Ashot Agdayan v. Travelers Commercial Insurance Company et al

Filing 16

ORDER REMANDING CASE TO STATE COURT by Judge Cormac J. Carney. Case Terminated. Made JS-6 (es)

JS-6

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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SOUTHERN DIVISION

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) Case No.: SACV 17-01503-CJC(JDEx)
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ASHOT AGDAYAN,
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Plaintiff,
) ORDER REMANDING CASE TO
) STATE COURT
v.
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TRAVELERS COMMERCIAL
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INSURANCE COMPANY AND DOES )
1-100, INCLUSIVE,
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Defendants.
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)

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I. INTRODUCTION

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On July 28, 2017, Plaintiff Ashot Agdayan filed this action in state court against

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Defendant Travelers Commercial Insurance Company (“Travelers”) and Does 1-100,

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inclusive, for tortuous breach of insurance contract. (Dkt. 1 Ex. 1 [Complaint, hereinafter
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“Compl.”].) On August 31, 2017, Travelers removed the action to this Court, invoking

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diversity jurisdiction. (Dkt. 1 [Notice of Removal].) On September 28, 2017, the Court

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ordered the parties to show cause why the case should not be remanded for lack of

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subject matter jurisdiction. (Dkt. 12.) Travelers and Plaintiff have filed responses to the

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Court’s order to show cause. (Dkt. 13 [Travelers’ Response, hereinafter “Def.’s Resp.”];

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Dkt. 14 [Plaintiff’s Response, hereinafter “Pl.’s Resp.”].) For the following reasons, the

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case is REMANDED to Orange County Superior Court.

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II. BACKGROUND

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Plaintiff alleges that he purchased a homeowner’s insurance policy from Travelers

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for his home located at 2904 Paper Lane, Newport Beach, California. (Compl. ¶ 1.) This

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insurance policy was in effect from August 1, 2015, to August 1, 2016. (Id. ¶ 6.) On

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August 8, 2015, “Plaintiff suffered a massive and sudden water leak which ruined most of

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his kitchen, and constituted a loss covered by” Travelers. (Id. ¶ 7.)

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Plaintiff claims that Travelers retained a contractor to repair his damaged kitchen

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cabinets. (Id. ¶ 10.) Travelers allegedly refused to allow the contractor to remove the

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granite counter tops that were on top of the cabinets and, as a result, the granite counter

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tops broke when the cabinets were being replaced. (Id. ¶¶ 10–11.) Plaintiff alleges that

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Travelers has refused to pay him the $7,125 that it cost to replace the counter tops. (Id. ¶

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12.) Plaintiff further alleges that as a result of Travelers’ conduct, he “has or will incur

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incidental expenses of at least $10,000.” (Id. ¶ 15.) The Complaint’s prayer for relief

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does not specify any amount in damages, but lists special damages, general damages,

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attorneys’ fees, exemplary damages, interest, costs of suit, and “such other and further

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relief as the court deems just and proper.” (Id. at 4.)

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Travelers admits that Plaintiff does not plead in his complaint any specific

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damages beyond the $7,125 to repair the counter tops and the $10,000 in incidental

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damages. (Def.’s Resp. at 2.) Yet, Travelers asserts that the $75,000 amount in

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controversy for diversity jurisdiction is satisfied because Plaintiff served on Defendants a

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“Statement of Damages,” that seeks $15,000 in property damages, $75,000 in emotional

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distress damages, and $500,000 in punitive damages. (Id.) Under California law, a

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“Statement of Damages” is a form that a plaintiff in a personal injury or wrongful death

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action must serve on the defendant upon request. Cal. Civ. Proc. Code § 425.11(b). The

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form “set[s] forth the nature and amount of damages being sought.” Id. A “Statement of

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Damages” is not required in an insurance dispute, but Plaintiff nevertheless served one on

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Defendant in this case.

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Plaintiff argues that the amount in controversy requirement has not been met. He

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claims that when he filed this action in July 2017, “he was under the impression that it

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would cost in excess of $25,000.00 to install new, granite counters.” (Pl.’s Resp. at 1.)

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He claims that “it has since turned out that it only cost $9,740.00 to replace the counters.”

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(Id. at 2.) It is unclear why Plaintiff now represents that it cost $9,740 to replace his

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counter tops when he alleges in his Complaint that it cost $7,125 to repair the counter

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tops. In any event, Plaintiff states that “this case has evolved into more of a garden

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variety poor workmanship case that it not [sic] likely to result in an award anywhere near

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$75,000.00.” (Id. at 2.)

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III. LEGAL STANDARD

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A civil action brought in a state court, but over which a federal court may exercise

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original jurisdiction, may be removed by the defendant to a federal district court. 28

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U.S.C. § 1441(a). The burden of establishing subject matter jurisdiction falls on the

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defendant, and the removal statute is strictly construed against removal jurisdiction.
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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“Federal jurisdiction must be

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rejected if there is any doubt as to the right of removal in the first instance.”).

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A federal court has diversity jurisdiction over a civil action between citizens of

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different states, so long as the amount in controversy exceeds $75,000. 28 U.S.C. § 1332.

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If at any time before final judgment, the court determines that it is without subject matter

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jurisdiction, the action shall be remanded to state court. 28 U.S.C. § 1447(c).

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When a defendant invokes diversity jurisdiction and “the complaint does not

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contain any specific amount of damages sought, the [defendant] bears the burden of

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showing, by a preponderance of the evidence, that the amount in controversy exceeds the

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statutory amount.” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 397 (9th Cir. 2010).

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“This traditional rule of burden allocation to determine removal jurisdiction comports

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with the Supreme Court’s view that ‘the dominant note in the successive enactments of

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Congress relating to diversity jurisdiction is one of jealous restriction, of avoiding offense

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to state sensitiveness, and of relieving the federal courts of the overwhelming burden of

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business that intrinsically belongs to the state courts in order to keep them free for their

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distinctive federal business.’” Id. at 399 (quotation omitted) (citing Indianapolis v.

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Chase Nat’l Bank, 314 U.S. 63, 76 (1941)).

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IV. DISCUSSION

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Travelers argues that the amount in controversy exceeds $75,000 because Plaintiff

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served Travelers with a “Statement of Damages” form, claiming that Plaintiff was

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seeking “$15,000 in property damage [sic], $75,000 in emotional distress damages, and

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$500,000 in punitive damages.” (Def.’s Resp. at 2.)

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In Surber v. Reliance Nat. Indem. Co., 110 F. Supp. 2d 1227 (N.D. Cal. 2000), the

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district court found that a plaintiff’s “Statement of Damages” is not conclusive to show

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the amount in controversy has been met. There, plaintiff sued her automobile insurance

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company after it declined to repair her car that had been damaged in an accident. Id. In

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her “Statement of Damages,” plaintiff sought general damages of $210,040 and punitive

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damages of $1,000,000. Id. at 1230. The court held that these amounts were not to be

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credited for two reasons. First, a “Statement of Damages” is required only in cases

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involving personal injury or wrongful death, and should be afforded far less weight in an

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insurance case. Id. at 1231 (citing Cal. Civ. Proc. Code § 425.11(b)). Second, the court

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found no support for the amounts included in the “Statement of Damages” in either the

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plaintiff’s complaint or the defendant’s Notice of Removal. Id.

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The analysis set forth in Surber is directly applicable in this case. This case is also

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a dispute arising under an insurance contract and is clearly not a personal injury or

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wrongful death case. Further, neither the Complaint nor the Notice of Removal includes

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any evidence to support the amounts Plaintiff listed in his “Statement of Damages.”

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At bottom, Plaintiff’s Complaint seeks the $7,125 he paid to replace his granite

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counter tops. The Court is leery of the extreme discrepancy between the $7,125 price tag

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for the granite counter tops and the $75,000 Plaintiff seeks in emotional distress damages.

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Travelers provides no evidence that Plaintiff in fact suffered emotional distress or sought

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treatment for his alleged distress. In fact, Travelers offers no evidence on this issue

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beyond Plaintiff’s “Statement of Damages.” Travelers therefore fails to show it is more

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likely than not that Plaintiff will recover $75,000 in emotional distress damages. Because

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Travelers has not met its burden of persuasion, Plaintiff’s claimed emotional distress

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damages in his “Statement of Damages” cannot be credited to satisfy the amount in

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controversy requirement. Id. at 1231–32.

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The Court is also not persuaded that Plaintiff will recover $500,000 in punitive

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damages. Travelers seems to admit as much. Travelers states that “the amount alleged in

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connection with punitive damages should be viewed with scrutiny.” (Def.’s Resp. at 2.)

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Travelers offers no additional argument or evidence regarding the claimed punitive

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damages, and therefore concedes that $500,000 is not a plausible estimate of punitive

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damages. Further, nothing in the record suggests that the $500,000 in punitive damages

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Plaintiff listed in his “Statement of Damages” is “anything but a bold and optimistic

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prediction.” Surber, 110 F. Supp. 2d at 1232. This “bold and optimistic” estimate of

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damages is unsupported, and nothing offered by Defendant, or even Plaintiff, indicates

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the amount is a good faith claim.

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Travelers has failed to meet its burden of establishing that the amount in

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controversy exceeds $75,000. According to the record, Plaintiff has made a good faith

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claim of $7,125 in compensatory damages, and approximately $10,000 in incidental

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damages. “A federal court should not and cannot adjudicate such minor claims.”

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Christensen v. Nw. Airlines, Inc., 633 F.2d 529, 531 (9th Cir. 1980)

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V. CONCLUSION

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For the foregoing reasons, the Court hereby REMANDS the case to Orange
County Superior Court.

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DATED:

October 24, 2017
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CORMAC J. CARNEY

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UNITED STATES DISTRICT JUDGE
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