Siding and Insulation Co. v. Acuity Mutual Ins. Co. ( 2014 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0120p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
THE SIDING AND INSULATION COMPANY, INC., ┐
individually and as a class of similarly-situated │
persons, │
│ No. 13-3884
Plaintiff-Appellant,
│
>
│
v.
│
│
ACUITY MUTUAL INSURANCE COMPANY, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland
No. 1:12-cv-01574—James S. Gwin, District Judge.
Argued: March 20, 2014
Decided and Filed: June 10, 2014
Before: KEITH, COOK, and KETHLEDGE, Circuit Judges.
_________________
COUNSEL
ARGUED: David M. Oppenheim, ANDERSON + WANCA, Rolling Meadows, Illinois, for
Appellant. D. John Travis, GALLAGHER SHARP, Cleveland, Ohio, for Appellee. ON
BRIEF: David M. Oppenheim, Jeffrey A. Berman, ANDERSON + WANCA, Rolling
Meadows, Illinois, Scott D. Simpkins, CLIMACO WILCOX PECA TARANTINO &
GAROFOLI CO., LPA, Cleveland, Ohio, for Appellant. D. John Travis, Jay Clinton Rice, Gary
L. Nicholson, GALLAGHER SHARP, Cleveland, Ohio, for Appellee.
1
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 2
_________________
OPINION
_________________
COOK, Circuit Judge. This insurance coverage dispute stems from a class action
alleging that Beachwood Hair Clinic, Inc. (“Beachwood”) violated the Telephone Consumer
Protection Act (TCPA), 47 U.S.C. § 227, by disseminating more than 37,000 unsolicited fax
advertisements between 2005 and 2006. See generally Siding & Insulation Co. v. Beachwood
Hair Clinic, Inc. (“Siding I”), No. 11-CV-1074 (N.D. Ohio). Facing more than $18 million in
statutory damages, Beachwood and its insurer, Acuity Mutual Insurance Co. (“Acuity”), agreed
to an approximate $4-million class settlement with the Ohio-based class representative, The
Siding & Insulation Co. (“Siding”). The settlement further stipulated that separate litigation
between Acuity and Siding would resolve a $2-million coverage dispute under Beachwood’s
policy. (See R. 21-1, Underlying Settlement Judgment ¶ G.) Per the settlement agreement,
Siding filed this declaratory judgment action against Acuity under Beachwood’s policy. The
district court granted summary judgment to Acuity denying coverage, prompting this appeal by
Siding.
Detecting a possible jurisdictional defect, we requested supplemental briefing from the
parties. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (“[S]ubject-matter
[jurisdiction] delineations must be policed by the courts on their own initiative . . . .”). If the
district court lacks original jurisdiction, our appellate jurisdiction extends no further than
“correcting the error of the lower court in entertaining the suit.” Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 95 (1998) (quotation omitted). As the party requesting a federal forum,
Siding bears the burden of establishing federal jurisdiction. See McNutt v. Gen. Motors
Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936); Serras v. First Tenn. Bank Nat’l Ass’n,
875 F.2d 1212, 1214 (6th Cir. 1989).
Siding invokes diversity jurisdiction for this coverage dispute, claiming diversity of
citizenship and an amount in controversy greater than $75,000. See 28 U.S.C. § 1332(a). We
take issue only with the amount in controversy, which we appraise from the plaintiff’s complaint.
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 3
See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288–89 (1938); Charvat v.
EchoStar Satellite, LLC, 630 F.3d 459, 462 (6th Cir. 2010). Unable to identify a singular interest
exceeding $75,000 in the remaining $2-million coverage dispute, Siding seeks to aggregate its
interest with putative class members to satisfy the diversity statute’s amount-in-controversy
requirement. Alternatively, Siding asks us to consider the value of the policy dispute from
Acuity’s perspective: $2 million. Concurring with Siding’s assertion of jurisdiction, Acuity
offers yet another jurisdictional basis: ancillary jurisdiction via the settlement judgment in the
underlying class action.
Finding these arguments unpersuasive, we conclude that Siding fails to carry its burden
of demonstrating federal jurisdiction and VACATE the district court’s judgment.
I.
Since the Judiciary Act of 1789 established the district courts, the amount-in-controversy
requirement has limited federal diversity jurisdiction, and “[t]he traditional judicial interpretation
. . . has been . . . that the separate and distinct claims of two or more plaintiffs cannot be
aggregated in order to satisfy the jurisdictional amount requirement.” Snyder v. Harris, 394 U.S.
332, 335 (1969). The Supreme Court recognizes a limited exception to this anti-aggregation
principle for cases where “two or more plaintiffs unite to enforce a single title or right in which
they have a common and undivided interest.” Id. at 335; Everett v. Verizon Wireless, Inc.,
460 F.3d 818, 822 (6th Cir. 2006). Siding asserts such an interest here, claiming that class
members share a common and undivided interest in the $2 million in insurance proceeds at stake.
Though novel in this circuit, the Seventh Circuit recently rejected this sort of aggregation
argument. See Travelers Prop. Cas. v. Good, 689 F.3d 714 (7th Cir. 2012). There, following a
$16-million class settlement against a shoe company for issuing unlawful receipts, the
company’s insurer filed a declaratory judgment action against the class plaintiffs seeking to
avoid coverage. In dismissing the action for lack of jurisdiction, the court denied the insurance
company’s attempt to aggregate class members’ modest claims, concluding that the underlying
class lacked a common and united interest in the insurance. Travelers, 689 F.3d at 722–23.
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 4
Two limiting principles from our sister circuits guided the Travelers court’s claim-
aggregation analysis. First, the court adopted the Fifth Circuit’s Eagle Star standard, confining
aggregation to cases in which plaintiffs share a “joint interest in [a] fund, such that . . . plaintiffs’
rights are . . . affected by the rights of co-plaintiffs.” Id. at 722 (quoting Eagle Star Ins. Co. v.
Maltes, 313 F.2d 778, 781 (5th Cir. 1963)). Then, borrowing from a Second Circuit case, the
court examined the “nature of the right asserted,” framing the relevant inquiry as whether the
class members shared a “pre-existing (pre-litigation) interest in the subject of the litigation”—
and not simply “whether successful vindication of the right will lead to a single pool of money
that will be allocated among the plaintiffs.” Travelers, 689 F.3d at 722 (quoting Gilman v. BHC
Sec., Inc., 104 F.3d 1418, 1427 (2d Cir. 1997)). The class members in Travelers lacked such a
pre-existing interest—notwithstanding the fact that the underlying settlement predated the
declaratory action—because their underlying “claims all arose from separate transactions. As
the Second Circuit said in Gilman: ‘There is no fund. The claim remains one on behalf of
separate individuals for the damage suffered by each due to the alleged conduct of the
defendant.’” Travelers, 689 F.3d at 722 (quoting Gilman, 104 F.3d at 1427).
We find Travelers instructive because our decision in Everett endorsed both limiting
principles. Everett, 460 F.3d at 824, 827 (relying on Eagle Star and Gilman). Everett involved a
state-court class action alleging contract and misrepresentation claims related to hidden cell-
phone fees, removed to federal court on diversity grounds by the service-provider defendants.
See id. at 821. Even without the added wrinkles of an underlying action and settlement
judgment, the claim-aggregation theory in Everett bears a striking resemblance to that in
Travelers. So do the court’s reasons for rejecting it.
In Everett, the service provider defending federal jurisdiction on appeal aggregated class
plaintiffs’ unjust-enrichment claims for disgorgement, arguing that their shared interest in the
putative constructive trust satisfied the amount-in-controversy requirement. See Everett,
460 F.3d at 824. We disagreed, emphasizing Gilman’s pre-litigation-interest requirement:
“Plaintiffs suing to enforce a ‘single title or right’ must share their ‘common and undivided
interest’ in vindicating that right before the litigation, not as a result of it.” Id. at 824 (quoting
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 5
Gilman, 104 F.3d at 1424, 1430); see also id. at 827.1 Everett built on our unpublished decision
in Durant v. Servicemaster Co., 109 F. App’x 27, 29–30 (6th Cir. 2004), which rejected a similar
claim-aggregation theory. Both cases distinguish class funds from a joint interest in a common
fund:
“[The class] ‘fund’ is created to facilitate the litigation process in virtually every
class action, and has nothing necessarily to do with whether the plaintiffs shared a
pre-existing (pre-litigation) interest in the subject of the litigation.” Gilman,
104 F.3d at 1427. As in Durant, any such fund would only be “a vehicle for
administering individual awards, not an indivisible res.” 109 F. App’x at 30.
Everett, 460 F.3d at 827.
We note the same flaw here. Siding’s successful pursuit of this coverage would garner
additional funds for the underlying settlement fund: a single pool of money to pay class
members’ individual claims against the underlying defendant.2 The thousands of junk faxes sent
by Beachwood served as the pre-litigation source of their claims. “Each [victim] had the option,
had he or she wished, to sue the [alleged wrongdoer] individually for the [misconduct]—a legal
reality that precludes jurisdiction today no less than it did 100 years ago.” Everett, 460 F.3d at825 (citing Gibson v. Shufeldt, 122 U.S. 27, 30 (1887)); cf. Troy Bank of Troy, Ind., v. G.A.
Whitehead & Co., 222 U.S. 39, 41 (1911) (allowing aggregation of plaintiffs’ joint interests in
enforcing a vendor’s lien, explaining that “neither can enforce [it] in the absence of the other”).
Acuity counters with dicta from Everett that identifies “an insurance policy” as one of the
“paradigm ‘common fund’ cases.” 460 F.3d at 824 (quotation omitted). Variations of this
1
Or, as the Ninth Circuit put it, “the character of the interest asserted depends on the source of plaintiffs’
claims. If the claims are derived from rights that they hold in group status, then the claims are common and
undivided. If not, the claims are separate and distinct.” Eagle v. Am. Tel. & Tel. Co., 769 F.2d 541, 546 (9th Cir.
1985) (emphases added). Eagle allowed claim aggregation in a shareholders’ derivative suit, explaining that, under
California law, “the shareholders’ claim for the wrongful depletion of corporate assets is the common and undivided
interest each shareholder has in a corporation’s assets and a right to share in dividends.” Id.2
The settlement judgment ordered as follows: (1) entry of judgment against Beachwood in the amount of
$3,956,650; (2) Acuity’s payment of $1,956,650 to an initial settlement fund; (3) that “[t]he remaining portion of the
Judgment shall be subject of a separate Coverage Action and if there is any further recovery on the Judgment, then
such recovery shall be satisfied only through the proceeds of [Beachwood’s] insurance policy(ies) with Acuity;” and
(4) that class members submitting “timely and valid claim[s]” would receive “a pro rata share, not to exceed $500
per fax sent, of the Initial Settlement Fund,” with a “second opportunity to submit claims” in the event of “further
recovery,” but “[i]n no event w[ould] a Class member be paid more from the Judgment than $500 per fax that was
sent to them.” (R. 21-1, Underlying Settlement Judgment ¶¶ G, I.)
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statement, first authored in Bishop v. General Motors Corp., 925 F. Supp. 294, 298 (D.N.J.
1996), appear in numerous later cases, including Gilman and Durant. But none of these cases
resolved a claim-aggregation argument under an insurance policy. Further, Everett concerned an
insurance policy “which [multiple plaintiffs] claim as common owners or in which they share a
common interest arising under a single title or right,” Everett, 460 F.3d at 824 (quoting Gilman,
104 F.3d at 1424)), bringing to mind a jointly purchased insurance policy. The underlying class
members here lack such an ownership interest, and numerous authorities demonstrate that
multiple claims against a single instrument, alone, does not qualify for claim aggregation. See
Motorists Mut. Ins. Co. v. Simpson, 404 F.2d 511, 513 (7th Cir. 1968) (rejecting insurer’s
attempt, following a fatal car accident, to aggregate widow’s and car owner’s insurance claims,
reasoning that “[t]he potential liability of [the insurer] to the two . . . is several, not joint,” and
finding “immaterial” the fact that both claims arose under the same insurance policy); cf.
Thomson v. Gaskill, 315 U.S. 442, 447 (1942) (“Aggregation of plaintiffs’ claim cannot be made
merely because the claims are derived from a single instrument or because the plaintiffs have a
community of interest.” (internal citation omitted)); 14AA Charles Alan Wright et al., Federal
Practice and Procedure § 3704 (4th ed. West 2014) (“Even when the claims arose from a single
instrument or the parties had a community of interest in the subject matter of the suit . . . the
cases were quite clear and virtually unanimous that separate and distinct claims by different
plaintiffs still could not be aggregated for purposes of measuring the amount in controversy.”).
We acknowledge that some cases permit claim-aggregation under a single insurance
policy. See Phoenix Ins. Co. v. Woosley, 287 F.2d 531, 532–33 (10th Cir. 1961) (aggregating
suppliers’ lost-merchandise claims with grocer’s claims under grocer’s fire insurance policies);
Mfrs. Cas. Ins. Co. v. Coker, 219 F.2d 631, 633 (4th Cir. 1955) (permitting aggregation of school
children’s injuries, following a bus accident, in insurer’s declaratory-judgment action against the
school administrator and school children). Phoenix rested its conclusion on the suppliers’
“common interest in the collection of [the grocer’s] insurance, although not an equal interest, for
. . . it was the source from which they might collect the money that was due them.” 287 F.2d at
533. Coker, on the other hand, primarily relied on a treatise, which stated (i) that plaintiffs’
“common or undivided interest against the defendant . . . may be separable as among the
plaintiffs,” and (ii) that “[i]t is not necessary that the claims of plaintiffs be joint, in the technical
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 7
legal sense . . . , as opposed to several.” Coker, 219 F.2d at 633–34 (citation omitted). Neither
case persuades, however, in view of Everett’s emphasis (borrowed from Gilman and shared with
Travelers) that claim-aggregation requires a “pre-existing (pre-litigation) interest in the subject
of the litigation,” instead of “a single pool of money that will be allocated among the plaintiffs.”
Everett, 460 F.3d at 827; see also id. at 824; Gilman, 104 F.3d at 1427; Travelers, 689 F.3d at
722.
Applying that standard, Siding fails to show a common and undivided prelitigation
interest in Beachwood’s policy justifying the aggregation of class members’ claims.
II.
Alternatively, Siding asks us to consider the coverage dispute from Acuity’s perspective;
the insurer, everyone recognizes, has $2 million in coverage at stake. This argument wades into
“a different jurisdictional morass” that divides our sister circuits: whether courts may assess the
jurisdictional amount in controversy from the perspective of either party (an “either viewpoint
rule”), or only from the plaintiff’s perspective. See Olden v. LaFarge Corp., 383 F.3d 495,
502 n.1 (6th Cir. 2004) (detailing the circuit split). So far, we have sidestepped this sedgy
terrain. Id.; see also Northup Props., Inc. v. Chesapeake Appalachia, L.L.C., 567 F.3d 767,
770 n.1 (6th Cir. 2009); Everett, 460 F.3d at 829; cf. Cleveland Hous. Renewal Project v.
Deutsche Bank Trust Co., 621 F.3d 554, 560–61 (6th Cir. 2010) (allowing defendant’s estimate
of the costs of complying with an injunction, where plaintiff offered no alternative valuation and
the property improvements likely exceeded $75,000). Though declining to resolve the larger
question of whether the “either viewpoint rule” ever bears on amount-in-controversy disputes,
we reject its application here because it would provide an end run around the longstanding anti-
aggregation principles discussed above.
The Ninth Circuit—recognized in Olden as an either-viewpoint jurisdiction—emphasized
this point in In re: Ford Motor Co./Citibank, “specifically declin[ing] to extend the ‘either
viewpoint rule’ to class action suits.” 264 F.3d 952, 958 (9th Cir. 2001) (recognizing the
“inherent conflict between the ‘either viewpoint’ rule and the non-aggregation rule when
calculating the amount in controversy in class action suits”). Looking to cases where class
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 8
plaintiffs predicated jurisdiction on a request for injunctive relief—and more specifically, the
cost to defendant of complying with the injunction—the court resolved that plaintiffs cannot
“dodge the non-aggregation rule by praying for an injunction.” See id. at 959.
Still, Siding insists that precedent requires consideration of the “value of the object of the
litigation.” See Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 253 (6th Cir. 2011);
Cleveland Hous. Renewal Project, 621 F.3d at 560. But we fail to see how this maxim for
quantifying declaratory judgment actions trumps the venerable rule against aggregating claims.
Neither Freeland nor Cleveland Housing Renewal Project confronted a claim-aggregation issue,
and the Supreme Court decision they relied on for this value-gauging principle, Hunt v.
Washington State Apple Advertising Commission, “found it unnecessary to reach” the claim-
aggregation issue because individual plaintiffs likely met the amount-in-controversy
requirement. 432 U.S. 333, 346–48 (1977).
Travelers reveals yet another reason for rejecting Siding’s “either viewpoint” argument:
there, the insurance company was the plaintiff. The court deemed that alignment irrelevant
because “[t]he anti-aggregation rule applies both to cases in which multiple plaintiffs seek to
combine their claims against a single defendant and to those brought by a single plaintiff against
multiple defendants.” Travelers, 689 F.3d at 717 (emphasis added, internal citation omitted). In
other words, the bar extends to both sides of the “v.” Though relatively undeveloped in this
circuit, we long ago recognized the defendant-aggregation aspect of the doctrine as the “settled
general rule.” Fechheimer Bros. Co. v. Barnwasser, 146 F.2d 974, 977 (6th Cir. 1945) (citing
Sovereign Camp, W.O.W. v. O’Neill, 266 U.S. 292, 295 (1924)); see also Federal Practice and
Procedure § 3704 (“The same [claim aggregation] principles also applied when suit was brought
. . . against multiple defendants.”). Neither party acknowledges this obstacle.
Because Siding fails to establish an exception to the rule against claim aggregation, its
amount-in-controversy showing falls short of the diversity-jurisdiction threshold. 28 U.S.C.
§ 1332(a).
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 9
III.
Finding diversity jurisdiction wanting, we consider Acuity’s alternative: that the district
court “retained continuing . . . jurisdiction” of this coverage dispute by virtue of the underlying
settlement judgment. True, language in the settlement judgment attempts to do just that. Shortly
after identifying the parties’ agreement to litigate this insurance dispute in a “separate Coverage
Action,” the settlement judgment purports to “retain[] jurisdiction over this case for purposes of
implementing” the settlement judgment. (R. 21-1, Underlying Settlement Judgment ¶ G.)
Another provision “expressly retains continuing exclusive jurisdiction as to . . . the final
judgment . . . and any future recovery for the class against Acuity.” (Id. ¶ N.) Yet, inasmuch as
the underlying TCPA class action lacked the insurance claims now at bar, the settlement order
could not retain jurisdiction of these coverage issues in the ordinary sense of the word. See
Webster’s II New College Dictionary 946 (2001) (defining “retain” as “keep[ing] or hold[ing] in
one’s possession”). So, accepting Acuity’s reading of the settlement judgment, it appears that
the district court (with the parties’ consent) assigned itself jurisdiction of an independent action.
This the court could not do.
First, as the Supreme Court has often reminded, federal courts “possess only that power
authorized by Constitution and statute, which is not to be expanded by judicial decree.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations
omitted); see also Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005);
Sheldon v. Sill, 49 U.S. (8 How.) 441, 449 (1850). Necessarily, then, the parties enjoy no more
discretion to expand our bailiwicks than we do. See, e.g., Owen Equip. & Erection Co. v.
Kroger, 437 U.S. 365, 377 n.21 (1978); Am. Fire & Cas. Co. v. Finn, 341 U.S. 6, 17–18 (1951);
People’s Bank v. Calhoun, 102 U.S. 256, 260–61 (1880).
To permit a federal trial court to enter a judgment in a case . . . where the federal
court could not have original jurisdiction of the suit even in the posture it had
at the time of judgment, would by the act of the parties work a wrongful extension
of federal jurisdiction and give district courts power the Congress has
denied them.
Am. Fire & Cas. Co., 341 U.S. at 18; Baze v. Parker, 632 F.3d 338, 341 (6th Cir. 2011). In light
of this teaching, the parties’ consent to jurisdiction matters not.
No. 13-3884 Siding & Insulation, Co. v. Acuity Mut. Ins. Page 10
Second, the substantive differences between the underlying litigation and this insurance
dispute—as well as the final judgment in the class suit—remove this case from the ambit of
ancillary jurisdiction. Ancillary jurisdiction lies in two circumstances: “(1) to permit disposition
by a single court of claims that are, in varying respects and degrees, factually interdependent;
and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its
authority, and effectuate its decrees.” Peacock v. Thomas, 516 U.S. 349, 354 (1996) (quotation
omitted). Acuity focuses on the second rationale, arguing that the district court assumed
jurisdiction to enforce its settlement judgment.3 But, in the absence of a claim that a party
violated a settlement term, we struggle to see how this action constitutes enforcement of the
settlement.
As noted above, the underlying TCPA action involved no insurance claims. The district
court made that point clear when it denied Acuity’s motion to intervene in the underlying action:
The subject matter of the underlying action, alleged violations of the TCPA, has
nothing to do with Acuity’s interest. Acuity’s interest is simply “the amount it
will have to pay” Beachwood if the Plaintiffs win. Accordingly, Acuity lacks a
direct interest in the lawsuit between the Plaintiffs and [Beachwood].
Moreover, Acuity’s interest is entirely contingent on future events: the
Plaintiffs’ success in their claims against Beachwood and a determination of
Acuity’s duties under the insurance contract. Essentially, Acuity attempts to
shoehorn its potential declaratory judgment contract claim into this TCPA class
action. But whether [Acuity] has any duty to Beachwood under their insurance
contract is wholly a matter of state contract law and bears no relation to the
underlying lawsuit.
Siding I, No. 11-CV-1074, R. 49 Op. & Order at 3 (citations omitted). Not surprisingly, the
settlement judgment identifies this insurance lawsuit as a “separate Coverage Action,” and
makes no determination of Acuity’s liability under Beachwood’s policy.
3
Given that this coverage dispute relies on the undisputed facts underpinning the TCPA class action—
Beachwood’s inadvertent dissemination of junk faxes via a dishonest fax broadcaster—one might expect the parties
to press the interdependent-facts avenue to ancillary jurisdiction. But that sort of ancillary jurisdiction—rooted in
prudential concerns of convenience and judicial economy—“vanishe[s]” the moment the “judgment was entered in
the original [action].” Peacock, 516 U.S. at 355 (citing Owen Equip. & Erection Co., 437 U.S. at 377).
Consequently, the December 2012 settlement judgment in the TCPA action extinguished the district court’s ability
to hear claims asserting interdependent facts.
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In view of the settlement judgment’s silence on Acuity’s liability under its insurance
policies, we reject Acuity’s characterization of this suit as an enforcement action. Although the
Supreme Court recognizes “a broad range of supplementary proceedings involving third parties
to assist in the protection and enforcement of federal judgments—including attachment,
mandamus, garnishment, and the prejudgment avoidance of fraudulent conveyances,” the Court
“ha[s] never authorized the exercise of ancillary jurisdiction in a subsequent lawsuit to impose an
obligation to pay an existing federal judgment on a person not already liable for that judgment.”
Peacock, 516 U.S. at 356–57 (rejecting a judgment creditor’s attempt to bring a veil-piercing
claim against the officer-shareholder of an uncollectable corporation as ancillary to the
underlying ERISA judgment). Rather, the Court explicitly cautions against extending ancillary
jurisdiction to “entirely new theories of liability.” Id. at 358; see also Dugas v. Am. Surety Co.,
300 U.S. 414, 428 (1937) (explaining that ancillary jurisdiction does not reach supplemental
claims requesting “relief . . . of a different kind or a different principle”). We heed that warning
here, where the underlying TCPA claim has no bearing on Acuity’s insurance liability. See, e.g.,
Hudson v. Coleman, 347 F.3d 138, 143 (6th Cir. 2003) (denying ancillary jurisdiction to
a garnishment claim seeking to impose liability on a third party under an indemnity agreement,
which had nothing to do with the theft claims at issue in the case).
Siding fails to establish an independent basis for federal jurisdiction over this coverage
dispute, and ancillary jurisdiction cannot fill the gap.
IV.
With this judgment we adhere to the fundamental principle that federal courts “are courts
of limited jurisdiction . . . possess[ing] only that power authorized by Constitution and statute.”
Exxon Mobil Corp., 545 U.S. at 552 (internal quotation marks omitted). Because “[j]urisdiction
is power to declare the law,” its absence constrains us to “announcing the fact and dismissing the
cause.” Steel Co., 523 U.S. at 94 (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514
(1868)). We therefore VACATE the district court’s judgment and REMAND so that it may
dismiss this action.