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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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Colorado Casualty Insurance Company, )
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Defendant.
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Channon Smith,

No. CV-11-1527-PHX-FJM
ORDER

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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).

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Plaintiff filed this action in state court alleging bad faith and breach of contract against

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defendant Colorado Casualty Insurance Company related to an underinsured motorist claim.

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Plaintiff alleges that she was involved in an automobile collision with an underinsured driver.

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She settled with the at-fault driver’s insurance company for the available policy limit of

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$15,000. But that did not fully compensate her for her injuries, medical expenses, and lost

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wages. Plaintiff then filed a claim for underinsured coverage with Colorado Casualty. She

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contends that Colorado Casualty breached the insurance contract and acted in bad faith when

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it unreasonably offered to settle her claim for $2,500, despite having valued her claim for

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more than the offered amount. Her complaint seeks an unspecified amount of compensatory

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damages, punitive damages, and attorney’s fees.

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Defendant removed the action asserting diversity of the parties and an amount in

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controversy in excess of $75,000. Plaintiff now moves to remand, arguing that we lack

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subject matter jurisdiction because defendant cannot show that the amount in controversy

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exceeds the jurisdictional minimum.

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A civil action may be removed to federal court so long as original jurisdiction would

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lie in the court to which the case is removed. 28 U.S.C. § 1441(a). Jurisdiction based on 28

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U.S.C. § 1332 requires complete diversity and an amount in controversy that exceeds

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$75,000.

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controversies between citizens of different states has always been rigorously enforced by the

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courts.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S. Ct. 586, 590

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(1938). Thus, we “strictly construe the removal statute against removal jurisdiction.” Gaus

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v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

Id.

“The intent of Congress drastically to restrict federal jurisdiction in

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Where a plaintiff’s state court complaint does not allege a specific amount of

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damages, the removing defendant bears the burden of proving by a preponderance of the

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evidence that the amount in controversy exceeds the jurisdictional amount. Sanchez v.

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Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). The defendant must show that

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it is “more likely than not” that the amount in controversy exceeds $75,000. Id. For

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purposes of calculating the amount in controversy, we may consider possible compensatory

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damages, punitive damages, and attorney’s fees, if such fees are authorized by contract or

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statute. Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n.3 (9th Cir. 2000)

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(punitive damages); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998)

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(attorney’s fees).

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If the amount in controversy is not apparent on face of the complaint, we may

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consider and weigh extrinsic evidence and resolve factual disputes. Singer v. State Farm

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Mut. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). Judicial admissions and demand letters are

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relevant to the amount in controversy inquiry. Valdez v. Allstate Ins. Co., 372 F.3d 1115,

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1117 (9th Cir. 2004).

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Here, it is not facially evident from plaintiff’s complaint that the amount in

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controversy exceeds $75,000. The complaint broadly seeks compensatory and punitive
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damages, and attorney’s fees. No specific amount is pled. Plaintiff asserts that the only

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determinable damages—her medical expenses—total $11,248.90. She received a settlement

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of $15,000 from the party at fault, presumably leaving few uncompensated compensatory

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damages.

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In order to satisfy its burden of establishing that the amount in controversy exceeds

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$75,000, defendant argues that (1) plaintiff filed a certificate of compulsory arbitration in

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state court indicating that the value of the case exceeds $50,000; (2) plaintiff made a demand

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of $50,000 to settle the case; and (3) plaintiff rejected defendant’s offer to remand the case

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in exchange for her agreement to limit her maximum recovery to $75,000.

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This is insufficient to prove that it is more likely than not that the amount in

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controversy exceeds $75,000. Plaintiff’s concession that the case value exceeds $50,000 is

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not evidence that it also exceeds $75,000. Defendant assumes that plaintiff’s claim valuation

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contained in the compulsory arbitration certificate and the demand letter does not include

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attorney’s fees and punitive damages, but there is no evidence to support this contention.

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Nor is there any evidence to show that punitive damages and attorney’s fees will increase

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plaintiff’s claim beyond $75,000. Defendant’s assertion that punitive damages awards in bad

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faith cases are often a “significantly large amount of money,” Response at 6, is not sufficient

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to establish the value of plaintiff’s punitive damages claim. Defendant has not explained

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why the facts alleged in this case might warrant extraordinary punitive damages.

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Finally, plaintiff’s refusal to limit her claim to $75,000 is insufficient in itself to

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satisfy defendant’s burden of proof. Defendant assumes that plaintiff would not stipulate to

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the remand because she “is in fact seeking more than $75,000 in damages.” Response at 3.

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But it is equally likely that plaintiff refused to limit her possible recovery because she

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reasonably evaluated defendant’s inability to satisfy its jurisdictional burden of proof.

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“Where doubt regarding the right to removal exists, a case should be remanded to state

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court.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).

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Because defendant has failed to establish by a preponderance of the evidence that the amount

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in controversy in this case exceeds $75,000, we grant plaintiff’s motion to remand and
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remand the case to state court.

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IT IS ORDERED GRANTING plaintiff’s motion to remand (doc. 8).

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IT IS FURTHER ORDERED REMANDING this case to the Superior Court of

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Arizona in Maricopa County.
DATED this 5th day of October, 2011.

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