Henrikson et al v. Travelers Home and Marine Insurance Company (JOINT ASSIGN)

Filing 25

ORDER: it is ORDERED that the 18 Recommendation of the Magistrate Judge is ADOPTED, Plfs' 19 Objection is OVERRULED, and this action is REFERRED back to the Magistrate Judge pursuant to 28 USC 636 for further proceedings and determination or recommendation as may be appropriate. Signed by Chief Judge William Keith Watkins on 8/15/2018. (alm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
GRAYDON HENRIKSON and
SHELLY L. WALLACEHENRIKSON,
Plaintiffs,
v.
TRAVELERS HOME AND
MARINE INSURANCE
COMPANY,
Defendant.

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CASE NO. 2:18-CV-75-WKW
[WO]

ORDER
Plaintiffs Graydon Henrikson and Shelly L. Wallace-Henrikson filed this
action in Alabama state court seeking recovery against Defendant Travelers Home
and Marine Insurance Company (“Travelers”).

Travelers was the insurer of

Plaintiffs’ home when it burned down in January 2016.

(Doc. # 1-1, at 3.)

Travelers removed the case to this court, contending that diversity jurisdiction was
proper pursuant to 28 U.S.C. § 1332. (Doc. # 1, at 3.) Plaintiffs moved to remand
(Doc. # 6), and the sole issue that remains is whether Travelers has shown by a
preponderance of the evidence that the “matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a); see

Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001). In his Report and
Recommendation, the Magistrate Judge recommends denying the motion and
retaining jurisdiction. (Doc. # 18.) Plaintiffs have timely objected (Doc. # 19),
and Travelers has filed a response (Doc. # 21). With briefing complete, and having
conducted an independent examination of the record and a de novo review of the
Recommendation,

see

28

U.S.C.

§

636(b),

the

court

concludes

the

Recommendation is due to be adopted.
Plaintiffs’ first objection is that the crux of the Recommendation is based on
evidence inadmissible at trial and therefore improper to consider in determining the
amount in controversy. (Doc. # 19, at 2–4.) The evidence in question was a presuit demand letter sent by Plaintiffs to Travelers seeking the policy limits for the
dwelling portion of the claim: $698,836.88. (Doc. # 1-6, at 2–3) According to
Plaintiffs, the letter is “inadmissible at the trial in this matter, and therefore do[es]
not constitute ‘competent evidence’ that the [c]ourt should rely on in determining
whether the Defendant has met its burden regarding the amount in controversy in
this matter.” (Doc. # 19, at 2–3 (citing Federal Rule of Evidence 408).)
Plaintiffs do not cite any case law for this proposition, though they do note
that the Eleventh Circuit has recognized that a settlement offer can be considered
an “other paper” from which a party may ascertain the amount in controversy
pursuant to § 1446(b)(3). (See Doc. # 19, at 3 (citing Lowery v. Ala. Power Co.,
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483 F.3d 1184, 1212 (11th Cir. 2007).) Perhaps the implication is that Lowery and
the “other paper” language is confined to section (b)(3) removals (formerly known
as “second paragraph” removals), whereas Travelers removed under section (b)(1)
(formerly known as a “first paragraph” removal) and that different rules apply.
But while differences do abound between the two kinds of removal, there is no
reason to think the applicability of Federal Rule of Evidence 408(a) is one of them.
Indeed, in a later decision clarifying the parts of the Lowery opinion that did not
apply to first paragraph removals, the Eleventh Circuit emphasized that “[t]he
substantive jurisdictional requirements of removal do not limit the types of
evidence that may be used to satisfy the preponderance of the evidence standard.”
Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 755 (11th Cir. 2010).
That this is so, of course, does not actually answer the question whether the
court may consider the settlement offer — only that the Lowery dictum applies
here as well. But consideration is nevertheless proper because the evidentiary
standard is not a trial standard. See Pretka, 608 F.3d at 754 (“[T]he court may
consider facts alleged in the notice of removal, judicial admissions made by the
plaintiffs, non-sworn letters submitted to the court, or other . . . evidence that may
reveal that the amount in controversy requirement is satisfied.” (citation omitted));
Spottswood v. Stewart Title Guar. Co., No. 10-cv-109-WS, 2010 WL 1539993, at
*4 n. 11 (S.D Ala. Apr. 16, 2010) (considering a report for amount-in-controversy
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purposes over a hearsay objection because “[t]he court is not deciding whether or
not to admit the . . . report into evidence, but is simply evaluating whether to
consider it for purposes of a preliminary ruling”). Thus, “[a]lthough settlement
negotiations are not admissible at trial pursuant to Federal Rule of Evidence 408 to
prove liability for or invalidity of the claim or its amount, they can be considered
to ‘show the stakes’ when determining whether the amount in controversy is met.”
Grinnell Mut. Reinsurance Co. v. Haight, 697 F.3d 582, 585 (7th Cir. 2012)
(quoting Rising–Moore v. Red Roof Inns, Inc., 435 F.3d 813, 816 (7th Cir. 2006));
see Fed. R. Evid. 408(b) (settlement evidence may be admitted “for another
purpose”). So it is here.
Plaintiffs’ second objection fares no better. They argue that “[t]he Plaintiffs’
claims under the coverages listed in the December 8, 2016[,] settlement demand
were all settled under the appraisal award that has already been paid to the
Plaintiffs prior to the suit being filed in this matter.” (Doc. # 19, at 4.) Maybe this
is so, but Plaintiffs’ Complaint nevertheless places the award in dispute:
As a result of Defendant Travelers[’s] continued refusal to pay the
claims submitted by the Plaintiffs, the parties submitted separate
appraisals of damages to an umpire pursuant to the terms of the
homeowner’s policy. After the umpire released his decision and
awarded specific loss figures to the Plaintiffs, Defendant Travelers,
without any reasonably legitimate, arguable and/or debatable reason,
ha[s] failed and/or refused to pay the Plaintiffs benefits due for their
loss under the homeowner’s policy.
(Doc. # 1-1, at 5.)
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Moreover, even if the entire appraisal award is not at issue — a proposition
not at all clear from the Complaint — Travelers provides evidence that it did not
pay $70,500 of the award and that it told Plaintiffs that this amount was not owed.
(See Doc. # 1-8, at 3.) By claiming that Travelers wrongfully refused to pay up
following the umpire’s decision, Plaintiffs placed this amount of the award in
dispute at the very least.
Additionally, Plaintiffs seek in their Complaint recompense for having “to
incur substantial professional fees to retain the service of appraisers.” (Doc. # 1-1,
at 8.) Travelers has shown that Plaintiffs paid the umpire $6,591.61. (Doc. # 110.) Combining the two numbers, it becomes more likely than not that at least
$76,591.61 was in dispute at the time of removal — and that does not even include
the amount of the initial settlement demand. Travelers has met its burden of
establishing jurisdiction.
Accordingly, it is ORDERED that the Recommendation of the Magistrate
Judge (Doc. # 18) is ADOPTED, Plaintiffs’ Objection (Doc. # 19) is
OVERRULED, and this action is REFERRED back to the Magistrate Judge
pursuant to 28 U.S.C. § 636 for further proceedings and determination or
recommendation as may be appropriate.
DONE this 15th day of August, 2018.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
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