does

not appeal the district court’s determination that it had subject matter jurisdiction over

those claims. Since federal courts are courts of limited jurisdiction, this Court has an

independent obligation to examine its own jurisdiction and the jurisdiction of the lower

court in a case under review even when the parties have not raised jurisdiction as an issue.

Bender v. Williamsport Area School Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 1331

(1986); Kennedy v. Lubar, 273 F.3d 1293, 1301-02 (10th Cir. 2001).

       Upon review of the jurisdictional issue, we conclude that the district court had

subject matter jurisdiction of this cause of action. Upon further review of the district

court’s dismissal of the Plaintiffs’ claims under Fed. R. Civ. P. 12(b)(6), we AFFIRM for

the following reasons.

                                     II. DISCUSSION

                                   A. JURISDICTION

       This Court reviews a district court’s ruling on the propriety of removal de novo.

Martin v. Franklin Capital Corp., 251 F.3d 1284, 1289 (10th Cir. 2001). Jurisdiction

based on diversity of citizenship exists when a dispute between citizens of different states

involves an amount in controversy exceeding $75,000. 28 U.S.C. § 1332(a). State Farm

presented undisputed evidence below that its costs of compliance with Lovell’s and

Gibson’s requested injunctive and equitable relief exceeded $75,000. In this case, it is

                                             -5-
undisputed that there is complete diversity among the parties. The jurisdictional issue

then is whether the amount in controversy requirement is met.

       In cases seeking declaratory and injunctive relief, “the amount in controversy is

measured by the value of the object of the litigation.” Hunt v. Washington State Apple

Adver. Comm’n, 432 U.S. 333, 347 (1977). The Tenth Circuit has followed what has

commonly been referred to as the “either viewpoint rule” which considers either the value

to the plaintiff or the cost to defendant of injunctive and declaratory relief as the measure

of the amount in controversy for purposes of meeting the jurisdictional minimum. Justice

v. Atchison, Topeka and Santa Fe Ry. Co., 927 F.2d 503, 505 (10th Cir. 1991). However,

in multiple plaintiff cases, including class actions, the “either viewpoint rule” does not

override the well established principle that each plaintiff or member of the class must

individually satisfy the amount in controversy requirement. Snyder v. Harris, 394 U.S.

332, 335 (1969); Lonnquist v. J.C. Penney Co., 421 F.2d 597, 599 (10th Cir. 1970).

       Class members’ claims may be aggregated to meet the amount in controversy

requirement only when they “unite to enforce a single title or right in which they have a

common and undivided interest.” 4 Snyder, 394 U.S. at 335. When plaintiffs’ claims arise

from individual contracts with a defendant, the plaintiffs are not suing to enforce a



       4
        The Court recognizes that the Class Action Fairness Act of 2005 amended the
diversity jurisdiction statute at 28 U.S.C. § 1332. Under the amended statute, class
members’ claims are now aggregated to determine whether there is the requisite amount
in controversy in excess of $5,000,00. However, the Class Action Fairness Act, effective
on February 18, 2005, is not retroactive to cases filed before the effective date. Pub. L.
No. 109-2 § 9, 119 Stat. 4, 14 (2005).

                                             -6-
common title or right to which they have a common and undivided interest. See Kessler

v. Nat’l Enter., Inc., 347 F.3d 1076, 1079-80 (8th Cir. 2003) (holding that class members

seeking to enforce rights obtained through individual contracts could not aggregate their

claims in order to meet the amount in controversy requirement); Smith v. GTE Corp., 236

F.3d 1292, 1309 (11th Cir. 2001) (“When plaintiffs assert rights that arise from individual

contracts with a defendant, those rights are separate and distinct, and thus, their claims

may not be aggregated.”) (citing Oliver v. Alexander, 31 U.S. (6 Pet.) 143, 145-48

(1832)).

       In this case, each Plaintiff’s and putative class member’s claims arise from

individual insurance contracts, and the Plaintiffs are not uniting to enforce a single title or

right in which they have a common interest. Thus, the claims of the Plaintiffs and

putative class members cannot be aggregated to meet the requisite amount in controversy.

       The district court concluded that the amount in controversy requirement was met

in this case because the injunctive relief sought by the Plaintiffs would not inure to any

single plaintiff but would benefit the class as a whole. However, the test for whether

multiple plaintiffs’ claims may be aggregated requires a court to look at the nature of the

claims. See Lonnquist, 421 F.2d at 599. There is no authority in this Circuit for looking

at the divisibility of the benefit of injunctive relief to determine whether claims can be

aggregated. While there are cases from other jurisdictions, cited by the district court,

supporting this method of determining the amount in controversy, this method cannot be

reconciled with this Court’s holding in Lonnquist.

                                              -7-
       In a Seventh Circuit case addressing the “either viewpoint rule” in multiple

plaintiff cases, the court held that each plaintiff’s claim must be examined separately, and

that the defendant in such a case is deemed to face multiple claims for injunctive relief.

In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 619 (7th Cir. 1997).

The court further reasoned that, in order to avoid violating the nonaggregation rule, the

cost to the defendant of the injunction running to a single plaintiff is the measure of the

amount in controversy. Id.

       We find the Seventh Circuit reasoning persuasive and consistent with this Court’s

prior rulings. Thus, while a court may look to the compliance costs of a defendant in

multiple plaintiff cases to determine the amount in controversy, the cost running to each

plaintiff must meet the amount in controversy requirement unless the plaintiffs’ claims

may be aggregated.

       In the current case, State Farm has shown that its costs of compliance running to

any single Plaintiff or putative class member would exceed $75,000 because the

requested relief would require it to make significant changes to its business practices by

developing a new system for adjusting and paying diminished value claims and providing

extensive notice in Colorado. Because the compliance cost to any single plaintiff exceeds

the requisite amount in controversy, the jurisdictional threshold is met and the district

court properly exercised subject matter jurisdiction over this case.




                                             -8-
                         B. MERITS OF LOVELL’S APPEAL

       The district court dismissed the Plaintiffs’ Complaint pursuant to Fed. R. Civ. P.

12(b)(6) for failure to state a claim. This Court reviews a district court’s order granting a

motion to dismiss for failure to state a claim de novo. Ruiz v. McDonnell, 299 F.3d 1173,

1181 (10th Cir. 2002). We accept all well-pleaded factual allegations in the complaint as

true and view them in the light most favorable to the nonmoving party. Sutton v. Utah

Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999). A dismissal pursuant to

12(b)(6) will be affirmed “only when it appears that the plaintiff can prove no set of facts

in support of the claims that would entitle the plaintiff to relief.” McDonald v.

Kinder-Morgan, Inc., 287 F.3d 992, 997 (10th Cir. 2002).

                              1. The Colorado No Fault Act

       Lovell urges that the district court erred in dismissing her case because the court

incorrectly concluded that the term “damage” as used in the No Fault Act does not

unambiguously and necessarily include diminished value. Lovell also contends that the

district court erred in determining that State Farm’s exclusion of diminished value

coverage in its policy is a valid exclusion in light of the No Fault Act.

       When federal courts are called upon to interpret state law, they must look to

rulings of the highest state court, and if no such rulings exist, must endeavor to predict

how the high court would rule. Johnson v. Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002);

Lampkin v. Little, 286 F.3d 1206, 1210 (10th Cir. 2002). No Colorado authority has yet

determined whether the term “damage” as used in the No Fault Act includes coverage for

                                             -9-
diminished value to an insured vehicle and, assuming “damage” includes diminished

value, whether an insurer’s attempt to exclude such coverage is void as against public

policy.5 Thus, this Court must attempt to predict how the Colorado Supreme Court would

decide these issues.

       The No Fault Act in effect during all relevant times states that, “All insurers shall

offer collision coverage for damage to insured motor vehicles . . .. Collision coverage

shall provide insurance without regard to fault against accidental property damage to the

insured motor vehicle . . ..” Colo. Rev. Stat. § 10-4-701(3) (2003). The language of the

No Fault Act with regard to collision coverage is mandatory. Thus, insurers must offer

collision coverage. The No Fault Act does not, however, clearly delineate the scope of

that coverage other than indicating that it must cover “damage” to insured motor vehicles.

The No Fault Act does not contain a definition of the term “damage.”

       Lovell contends that insurers in Colorado are obligated under the No Fault Act to

“cover all scenarios of physical damage to vehicles and to compensate individuals for

every aspect of damage that they might incur, including diminished value.” Appellant’s

Opening Br. p.5. In support of this argument, Lovell notes that the Colorado Legislature

included in the No Fault Act Declaration that the purpose of the No Fault Act is “to avoid

inadequate compensation to victims of automobile accidents; to require registrants of

       5
        While there is no direct mention in the parties’ briefs, in response to questioning
during oral argument over whether the issues raised in this appeal should be certified to
the Colorado Supreme Court, counsel stated that the district court certified these
questions to the Colorado Supreme Court, and the Colorado Supreme Court declined to
accept the certified questions.

                                            -10-
motor vehicles in this state to procure insurance covering legal liability arising out of

ownership or use of such vehicles and also providing benefits to persons occupying such

vehicles and to persons injured in accidents involving such vehicles.” Colo. Rev. Stat. §

10-4-702 (2003). Colorado courts have determined that the No Fault Act must be

liberally construed to further its remedial and beneficial purposes. Brennan v. Farmers

Alliance Mut. Ins. Co., 961 P.2d 550, 553 (Colo. App. 1996). Lovell points out that the

Colorado Legislature did not include a specific provision in the No Fault Act permitting

insurers to exclude diminished value from coverage. Thus, she argues, “damage” must

include all economic losses including diminished value or the express purposes of the No

Fault Act would be frustrated.

       As further support for her argument, Lovell turns to the legislative history of the

No Fault Act. Senator Plaut, one of the sponsors of the bill that became part of the No

Fault Act, gave a speech during the Colorado Senate’s consideration of the bill. In that

speech, he stated that insurance rates for consumers in other states that had adopted

similar legislation had not increased because those consumers were being “paid promptly

and fairly for their total economic loss and don’t feel compelled to sue.” Transcript of

Senate Consideration on House Bill 1027 and Senate Bill 200, Appellant App. 105.

Lovell argues that “total economic loss” necessarily includes diminished value, and that

Senator Plaut’s statements show the Colorado Legislature’s intent that diminished value

be included in “damages” under the No Fault Act. Accordingly, argues Lovell, a

determination that diminished value is not an element of collision coverage inherent in

                                             -11-
the term “damage” in the No Fault Act is contrary to the legislative intent of the No Fault

Act.

       The No Fault Act provides that every owner of a motor vehicle shall have a

complying policy of insurance covering the motor vehicle. Colo. Stat.§ 10-4-705 (2003).

The section that delineates a complying policy is titled “Required coverages -- complying

policies -- PIP examination program.” Colo. Stat. § 10-4-706 (2003). The portion of the

No Fault Act that requires insurers to provide collision coverage is in a section titled

“Required coverages are minimum.” Colo. Stat. § 10-4-710 (2003). This section of the

No Fault Act makes clear that Colorado consumers may purchase more extensive

coverage than the mandatory minimum coverage set forth in section 10-4-706, but

consumers are not required to purchase these additional coverages.

       By requiring that insurers offer collision coverage but allowing consumers to

choose whether to purchase such coverage, the Colorado Legislature clearly intended for

consumers to have a choice in whether to contract for such coverage. A reasonable

consumer would likely make this choice based on the amount of coverage, the amount of

the deductible and the premium to be paid. Under Lovell’s interpretation of the No Fault

Act, an insurer would be required to provide coverage that included diminution in value,

and a consumer would then have to choose between purchasing this coverage at whatever

the cost or purchasing no collision coverage at all. This is not a reasonable interpretation

of the No Fault Act. It is more reasonable to assume that the Colorado Legislature




                                             -12-
intended for consumers to have a broader range of choices in purchasing optional

coverage.

       The No Fault Act expressly limits an insurer’s ability to provide for exclusions

from or conditions on mandatory coverage. See Colo. Stat. § 10-4-712 (2003). However,

an insurer is permitted to make mandatory coverage subject to certain conditions and

exclusions. Id. The No Fault Act does not expressly limit an insurer’s ability to make

optional collision coverage subject to conditions or exclusions. Thus, it is reasonable to

conclude that the Colorado Legislature did not intend to limit an insurer’s ability to

provide for exclusions from optional collision coverage.

       Lovell argues that the absence of any provision expressly permitting exclusions

from collision coverage, coupled with the Colorado Legislature’s demonstrated ability to

draft such a provision, evidences the Legislature’s intent that insurers not be permitted to

make collision coverage subject to exclusions. This argument ignores the fact that the

express provision regarding exclusions from mandatory coverage is a limitation on an

insurer’s ability to contract with consumers - it is not a grant of authority or permission to

contract. In the absence of such limitation, insurers retain the same right to contract with

consumers that existed prior to the Act. Moreover, Lovell’s interpretation of the No Fault

Act would lead to the absurd result that insurers could provide mandatory coverage

subject to exclusions, but would be unable to provide for exclusions from optional

collision coverage.




                                             -13-
       With regard to the speech by Colorado State Senator Plaut, his use of the phrase

“total economic loss” is no more inclusive of diminished value than the term “damage” in

the No Fault Act. Neither Senator Plaut’s speech nor the No Fault Act itself gives any

indication that the Colorado Legislature intended the No Fault Act to require insurers to

provide diminished value compensation under optional collision coverage. We conclude

that the No Fault Act does not require an insured to pay diminished value as an element

of “damage” under collision coverage.

       Lovell cites Hyden v. Farmers, 20 P.3d 1222, 1225 (Colo. App. 2000) for the

proposition that Colorado courts have already recognized diminished value as an element

of property damage. Lovell’s reliance on Hyden is misplaced. In Hyden, the court was

interpreting the language of an insurance policy and was addressing only whether the

language of the policy, construed to give effect to the intent of the parties but with

ambiguous terms construed in favor of the insured, required the insurer to pay diminished

value. 20 P.3d at 1224. The court ultimately held that, “when an automobile insurer

promises to provide an insured with a vehicle ‘of like kind and quality,’ the insurer must

provide the insured, through repair, replacement, and/or compensation, the means of

acquiring a vehicle substantially similar in function and value to that which the insured

had prior to his or her accident.” Id. at 1226. The court did not discuss or have before it

any issue regarding the requirements under the No Fault Act. Nor does its holding, based

entirely on principles of contract interpretation, have any relevance to an interpretation of

the No Fault Act.

                                             -14-
                              2. Plaintiff’s Insurance Policy

       Lovell’s insurance policy with State Farm provides that State Farm would pay for

the “loss” to her insured vehicle, in excess of the deductible, caused by collision.

Appellant’s App. 129. “Loss” is defined in the policy as “loss of or damage to your car.”

Id. The policy limits State Farm’s liability for loss to “the lower of: 1). the actual cash

value, or 2). the cost of repair or replacement.” Id. “Actual cash value is determined by

the market value, age and condition at the time the loss occurred.” Id. Under the policy

provision for settlement of loss for collision coverage, State Farm has “the right to settle a

loss” in one of two ways. Id. at 130. First, it may pay the agreed actual cash value of the

property at the time of the loss. Id. Alternatively, State Farm may repair or replace the

damaged property. Id. If State Farm repairs or replaces damaged property and this

results in betterment, the insured must pay for the amount of betterment. Id.

       An endorsement to the policy amended the definition of “loss” stating that “loss

does not include any reduction in the value of any vehicle . . . as compared to its value

before it was damaged.” Id. at 134. The endorsement also changed the limit of liability

for collision coverage such that the limit of State Farm’s liability for loss to property to

“the lower of : 1) the actual cash value; or 2) the cost of repair or replacement. The cost

of repair or replacement does not include any reduction in the value of the property after

it has been repaired, as compared to its value before it was damaged.” Id.

       Lovell argues that the language in her insurance policy that requires an insured to

pay for any betterment to property after repair or replacement is at odds and inconsistent

                                             -15-
with any exclusion of diminished value coverage and is thus evidence that diminished

value coverage is included in her policy. While the betterment provision may appear

unfair or unequal in light of policy provisions that State Farm’s liability for loss is limited

to the lower of actual cash value or the cost of repair or replacement, the parties were free

to include whatever terms in the contract they desired, and Lovell was not compelled to

purchase collision coverage. See Allstate Ins. Co. v. Avis Rent-A-Car Sys., Inc., 947 P.2d

341, 346 (Colo. 1997) (recognizing a strong policy of freedom of contract in Colorado).

“Courts should not rewrite insurance policy provision that are clear and unambiguous.”

Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613 (Colo. 1999). The terms of

Lovell’s insurance policy, even without consideration of the provisions of the

endorsement, are clear and unambiguous in limiting State Farm’s liability for loss in such

a manner as to exclude any coverage for diminished value. The endorsement expressly

excludes diminished value coverage. This Court cannot remedy Lovell’s dissatisfaction

with the terms of her policy by rewriting the terms to equalize the betterment provision

with the provision limiting State Farm’s liability for loss.

       Lovell’s primary argument that her insurance policy includes diminished value

coverage relies on her interpretation of the No Fault Act as requiring collision coverage to

include coverage for diminished value of an insured’s vehicle. Lovell is correct that, if

the No Fault Act mandated that collision coverage include diminished value

compensation, State Farm’s attempt to exclude diminished value coverage would be void.

See McConnell v. St. Paul Fire & Marine Ins. Co., 906 P.2d 109, 112 (Colo. 1995) (“any

                                             -16-
clause of a policy that attempts to dilute, condition, or limit statutorily mandated

coverage” is void and unenforceable.”). However, we have concluded that the No Fault

Act does not require an insurer to pay diminished value as an element of “damage” under

collision coverage. Accordingly, State Farm’s exclusion of diminished value

compensation from its collision coverage is not void and unenforceable as against

Colorado public policy.

                                    III. CONCLUSION

       Because the No Fault Act does not require State Farm to pay diminished value

compensation under its collision coverage of Lovell’s vehicle, and Lovell’s insurance

policy contains an enforceable exclusion of such coverage, Lovell can prove no set of

facts in support of her claims that would entitle her to relief. Thus, the district court did

not err in granting State Farm’s motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6),

and the judgment of the district court is AFFIRMED.




                                             -17-
