Welsh v. New Hampshire Insurance Company et al

Filing 14

ORDER granting 7 Plaintiff's Motion to Remand to State Court. Plaintiff's request for attorneys' fees is denied. The Clerk of the Court shall remand this action to Maricopa County SuperiorCourt. Signed by Judge James A Teilborg on 2/7/12. (Attachments: # 1 Remand Letter)(DMT)

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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 15 ) ) ) Plaintiff, ) ) vs. ) ) New Hampshire Insurance Company,) Specialty Risk Services, LLC (aka) ) Sedgwick Claims Mngmt Svcs Inc), ) ) Defendants. ) ) Jeremiah Welsh, No. CV 11-2039-PHX-JAT ORDER 16 Pending before the Court is Plaintiff’s Motion to Remand (Doc. 7). The Court now 17 18 rules on the motion. 19 I. BACKGROUND 20 Plaintiff was an employee of Lowe’s Home Improvement Warehouse, Inc. (Doc. 1, 21 Ex.1 at 2). While fixing a cabinet door at work, Plaintiff stood up and felt a sharp pain in his 22 back. (Id. at 3). Defendants denied Plaintiff’s workers’ compensation claim, prompting 23 Plaintiff to request a hearing with the Industrial Commission. (Id. at 4). The Industrial 24 Commission hearings resulted in an Administrative Law Judge ordering Defendants to 25 compensate the claim. 26 Plaintiff commenced this action in Maricopa County Superior Court against 27 Defendants, alleging two state causes of action for breach of the implied covenant of good 28 faith and fair dealing and aiding and abetting. (Id. at 6–7). Plaintiff seeks compensatory 1 damages, financial damages, punitive damages and attorneys’ fees, as well as costs. (Id. at 2 9). Defendants filed their Notice of Removal of this action pursuant to 28 U.S.C. § 1441(b), 3 claiming diversity jurisdiction pursuant to 28 U.S.C. §1332. (Doc. 1 at 2). In their Notice 4 of Removal, Defendants allege that “[t]his action . . . is a civil action between citizens of 5 different states and the matter in controversy exceeds the sum of $75,000.” (Id.) Both 6 parties agree that the action is between citizens of different states. 7 Accordingly, the Court must determine whether Defendants have established the requisite 8 amount in controversy for this Court to have subject matter jurisdiction. 9 II. (Doc. 8 at 2). LEGAL STANDARD 10 Pursuant to 28 U.S.C. § 1332, “district courts shall have original jurisdiction of all 11 civil actions where the matter in controversy exceeds the sum or value of $75,000, 12 exclusive of interests and costs, and is between . . . citizens of different States[.]” 13 28 U.S.C. § 1332(a)(1). 14 The removal statute, 28 U.S.C. § 1441, provides, in pertinent part: “[A]ny civil action 15 brought in a State court of which the district courts of the United States have original 16 jurisdiction, may be removed by the defendant . . . to the district court of the United States 17 for the district and division embracing the place where such action is pending.” 28 U.S.C. 18 § 1441(a). Courts strictly construe the removal statute against removal jurisdiction. See 19 Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980 20 F.2d 564, 566 (9th Cir. 1992). “The ‘strong presumption’ against removal jurisdiction means 21 that the defendant always has the burden of establishing that removal is proper.” Gaus, 980 22 F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979).) 23 “In a removed case, . . . the plaintiff chose a state rather than federal forum. Because 24 the plaintiff instituted the case in state court, ‘there is a strong presumption that the plaintiff 25 has not claimed a large amount in order to confer jurisdiction on a federal court[.]’” Singer v. 26 State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997) (quoting St. Paul Mercury 27 Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938)). “Where the complaint does not 28 demand a dollar amount, the removing defendant bears the burden of proving by a -2- 1 preponderance of the evidence that the amount in controversy exceeds [$75,000].” Id. at 2 376. “Under this burden, the defendant must provide evidence establishing that it is ‘more 3 likely than not’ that the amount in controversy exceeds [$75,000].” Sanchez v. Monumental 4 Life Insurance Co., 102 F.3d 398, 404 (9th Cir. 1996). “[R]emoval ‘cannot be based simply 5 upon conclusory allegations’ where the [complaint] is silent” as to the dollar amount of 6 damages the plaintiff seeks. Singer, 116 F.3d at 377 (citing Allen v. R&H Oil & Gas Co., 63 7 F.3d 1326, 1335 (5th Cir. 1995)). However, the inquiry into the amount in controversy is not 8 confined to the face of the complaint. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th 9 Cir. 2004). 10 III. ANALYSIS 11 Plaintiff has not demanded a dollar amount in his complaint. Accordingly, it is 12 Defendants’ burden to prove by a preponderance of the evidence that the amount in 13 controversy exceeds $75,000. Singer, 116 F.3d at 376. Defendant may not rely upon 14 conclusory allegations, but may submit summary-judgment-type evidence. Valdez, 372 F.3d 15 at 1117. 16 Defendants submitted four pieces of evidence to support their assertion that the 17 amount in controversy is greater than $75,000. (Doc. 8 at 3-5). First, Defendants requested 18 that the parties agree to limit damages to no more than $75,000 in exchange for Defendants’ 19 stipulation to remand this case. (Id.) Plaintiff did not agree. (Id.) Second, Plaintiff certified 20 that the claim is not subject to compulsory arbitration because the amount in controversy 21 exceeded $50,000. (Id. at 3). Third, Defendants claim that punitive damages could be “a 22 significant amount easily satisfying the jurisdictional requirements.” (Id. at 4). Finally, 23 Plaintiff has requested attorneys’ fees, which Defendants claim will likely exceed $25,000. 24 (Id.) In sum, Defendants argue that Plaintiff’s certification that the amount in controversy 25 exceeds $50,000, in addition to the potential punitive damages and attorneys’ fees establish 26 that the jurisdictional requirement is met. (Id.) 27 Defendants have not satisfied their burden in demonstrating that the amount in 28 controversy meets the $75,000 requirement. Although Plaintiff’s certificate regarding -3- 1 compulsory arbitration is undisputed, it estimates that the amount in controversy is at least 2 $50,000. Defendants’ statements that attorneys’ fees and punitive damages make up the 3 remaining $25,000 are unsupported by further evidence. Also, a lack of agreement between 4 the parties to limit damages to $75,000 is not conclusive. 5 A. 6 Defendants correctly assert that the certification that the amount in controversy 7 exceeds $50,000 can be included in calculating the total amount in controversy. Ansley v. 8 Metro. Life Ins. Co., 215 F.R.D. 575, 578 (D. Ariz. 2003); cf. Singer, 116 F.3d at 376 (district 9 judge has discretion to accept plaintiff’s admission as to the amount in controversy). Plaintiff 10 concedes that the $50,000 certification is an estimate only and does not prove that damages 11 will exceed $75,000. The Court agrees. See Ferguson v. First Am. Specialty Ins. Co., No. 12 CV 09-01581-PHX-JAT, 2009 WL 4154653, at *3 (D. Ariz. Nov. 23, 2009) (stating “the 13 certificate regarding compulsory arbitration does nothing more than establish that the amount 14 in controversy is likely more than $50,000”). Thus, the certification only demonstrates that 15 the amount in controversy is at least $50,000. Arbitration Certificate 16 B. 17 Defendants are also correct that attorneys’ fees may be included in the amount in 18 controversy when a statute authorizes those fees. Galt G/S v. JSS Scandinavia, 142 F.3d 19 1150, 1156 (9th Cir. 1998). Under Arizona law, attorneys’ fees for actions arising out of 20 contract, including those incurred pursuing a bad faith action, may be awarded to a successful 21 litigant. Noble v. Nat’l Am. Life Ins. Co., 624 P.2d 866, 868 (D. Ariz. 1981). Attorneys’ Fees 22 Defendants argue that “it is highly likely that Plaintiff will incur well over $25,000.00 23 in attorneys’ fees.” (Doc. 8 at 4). Defendants offer no other evidence to substantiate their 24 statement and a statement of mere opinion is speculative. See Burk v. Med. Sav. Ins. Co., 348 25 F. Supp. 2d 1063, 1068 (D. Ariz. 2004); Ferguson, 2009 WL 4154653, at *3 (stating that an 26 affidavit estimating the attorneys fees is too speculative to be used in calculating the amount 27 in controversy). As a result, this statement cannot support a finding that the attorneys’ fees 28 would sufficiently increase the amount in controversy. -4- 1 C. 2 Punitive damages, recoverable under law, may be included in computing the amount 3 in controversy. Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001); Ferguson, 4 2009 WL 4154653, at *4. Under Arizona law, punitive damages may be awarded in bad 5 faith insurance cases. Filasky v. Preferred Risk Mut. Ins. Co., 734 P.2d 76, 83 (Ariz. 1987). 6 “However, the mere possibility of a punitive damages award is insufficient to prove that the 7 amount in controversy requirement has been met.” Burk, 348 F. Supp. 2d at 1069 (citing 8 Surber v. Reliance Nat’l Indem. Co., 110 F. Supp. 2d 1227, 1232 (N.D. Cal. 2000)). To 9 show that the claim for punitive damages establishes that it is more likely than not that the 10 amount in controversy exceeds $75,000, Defendants must present appropriate evidence. Id. 11 (citing McCaa v. Mass. Mut. Life Ins. Co., 330 F. Supp. 2d 1143, 1149 (D. Nev. 2004)). Punitive Damages 12 Defendants argue punitive damages “could likely be a significant amount easily 13 satisfying the jurisdictional requirements.” (Doc. 8 at 4). Defendants cite Sanchez, to state 14 that if bad faith is shown, punitive damages will likely be a significantly large amount of 15 money. (Id.) However, Sanchez is inapposite because it discusses trebling punitive damages 16 per a California statute in regard to “unfair or deceptive practices against senior citizens or 17 disabled persons.” 102 F.3d at 405. In addition, in Sanchez, the Ninth Circuit Court of 18 Appeals vacated the district court’s judgment and remanded the case with instructions to 19 remand to the state court because defendant did not establish that the amount in controversy 20 exceeded the requirement. Id. at 406. Defendants offer no other support that possible 21 punitive damages in this case would satisfy the jurisdictional requirement for the amount in 22 controversy. 23 D. 24 Defendants’ last argument is that Plaintiff’s refusal to stipulate to limit damages is 25 direct evidence that Plaintiff is seeking over $75,000 in damages. Such evidence can be 26 considered in determining the amount in controversy. See Ansley, 215 F.R.D. at 578; see 27 also, Del Real v. Healthsouth Corp., 171 F. Supp. 2d 1041, 1043 (D. Ariz. 2001). However, 28 such evidence is not conclusive in establishing that the amount in controversy is greater than $75,000 Agreement -5- 1 $75,000. 2 The Court is not persuaded by Defendants’ argument that Plaintiff tacitly admitted to 3 seeking damages in excess of $75,000 by requesting Defendant stipulate that they owe a 4 minimum of $75,000. 5 IV. CONCLUSION 6 The Defendants have not met their burden to show that the amount in controversy 7 exceeds the jurisdictional requirement of $75,000. The arbitration certificate suggests that 8 the amount in controversy exceeds $50,000, but the conclusory allegations that punitive 9 damages, attorneys’ fees, and failure to jointly agree to limit damages have not persuaded the 10 Court that the amount in controversy exceeds $75,000. Therefore, Plaintiff’s Motion to 11 Remand is granted. 12 V. ATTORNEYS’ FEES 13 Plaintiff requests attorneys’ fees pursuant to 28 U.S.C. § 1447(c) because Plaintiff 14 claims Defendants did not have an “objectively reasonable basis” for removal. Although the 15 Court is granting the motion to remand, Defendants had an objectively reasonable argument 16 for removal. The complaint does not request a specific amount of damages and it is 17 objectively reasonable to argue that attorneys’ fees and punitive damages from claims of 18 breach of the implied covenant of good faith and fair dealing and aiding and abetting satisfy 19 the jurisdictional requirements. Therefore, Plaintiff’s request for attorneys’ fees is denied. 20 Accordingly, 21 IT IS ORDERED that Plaintiff’s request for attorneys’ fees is DENIED. 22 IT IS FURTHER ORDERED that Plaintiff’s Motion to Remand (Doc. 7) is 23 GRANTED. The Clerk of the Court shall remand this action to Maricopa County Superior 24 Court. 25 DATED this 7th day of February, 2012. 26 27 28 -6-

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