Stubbs et al v. State Farm Fire & Casualty Company
MEMORANDUM OPINION. Signed by Chief Judge Sharon Lovelace Blackburn on 3/8/2013. (KAM, )
2013 Mar-08 PM 12:01
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
VANCE STUBBS; BRENDA STUBBS,
STATE FARM FIRE & CASUALTY
Case Number 2:12-CV-2186-SLB
This case is presently before the court on Motion to Remand filed by plaintiffs, Vance
Stubbs and Brenda Stubbs. (Doc. 4.)1 Plaintiffs originally filed this action in the Circuit
Court of Jefferson County, alleging that defendant, State Farm Fire and Casualty Company
“breached the terms of [plaintiffs’ insurance] Policy by refusing to approve and pay
[plaintiffs’] full claim,” and defendant acted in bad faith. (Doc. 1-2 at 5-6.) Defendant
removed this action, invoking this court’s diversity jurisdiction. (Doc. 1 at 2.) Plaintiffs filed
a motion seeking remand, contending that defendant has not established that the amount in
controversy exceeds $75,000. (See generally doc. 4.) Upon consideration of the record, the
Reference to a document number, [“Doc. ___”], refers to the number assigned to each
document as it is filed in the court’s record.
submissions of the parties, the arguments of counsel, and the relevant law, the court is of the
opinion that plaintiffs’ Motion to Remand, (doc. 4), is due to be denied.2
I. STATEMENT OF FACTS
Prior to April 27, 2011, plaintiffs owned a home in Fultondale, Alabama, which was
insured under a homeowner’s policy issued by defendant. (Doc. 1-2 ¶¶ 7-8.) Plaintiffs’
home was destroyed by a tornado on April 27, 2011. (Id. ¶¶ 12-14.) The City of Fultondale
found, “A large tree fell on the right side of the structure and jammed the footings into the
ground and the walls are cracked; the front porch was lifted and structural iron columns are
not in alignment.” (Id. ¶ 16.) Thereafter, the City condemned the property and plaintiffs
were not allowed to stay in their home. (Id. ¶¶ 15-16.)
Plaintiffs filed a claim with defendant. (Id. ¶ 15.)
Defendant paid plaintiffs
$33,986.68 – $31,411.54 for structural loss, $1,151.16 for contents loss, and $1,423.98 for
living expense loss. (Id. ¶ 17.) Plaintiffs allege that defendant’s payment was “wrongful
because it was not consistent with the facts or the Policy,” and that defendant “intentionally
misrepresented the facts and the content of the Policy in a bad faith effort to refuse full
payment.” (Id. ¶¶ 18, 19.) They allege defendant refused to pay their “full claim,” (id. ¶¶
23, 27, 30), and refused “to approve and pay the claim to the full extent of coverage,” (id. ¶
28). The Complaint “demand[s] [a] judgment against State Farm in an amount which will
The court informed the parties at oral argument that it was leaning toward granting
plaintiffs’ Motion to Remand. However, upon further consideration, the court finds the
Motion is due to denied.
fairly and adequately compensate Plaintiffs for their damages in such an amount as a jury
may assess.” (Id. at 5; see also id. at 6 [including a demand for punitive damages].)
According to defendant’s Notice of Removal, the policy limits for the house and its
contents is $214,100. (Doc. 1 at 3 n.3.) Defendant alleges that the policy limits – less the
amount paid – is the amount in controversy. (Id. ¶ 5.) It has not provided the court with any
evidence of the amount plaintiffs’ claim under the policy, which is the estimated cost to
repair and/or replace plaintiffs’ home or their personal property.
The policy at issue provides replacement cost coverage for plaintiffs’ home. (See
generally doc. 1-1.) In the Loss Settlement section of the policy, defendant describes how
it will determine the amount of coverage in the event of a covered loss:
[Defendant] will pay the cost to repair or replace with similar construction and
for the same use of the premises shown in the Declarations, the damaged part
of the property covered . . . subject to the following:
(1) until the actual repair or replacement is completed, we will pay
only the actual cash value at the time of the loss of the damaged part of
the property, up to the applicable limit of liability shown in the
Declarations, not to exceed the cost to repair or replace the damaged
part of the property;
(2) when the repair or replacement is actually completed, we will pay
the covered additional amount you actually and necessarily spend to
repair or replace the damaged part of the property, or an amount up to
the applicable limit of liability shown in the declarations, whichever is
(3) to receive any additional payments on a replacement cost basis, you
must complete the actual repair or replacement of the damaged part of
the property within two years after the date of loss, and notify us within
30 days after the work has been completed . . . .
(Id. at 22.) Under the terms of policy, defendant is not obligated to pay the policy limits
simply because the covered dwelling is completely destroyed. (See id.) It is obligated only
to pay the “actual cash value” unless and until the dwelling is repaired or replaced; if the
dwelling is repaired or replaced, defendant is obligated only to pay such costs up to the policy
As for personal property covered under the policy, defendant will pay the cost to
repair or replace less depreciation unless and until the personal property is repaired or
replaced; in that case, defendant pays the cost to repair or replace up to the policy limits. (Id.
at 23.) Except, in the case of “antiques, fine arts, painting, statuary . . . which by their
inherent nature cannot be replaced with new articles;” “articles whose age or history
contribute substantially to their value . . . ;” and “property not useful for its intended
purpose,” defendant has agreed to pay “market value at the time of loss.” (Id. at 23.)
Also, plaintiffs’ policy contains the following language:
An estimate of the replacement cost of an insured home or structure is used to
establish its value for insurance purposes. It affects your premium, and what
coverage options may be available. . . .
State Farm does not guarantee that any type of estimate will represent the
actual cost to rebuild your home or structure after a loss. Also, a replacement
cost estimate does not dictate the amount of insurance coverage a policyholder
must or may purchase. For many reasons, a policyholder may want to
purchase more or less than the replacement cost estimate. State Farm allows
you to choose the coverage limits that best fit your circumstances.
When a policy provides coverage on a replacement cost basis, following a
covered loss, State Farm pays you the “replacement cost” that you actually and
necessarily spend to repair or replace the damaged part of the property –
subject to the terms of the policy and coverage limits. The replacement cost
is not the market value, the purchase price, or the outstanding amount of any
mortgage loan. It does not include the value of the land. Rather, replacement
cost is the cost, subject to the terms of the policy, of repairing or rebuilding the
damaged part of the insured structure, not including desired or required
upgrades or improvements.
(Id. at 8.)
Pursuant to 28 U.S.C. § 1332, a federal district court may hear a civil action (1) that
is between citizens of different states and (2) where the matter in controversy exceeds
$75,000, exclusive of interest and costs. See Wachovia Bank v. Schmidt, 546 U.S. 303, 306
(2006). The parties do not dispute that plaintiffs and defendant are citizens of different
Defendant relies on the policy limits of plaintiffs’ homeowners policy to show the
amount in controversy has been met. (Doc. 1 ¶ 5.) It alleges:
5. In addition to diversity of citizenship among the parties to this cause,
this Court has jurisdiction under 28 U.S.C. § 1332, and removal is proper
pursuant to 28 U.S.C. § 1441, in that there is a sufficient basis that the
jurisdictional amount in controversy could be met. In the Complaint, the
Stubbs[es] seek an indeterminate amount in damages. The policy of insurance,
made the basis of this suit, has dwelling coverage limits of $122,600 and
contents limits of $91,500. Paragraph 17 of Plaintiffs’ Complaint alleges State
Farm wrongfully determined that the damage to the dwelling totaled
$31,411.54 and the contents loss totaled $1,151.16. Plaintiffs’ Complaint in
¶ 23 further alleges State Farm did not pay the “full claim”. Combining the
dwelling and contents limits of the policy and subtracting the benefits paid to
date, according to Plaintiffs’ Complaint, the jurisdictional amount in
controversy is satisfied.
(Id. [footnotes omitted].)
In their Motion to Remand, (doc. 4), plaintiffs contend that defendant has failed to
show the requisite amount in controversy. They do not challenge defendant’s calculations
with regard to the limits of the available coverage under their policy. However, they argue
defendant’s “conclusory assertions referencing the policy limits” are “plainly insufficient”
to establish the amount in controversy because the policy limits are “not an assessment of
[plaintiffs’] damages.” (Id. at 4.) The court agrees.
If a plaintiff makes “an unspecified demand for damages in state court, a
removing defendant must prove by a preponderance of the evidence that the
amount in controversy more likely than not exceeds the . . . jurisdictional
requirement.” Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1357 (11th
Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 204
F.3d 1069 (11th Cir. 2000). In some cases, this burden requires the removing
defendant to provide additional evidence demonstrating that removal is proper.
See, e.g., Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744 (11th Cir. 2010).
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.” See id. at 754
(quoting Williams v. Best Buy Co., Inc., 269 F.3d 1316, 1319 (11th Cir. 2001)).
Roe v. Michelin North America, Inc., 613 F.3d 1058, 1061 (11th Cir. 2010)(footnote
omitted). Of course, this standard does not imply that “a removing defendant is . . . required
to prove the amount in controversy beyond all doubt or to banish all uncertainty about it.”
Pretka, 608 F.3d at 754. However, a “conclusory allegation in the notice of removal that the
jurisdictional amount is satisfied, without setting forth the underlying facts supporting such
an assertion, is insufficient to meet the defendant’s burden.” Williams v. Best Buy Co., 269
F.3d 1316, 1319-20 (11th Cir. 2001). The jurisdictional inquiry focuses on how much is in
controversy at the time of removal. Pretka, 608 F.3d at 751. The plaintiffs’ likelihood of
success on the merits is “largely irrelevant” to the jurisdictional inquiry because the pertinent
question is what is “in controversy in the case, not how much the plaintiffs are ultimately
likely to recover.” Pretka, 608 F.3d at 751 (quoting Amoche v. Guarantee Trust Life Ins.
Co., 556 F.3d 41, 51 (1st Cir. 2009) (emphasis in both Amoche and Pretka)).
In some cases, “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.’” Roe, 613 F.3d at 1061 (citing Pretka, 608 F.3d at 754
(quoting Williams, 269 F.3d at 1319)). Where a defendant argues as much, the court is to
examine the pleading in light of its “judicial experience and common sense” to evaluate the
amount in controversy. Roe, 613 F.3d at 1062. In so doing, the court is authorized to make
“reasonable deductions” and draw “reasonable inferences,” id. at 1061-62, but the court
cannot base its exercise of jurisdiction upon mere “conjecture, speculation, or star gazing”
regarding the amount in controversy. Pretka, 608 F.3d at 754; see also Lowery v. Alabama
Power Co., 483 F.3d 1184, 1214-15 (11th Cir. 2007).
The District Court for the Southern District of Florida, in a similar case, stated:
In determining the amount in controversy in the insurance context,
numerous courts have held that “it is the value of the claim, not the value of
the underlying policy, that determines the amount in controversy.” Kelly v.
General Star National Indemnity Co., No. 8:07-CV-1143-JDW-TGW, 2007
WL 3034654, *2 (M.D. Fla. Oct. 16, 2007); see also Hartford Ins. Co. v.
Lou-Con, Inc., 293 F.3d 908, 911 (5th Cir. 2002)(stating that in declaratory
judgment cases, the jurisdictional amount is measured by the value of the
underlying claim and not the face amount of the policy); Employers Mutual
Casualty Co. v. Parking Towing Co., Inc., No. 07-0684-WS-B, 2007 WL
4577705, *2 (S.D. Ala. Dec. 27, 2007)(“a high policy limit does not establish
a large amount in controversy for the simple reason that the underlying
plaintiff’s claim may be for far less than the policy limit”); Warth v. State
Farm Fire & Casualty Co., 792 F. Supp. 101, 103 (M.D. Fla. 1992)(“[d]ue to
the fact that [the] [p]laintiffs in this case have not plead or represented to this
Court the damages they seek, the face amount of the [insurance] policy does
not control on the issue of the threshold jurisdictional amount”). Based on
this precedent, the Court concludes that the sole evidence provided by
Defendant, i.e., the policy limits for Plaintiff’s insurance policy, does not meet
Defendant’s burden of establishing that the jurisdictional amount in
controversy has been met.
Martins v. Empire Indem. Ins. Co., No. 08-60004-CIV, 2008 WL 783762, *2 (S.D. Fla. Mar.
21, 2008)(emphasis added). Unless the Complaint asks for the policy limits or the court,
relying on judicial experience and common sense, determines that plaintiffs’ damages will
likely meet or exceed the policy limits, a removing defendant must make some showing as
to the amount plaintiffs are likely to recover if successful.
In this case, the court has no evidence or information as to the cost to repair or replace
plaintiffs’ home and personal property. The policy explicitly recognizes that policy limits
may not accurately reflect the actual cost to repair or replace the covered property, and
explicitly limits plaintiffs’ recovery to actual cash value of their home and contents unless
and until the home and contents are repaired or replaced. As the Supreme Court of Alabama
has recognized, “actual cash value [is] nearly always . . . less than replacement costs.”
Huggins v. Hanover Ins. Co., 423 So. 2d 147, 151 (Ala. 1982). Therefore, plaintiffs’ request
for the full amount of coverage is not synonymous with a claim for policy limits in a
replacement cost policy.
In this case, the policy limits represent the outer limits of defendant’s liability under
the contract; the policy limits do not represent the “actual cash value” or cost to replace or
repair the home and personal property.
Therefore, the issue is whether the court, relying on its judicial experience and
common sense, can determine whether plaintiffs’ claims satisfy the jurisdictional amount in
controversy. The court is not confident that the cost to repair or replace the home exceeds
the jurisdictional limit. The court has no intuitive sense of the actual cash value of plaintiffs’
home or the cost to repair or replace that home or any lost contents. Therefore, the court
cannot say with conviction that the amount in controversy in plaintiff’s breach of contract
claim is more than $108,987 – the amount already paid by defendant plus $75,000.
However, the court’s judicial experience informs its decision that the amount in
controversy as to plaintiffs’ bad faith claim exceeds $75,000. The Complaint alleges that
defendant waited four months to pay plaintiffs any amount under the policy. (Doc. 1-2 ¶ 17.)
Also, plaintiffs allege defendant “misrepresented the facts and the content of the Policy in
a bad faith effort to refuse full payment,” (id. ¶ 19), and that defendant “intentionally,
purposefully, and maliciously delayed the claims process and refused to approve and pay this
claim in the absence of any reasonably legitimate or arguable reason for that refusal.” (Id at
¶ 20.) And, they contend defendant had no legitimate reason for refusing to pay their claim
and/or it intentionally or recklessly failed to investigate their claim. (Id. ¶¶ 28-29.) These
allegations provide a sufficient basis for the court to make “reasonable deductions,
reasonable inferences, or other reasonable extrapolations . . . to determine whether it is
facially apparent that [this] case is removable.” See Roe, 613 F.3d at 1061-62 (quoting
Pretka, 608 F.3d at 754)(internal quotations omitted). Based on the court’s judicial
experience and common sense, the court finds that, based on plaintiffs’ bad faith claim, the
amount in controversy exceeds $75,000.3
For the foregoing reasons, the court is of the opinion that the amount in controversy
exceeds $75,000; therefore, plaintiffs’ Motion to Remand will be denied. An Order denying
plaintiffs’ Motion to Remand will be entered contemporaneously with this Memorandum
DONE, this 8th day of March, 2013.
SHARON LOVELACE BLACKBURN
CHIEF UNITED STATES DISTRICT JUDGE
Nevertheless, because the court’s determination of the amount in controversy is not
based on a specific amount claimed by plaintiffs in their Complaint or on evidence submitted
by defendant, the court will allow plaintiffs the opportunity to submit evidence, in the form
of a stipulation, signed by plaintiffs and their counsel, that they are not claiming damages
over $74,999, and that they will not accept any award over $75,000. See Sierminski v.
Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir. 2000). Plaintiffs may file such a
stipulation, together with a Motion to Reconsider, no later than 10 days after entry of the
Order denying their Motion to Remand.
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