Senn et al v. State Farm Mutual Automobile Insurance Company et al

Filing 29

MEMORANDUM OPINION AND ORDER: it is ORDERED that Plfs' 20 Motion to Remand is GRANTED, and that this case is REMANDED to the Circuit Court of Barbour County, Alabama, pursuant to 28 USC § 1447(c); DIRECTING the Clerk to take appropriate steps to effectuate the remand. Signed by Chief Judge William Keith Watkins on 5/12/2014. (wcl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
ANTHONY T. SENN, et al.,
Plaintiffs,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY, et al.,
Defendants.

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CASE NO. 2:13-CV-747-WKW
[WO]

MEMORANDUM OPINION AND ORDER
Defendants have removed this action pursuant to 28 U.S.C. §§ 1441 and
1446(b)(1), alleging that this action is within the court’s original jurisdiction under
28 U.S.C. § 1332(a). Before the court is Plaintiffs’ Motion to Remand. (Doc.
# 20.) The motion is fully briefed (Docs. # 25, 28), and the matter is ready for
adjudication.

Based upon the arguments of counsel and the relevant law,

Plaintiffs’ Motion to Remand is due to be granted.
I. BACKGROUND
A.

The Parties
Plaintiffs are Anthony T. Senn and Adam Senn. Plaintiffs are citizens of

Alabama. See § 1332.

Defendants are State Farm Mutual Automobile Insurance Company (“State
Farm”), an Illinois corporation with its principal place of business in Illinois, see
§ 1332(c)(1), and Josh Howell (“Howell”), an employee of State Farm and citizen
of Alabama.
B.

Procedural and Factual History
This action stems from a dispute resulting from the medical payments

coverage of Plaintiffs’ State Farm automobile policy totaling $10,000 in medical
payments paid to Plaintiffs as a result of injuries sustained in a motor vehicle
accident.

(Doc. # 7-1 ¶ 10.)

Plaintiffs retained an attorney and signed a

contingency fee agreement, which provided the attorney a percentage1 of any
potential recovery against the tortfeasor and reimbursement of expenses. (Doc.
# 7-1 ¶ 11.) A settlement with the tortfeasor’s insurance carrier was reached, and
settlement funds were received on behalf of Plaintiffs. (Doc. # 7-1 ¶ 11.) Pursuant
to the Common Fund Doctrine, the attorney deducted the agreed upon contingency
fee from the “State Farm subrogation recovery, and remitted the net subrogation
recovery to State Farm in care of State Farm’s Josh Howell.” (Doc. # 7-1 ¶ 12.)
Plaintiffs allege that Defendants insisted on 100% recovery of State Farm’s
subrogation interest and demanded repayment of the full amount. (Doc. # 7-1

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The Complaint does not specify the percentage of the contingency fee. Plaintiffs
assume a contingency fee arrangement of 33 1/3% or 40%.
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¶ 13.) As a result, Plaintiffs filed suit in the Circuit Court of Barbour County,
Alabama.
The Complaint asserts the following state-law claims:

(1) intentional

interference with contractual/business relations (Count I); (2) misrepresentation,
suppression, violation of Alabama’s regulatory protocol (Count II); (3) breach of
contract (Count III); (4) unjust enrichment (Count IV); and (5) bad faith (Count V).
Plaintiffs seek unspecified compensatory damages for mental anguish, emotional
distress, embarrassment, humiliation, harm to reputation and injuries, as well as
punitive damages.
Defendants timely removed this action to this court on the grounds that the
amount in controversy was met and Mr. Howell was fraudulently joined to defeat
federal diversity jurisdiction. See § 1441(a) (allowing removal of civil actions over
which the district courts have original jurisdiction); § 1332(a) (defining original
jurisdiction as including civil actions where the amount in controversy exceeds
$75,000 and there is complete diversity). Within thirty days of removal, Plaintiffs
moved to remand arguing first, that Defendants have failed to show that the
amount in controversy meets federal jurisdictional requirements, and second, that
Defendants have failed to meet their burden of showing, by clear and convincing
evidence, that Mr. Howell was fraudulently joined, and therefore complete
diversity is lacking.
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II. STANDARD OF REVIEW
A.

Generally
“[F]ederal courts have a strict duty to exercise the jurisdiction that is

conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S.
706, 716 (1996). However, “[f]ederal courts are courts of limited jurisdiction.”
Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). Thus, with
respect to cases removed to this court pursuant to § 1441, the law of the Eleventh
Circuit favors remand where federal jurisdiction is not absolutely clear.
“[R]emoval statutes are construed narrowly; where plaintiff and defendant clash
about jurisdiction, uncertainties are resolved in favor of remand.” Id.
B.

Section 1332(a) Removals Where Damages are Unspecified
A federal district court may exercise subject matter jurisdiction over a civil

action in which only state law claims are alleged if the civil action arises under the
federal court’s diversity jurisdiction. See § 1332(a). Section 1332(a)(1) confers
jurisdiction on the federal courts when the dispute is between “citizens of different
States,” and the amount in controversy exceeds $75,000, exclusive of interest and
costs. Id. Where the complaint alleges unspecified damages, the removing party
bears the burden of establishing the amount in controversy by a preponderance of
the evidence. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 752 (11th Cir.
2010); see also § 1446(c)(2)(B).

In some cases, the preponderance burden
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“requires the removing defendant to provide additional evidence demonstrating
that removal is proper.” Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1061 (11th
Cir. 2010) (citing Pretka, 608 F.3d at 744). “In other cases, however, it may be
‘facially apparent’ from the pleading itself that the amount in controversy exceeds
the jurisdictional minimum, even when ‘the complaint does not claim a specific
amount of damages.’” Id. (quoting Pretka, 608 F.3d at 754). In either case, the
amount in controversy must be measured as of the time of removal, not by events
occurring afterward. See Pretka, 608 F.3d at 751.
C.

Remand
28 U.S.C. § 1447(c) provides, in relevant part: “A motion to remand the

case on the basis of any defect other than lack of subject matter jurisdiction must
be made within 30 days after the filing of the notice of removal under section
1446(a).” “If at any time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be remanded.” Id. As explained in
Lowery, Ҥ 1447(c) distinguishes between motions to remand made within the first
thirty days following removal, and challenges to subject matter jurisdiction brought
after that time.” 483 F.3d at 1213 n.64. “Plaintiffs have only thirty days from the
notice of removal to file a motion to remand challenging any procedural defects in
the removal.” Id. In other words, “[t]here is only a thirty-day window . . . for a

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plaintiff to challenge the propriety of the removal itself, whether that challenge be
on the basis of a procedural defect or a lack of subject matter jurisdiction.” Id.
III. DISCUSSION
Plaintiffs make two arguments in support of their motion to remand. They
argue, first, that Defendants have failed to meet the jurisdictional amount-incontroversy requirement for removal and, second, that Defendants have not
demonstrated the fraudulent joinder of Mr. Howell such that complete diversity is
lacking.

Because the amount-in-controversy inquiry is dispositive, it is

unnecessary to address the parties’ arguments regarding fraudulent joinder.
The parties do not dispute that this is a § 1446(b)(1) removal and thus,
governed by Pretka. Additionally, there is no dispute that Plaintiffs timely filed
their Motion to Remand within the thirty-day window. Rather, the critical issue is
whether the Complaint, which seeks unspecified compensatory and punitive
damages, sustains Defendants’ removal burden to prove by a preponderance of the
evidence § 1332(a)’s amount in controversy.
Defendants argue that, even though the Complaint does not specify the
amount of damages sought, it is readily apparent from its allegations that at the
time of removal more than $75,000 was at stake. According to the Complaint,
State Farm paid a total of $10,000 under the medical payments coverage of the
insurance policy (Doc. # 7-1 ¶ 10), and Plaintiffs agreed to pay their attorney a
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percentage of any recovery from the tortfeasor as attorney’s fees and for
reimbursement of expenses. (Doc. # 7-1 ¶ 11.) Further, Defendants assert that
Plaintiffs’ refusal to stipulate that the amount in controversy is less than $75,000 is
evidence satisfying Defendants’ burden of proof. (Doc. # 25, at 8, citing Williams
v. Best Buy Co., 269 F.3d 1316, 1320 (11th Cir. 2001).) Defendants contend that,
“when the allegations of the Complaint are taken into account with the combined
amount and elements of damages sought, the Plaintiffs’ refusal to stipulate, and
judicial experience and common sense, it is clear that the amount in controversy
more likely than not exceeds $75,000 exclusive of interests and costs.” (Doc. # 25,
at 1–2.)
Plaintiffs counter that Defendants have failed to establish the jurisdictional
amount by a preponderance of the evidence. (Doc. # 20, at 1–2, 5.) According to
Plaintiffs, assuming the agreed-upon attorney’s fee between Plaintiffs and their
attorney was 40%, the amount State Farm refused to pay was $2,000 for each
Plaintiff, for a total of $4,000. Hence, the baseline for calculating the amount in
controversy “is the failure of State Farm to pay [Plaintiffs’] attorney about $2,000
on each of the subrogation recoveries of $5,000, plus whatever extra-contractual
damages each plaintiff may recover under Alabama law on a $2,000 liquidated
damages claim.” (Doc. # 20, at 5.) Plaintiffs have the better argument.

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In Pretka, the Eleventh Circuit articulated the scope of evidence that can be
considered and the burden of proof for establishing the jurisdictional amount where
the complaint alleges unspecified damages and is removed pursuant to §§ 1332(a)
and 1446(b)(1). 608 F.3d 744 (11th Cir. 2010). In an action timely removed based
upon the initial pleading, Pretka permits consideration of evidence outside the
removal petition. Id. at 754–55. “When the complaint does not claim a specific
amount of damages, removal from state court is jurisdictionally proper if it is
facially apparent from the complaint that the amount in controversy exceeds the
jurisdictional requirement.”

Id. at 754 (internal quotation marks and citation

omitted). If it is not facially apparent from the complaint, the court “should look to
the notice of removal and may require evidence relevant to the amount in
controversy at the time the case was removed.” Id.
A.

Facially Apparent
Notwithstanding that damages are unspecified in the Complaint, Defendants

contend that the number of claims and the nature of damages sought reveal that the
amount in controversy exceeds $75,000. The Complaint’s allegations, however,
do not describe Plaintiffs’ injuries in sufficient detail to ascertain that the removal
was proper. Defendants’ notice of removal, therefore, must be examined.

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B.

Plaintiffs’ Refusal to Stipulate the Amount in Controversy
In the notice of removal, Defendants emphasize that Plaintiffs have refused

to stipulate that the amount in controversy is below the jurisdictional threshold. As
the Eleventh Circuit has explained, “[t]here are several reasons why a plaintiff
would not so stipulate, and a refusal to stipulate standing alone does not satisfy
Defendants’ burden of proof on the jurisdictional issue.” Williams, 269 F.3d at
1320.

Defendants submit no other evidence, other than Plaintiffs’ refusal to

stipulate. Because the refusal to stipulate stands alone, it is insufficient evidence to
satisfy Defendants’ removal burden.
C.

Judicial Experience and Common Sense
Defendants further contend that common sense dictates that the amount in

controversy is satisfied based upon Plaintiffs’ request for mental anguish damages
and punitive damages. Defendants cite Roe for the proposition that even postLowery, district courts need not “suspend reality or shelve common sense” when
deciding whether the jurisdictional threshold has been met. 613 F.3d 1058, 1062
(11th Cir. 2010). In Roe, a wrongful death case, the Eleventh Circuit applied
“judicial experience and common sense” to find that “a dispute in which the
wanton conduct of a large company result[ed] in a death” satisfied the
jurisdictional requirement.

Id.

Defendants contend that this principle, when

applied to the case at hand, demonstrates that the amount in controversy exceeds
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$75,000, even though Plaintiffs’ claims begin at $2,000 for each.

However,

“judicial experience and common sense” do not lead to such a clear result. The
alleged injuries in this case simply do not rise to the level of those for wrongful
death alleged in Roe, notwithstanding the requests for mental anguish damages and
punitive damages. The court will not speculate as to the amount of damages.
Thus, Defendants have failed to meet their burden of proving, by a
preponderance of the evidence, that the jurisdictional amount-in-controversy
requirement is satisfied.
IV. CONCLUSION
For the foregoing reasons, subject matter jurisdiction is lacking over this
removed action for Defendants’ failure to establish the required minimum amount
in controversy by a preponderance of the evidence. Accordingly, it is ORDERED
that Plaintiffs’ Motion to Remand (Doc. # 20) is GRANTED, and that this case is
REMANDED to the Circuit Court of Barbour County, Alabama, pursuant to
28 U.S.C. § 1447(c). The Clerk of the Court is DIRECTED to take appropriate
steps to effectuate the remand.
DONE this 12th day of May, 2014.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

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