Pompa-Monreal v. Coast National Insurance Company et al

Filing 17

ORDER granting 8 plaintiff's Motion to Dismiss fictitious parties. Fictitious parties John and Jane Does I-X, ABC Corporations I-X, and XYZ Partnerships I-X are hereby dismissed; denying 9 plaintiff's Motion to Remand. Signed by Judge Frederick J Martone on 8/24/12.(TLJ)

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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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Coast National Insurance Company, et al.,)
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Defendants.
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Reynaldo Pompa-Monreal,

No. CV 12-01431-PHX-FJM
ORDER

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The court has before it plaintiff's motion to dismiss fictitious parties (doc. 8), motion

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to remand (doc. 9), defendant Coast National Insurance Company's response to plaintiff's

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motion to remand (doc. 11), and plaintiff's reply (doc. 13). On May 29, 2012, plaintiff filed

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a complaint in the Superior Court of Arizona in Maricopa County, alleging breach of contract

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and bad faith. He sought underinsured motorist benefits, unspecified general and special

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damages, punitive damages, costs, interest, and attorneys' fees. Defendant removed on the

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basis of diversity jurisdiction and plaintiff moves to remand, arguing that the amount in

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controversy is less than $75,000.

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If it is not facially evident from the complaint that more than $75,000 is in

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controversy, defendant must "provide evidence establishing that it is 'more likely than not'

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that the amount in controversy exceeds that amount." Valdez v. Allstate Ins. Co., 372 F.3d

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1115, 1117 (9th Cir. 2004) (quotation omitted). The court may consider facts in the removal

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petition and "summary-judgment-type evidence relevant to the amount in controversy at the

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time of removal." Id. (quotation omitted).

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Plaintiff contends that his policy limit is $100,000 and defendant has offered him

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$37,763.84 to settle his claim, leaving an amount in controversy of $62,236.16 (doc. 9 at 2).

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Defendant asserts that the inclusion of punitive damages and attorneys' fees will raise the

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amount in controversy to over $75,000.

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Punitive damages are part of the amount in controversy. Gibson v. Chrysler Corp.,

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261 F.3d 927, 945 (9th Cir. 2001). Plaintiff could possibly recover punitive damages here.

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Filasky v. Preferred Risk Mut. Ins. Co., 152 Ariz. 591, 598, 734 P.2d 76, 83 (1987).

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"[W]here an underlying statute authorizes an award of attorneys' fees, either with

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mandatory or discretionary language, such fees may be included in the amount in

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controversy." Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). Arizona

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permits attorneys' fees for any contested action arising out of a contract. A.R.S. § 12-

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341.01(A). Both causes of action here arise out of a contract. See Sparks v. Republic Nat'l

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Life Ins. Co., 132 Ariz. 529, 544, 647 P.2d 1127, 1142 (1982) (action alleging insurance bad

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faith arises out of contract within the meaning of § 12-341.01(A)). Therefore, the court may

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take attorneys' fees into account when determining the amount in controversy.

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The United States Court of Appeals for the Ninth Circuit has not ruled on whether

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attorneys' fees incurred after removal are properly included in the amount in controversy.

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District courts in this circuit are in disagreement. Compare Conrad Assocs. v. Hartford

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Accident & Indem. Co., 994 F. Supp. 1196, 1200 (N.D. Cal. 1998) (since amount in

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controversy must be determined as of the date of removal, but estimate of fees relies on post-

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removal events, fees cannot be included), with Brady v. Mercedes-Benz USA, Inc., 243 F.

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Supp. 2d 1004, 1011 (N.D. Cal. 2002) (a reasonable estimate of fees likely to be incurred in

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resolving the controversy should be included in the amount in controversy).

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The Seventh Circuit and prior cases within the District of Arizona have concluded that

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attorneys' fees incurred after the date of removal should not be included. Gardynski-

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Leschuck v. Ford Motor Co., 142 F.3d 955, 959 (7th Cir. 2000) ("legal expenses that lie in

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the future and can be avoided by the defendant's prompt satisfaction of the plaintiff's demand
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are not an amount 'in controversy' when the suit is filed"); Lana v. State Farm Mut. Auto.

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Ins. Co., No. CV12-0771-PHX-DGC, 2012 WL 2357370 (D. Ariz. June 20, 2012); Dukes

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v. Twin City Fire Ins. Co., No. CV-09-2197-PHX-NVW, 2010 WL 94109 (D. Ariz. Jan. 6,

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2010). On the other hand, the Tenth Circuit holds that a reasonable estimate of fees likely

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to be recovered may be included. Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th

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Cir. 1998).

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We need not decide the issue of future fees because plaintiff undoubtedly incurred

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fees before removal. His lawyer drafted and filed a complaint in the Superior Court. When

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attorneys' fees and potential punitive damages are added to plaintiff's alleged amount in

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controversy, it is more likely than not that the jurisdictional amount will be met. Therefore,

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this court has jurisdiction over plaintiff's action.

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IT IS ORDERED DENYING plaintiff's motion to remand (doc. 9).

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IT IS ORDERED GRANTING plaintiff's motion to dismiss fictitious parties (doc.

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8). Fictitious parties John and Jane Does I-X, ABC Corporations I-X, and XYZ Partnerships

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I-X are hereby dismissed.

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DATED this 24th day of August, 2012.

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