Smith v. Colorado Casualty Insurance Company et al

Filing 11

ORDER granting plaintiff's 8 Motion to Remand. IT IS FURTHER ORDERED REMANDING this case to the Superior Court of Arizona in Maricopa County. (See document for full details). Signed by Judge Frederick J Martone on 10/5/11. (Attachments: # 1 Copy of Remand Letter)(LAD)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 ) ) ) Plaintiff, ) ) vs. ) ) Colorado Casualty Insurance Company, ) ) ) Defendant. ) ) Channon Smith, No. CV-11-1527-PHX-FJM ORDER 15 16 17 The court has before it plaintiff’s motion to remand pursuant to 28 U.S.C. § 1447(c) (doc. 8), defendant’s response (doc. 9), and plaintiff’s reply (doc. 10). 18 Plaintiff filed this action in state court alleging bad faith and breach of contract against 19 defendant Colorado Casualty Insurance Company related to an underinsured motorist claim. 20 Plaintiff alleges that she was involved in an automobile collision with an underinsured driver. 21 She settled with the at-fault driver’s insurance company for the available policy limit of 22 $15,000. But that did not fully compensate her for her injuries, medical expenses, and lost 23 wages. Plaintiff then filed a claim for underinsured coverage with Colorado Casualty. She 24 contends that Colorado Casualty breached the insurance contract and acted in bad faith when 25 it unreasonably offered to settle her claim for $2,500, despite having valued her claim for 26 more than the offered amount. Her complaint seeks an unspecified amount of compensatory 27 damages, punitive damages, and attorney’s fees. 28 Defendant removed the action asserting diversity of the parties and an amount in 1 controversy in excess of $75,000. Plaintiff now moves to remand, arguing that we lack 2 subject matter jurisdiction because defendant cannot show that the amount in controversy 3 exceeds the jurisdictional minimum. 4 A civil action may be removed to federal court so long as original jurisdiction would 5 lie in the court to which the case is removed. 28 U.S.C. § 1441(a). Jurisdiction based on 28 6 U.S.C. § 1332 requires complete diversity and an amount in controversy that exceeds 7 $75,000. 8 controversies between citizens of different states has always been rigorously enforced by the 9 courts.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S. Ct. 586, 590 10 (1938). Thus, we “strictly construe the removal statute against removal jurisdiction.” Gaus 11 v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Id. “The intent of Congress drastically to restrict federal jurisdiction in 12 Where a plaintiff’s state court complaint does not allege a specific amount of 13 damages, the removing defendant bears the burden of proving by a preponderance of the 14 evidence that the amount in controversy exceeds the jurisdictional amount. Sanchez v. 15 Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). The defendant must show that 16 it is “more likely than not” that the amount in controversy exceeds $75,000. Id. For 17 purposes of calculating the amount in controversy, we may consider possible compensatory 18 damages, punitive damages, and attorney’s fees, if such fees are authorized by contract or 19 statute. Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n.3 (9th Cir. 2000) 20 (punitive damages); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998) 21 (attorney’s fees). 22 If the amount in controversy is not apparent on face of the complaint, we may 23 consider and weigh extrinsic evidence and resolve factual disputes. Singer v. State Farm 24 Mut. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). Judicial admissions and demand letters are 25 relevant to the amount in controversy inquiry. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 26 1117 (9th Cir. 2004). 27 Here, it is not facially evident from plaintiff’s complaint that the amount in 28 controversy exceeds $75,000. The complaint broadly seeks compensatory and punitive -2- 1 damages, and attorney’s fees. No specific amount is pled. Plaintiff asserts that the only 2 determinable damages—her medical expenses—total $11,248.90. She received a settlement 3 of $15,000 from the party at fault, presumably leaving few uncompensated compensatory 4 damages. 5 In order to satisfy its burden of establishing that the amount in controversy exceeds 6 $75,000, defendant argues that (1) plaintiff filed a certificate of compulsory arbitration in 7 state court indicating that the value of the case exceeds $50,000; (2) plaintiff made a demand 8 of $50,000 to settle the case; and (3) plaintiff rejected defendant’s offer to remand the case 9 in exchange for her agreement to limit her maximum recovery to $75,000. 10 This is insufficient to prove that it is more likely than not that the amount in 11 controversy exceeds $75,000. Plaintiff’s concession that the case value exceeds $50,000 is 12 not evidence that it also exceeds $75,000. Defendant assumes that plaintiff’s claim valuation 13 contained in the compulsory arbitration certificate and the demand letter does not include 14 attorney’s fees and punitive damages, but there is no evidence to support this contention. 15 Nor is there any evidence to show that punitive damages and attorney’s fees will increase 16 plaintiff’s claim beyond $75,000. Defendant’s assertion that punitive damages awards in bad 17 faith cases are often a “significantly large amount of money,” Response at 6, is not sufficient 18 to establish the value of plaintiff’s punitive damages claim. Defendant has not explained 19 why the facts alleged in this case might warrant extraordinary punitive damages. 20 Finally, plaintiff’s refusal to limit her claim to $75,000 is insufficient in itself to 21 satisfy defendant’s burden of proof. Defendant assumes that plaintiff would not stipulate to 22 the remand because she “is in fact seeking more than $75,000 in damages.” Response at 3. 23 But it is equally likely that plaintiff refused to limit her possible recovery because she 24 reasonably evaluated defendant’s inability to satisfy its jurisdictional burden of proof. 25 “Where doubt regarding the right to removal exists, a case should be remanded to state 26 court.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). 27 Because defendant has failed to establish by a preponderance of the evidence that the amount 28 in controversy in this case exceeds $75,000, we grant plaintiff’s motion to remand and -3- 1 remand the case to state court. 2 IT IS ORDERED GRANTING plaintiff’s motion to remand (doc. 8). 3 IT IS FURTHER ORDERED REMANDING this case to the Superior Court of 4 5 Arizona in Maricopa County. DATED this 5th day of October, 2011. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-

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