Beyer, Pongratz & Rosen v. Evanston Insurance Company

Filing 16

ORDER signed by District Judge Kimberly J. Mueller on 9/8/16 GRANTING 5 Motion to Remand REMANDING CASE to Sacramento County Superior Court. Copy of remand order sent to other court. And DENYING Request for Attorney's Fees. CASE CLOSED. (Washington, S)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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BEYER, PONGRATZ & ROSEN,

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Plaintiff,

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No. 2:16-cv-01061-KJM-CKD

v.

ORDER

EVANSTON INSURANCE COMPANY,

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Defendant.

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This case comes before the court on the motion to remand and request for

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attorneys’ fees by plaintiff Beyer, Pongratz & Rosen (Beyer). For reasons explained below, the

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motion to remand is GRANTED, while the request for attorneys’ fees is DENIED.

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I.

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PROCEDURAL HISTORY AND BACKGROUND
Plaintiff Beyer, a law firm, is a resident and citizen of California. Defendant

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Evanston Insurance Company (Evanston) has its corporate office in Deerfield, Illinois but does

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business in California. Compl. ¶¶ 1–2, ECF No. 1-2. On April 7, 2016, Beyer filed a complaint

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with the Superior Court for the County of Sacramento, id., asserting four state law claims against

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Evanston: (1) Breach of the Duty of Good Faith and Fair Dealing, (2) Breach of Contract,

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(3) Negligence, and (4) Declaratory Relief and Accounting. Id. ¶¶ 14–40. Beyer’s claims arise

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from Evanston’s alleged failure to cover $177,260.91 Beyer paid to a plaintiff in an arbitration
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dispute. Id. ¶ 10. Beyer alleges it had to pay this money because Evanston, as Beyer’s insurer

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and representative in the arbitration matter, did not properly and efficiently defend Beyer.

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Id. ¶ 12.

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For its claims, Beyer seeks the following relief:

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Monetary Damages in the amount of $25,000, the cost of Beyer’s insurance

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deductible for its $500,000 coverage. Id. ¶ 40(1).

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Monetary Damages in the amount of $9,500 for Beyer’s loss of earnings.

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Id. ¶ 40(2).

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Monetary damages “in an amount to be determined at trial based on

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[Beyer’s] contention that Evanston improperly “wasted” part of [Beyer’s]

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available insurance proceeds . . . in an amount which will not exceed

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$40,000.” Id. ¶ 40(3).

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“[A] full and complete accounting of all expenses and attorney fees

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incurred and paid by Evanston.” Id. ¶ 40(4).

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[S]uch other and further relief as the [c]ourt deems just and proper.” Id.

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¶ 40(6).

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Beyer expressly clarifies that “plaintiff is seeking a total compensation of no more than $74,500

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in damages, exclusive of interests and costs, in this matter.” Id. ¶ 40(5).

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On May 18, 2016, Evanston removed Beyer’s case to this court on the basis of

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diversity jurisdiction, contending Beyer alleges Evanston improperly required Beyer pay

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$177,260.91 in arbitration damages, an amount far exceeding the federal diversity threshold of

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$75,000. Not. of Remov. 2, ECF No. 1. On June 8, 2016, Beyer moved to remand the case to

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state court, contending it “clearly and unequivocally seeks the stated amount of $74,500.” Mot.

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Remand 2, ECF No. 6. Evanston opposed the motion on August 25, 2016, Opp’n, ECF No. 10,

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and Beyer replied on September 2, 2016, Reply, ECF No. 12.

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II.

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LEGAL STANDARDS
When a case “of which the district courts of the United States have original

jurisdiction” is initially brought in state court, a defendant may remove it to federal court. 28
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U.S.C. § 1441(a). In a motion to remand to state court, the party asserting federal jurisdiction has

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the burden of proof. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). “The

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burden of establishing federal jurisdiction is upon the party seeking removal, and the removal

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statute is strictly construed against removal jurisdiction.” Id.

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In cases in which the existence of diversity jurisdiction depends on the amount in

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controversy, “[t]he district court may consider whether it is ‘facially apparent’ from the complaint

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that the jurisdictional amount is in controversy.” Singer v. State Farm Mutual Auto. Ins. Co., 116

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F.3d 373, 377 (9th Cir.1997) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326 (5th Cir.1995)).

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The amount in controversy includes claims for general and special damages (excluding costs and

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interests), including attorneys’ fees, if recoverable by statute or contract, and punitive damages, if

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recoverable as a matter of law. See Richmond v. Allstate Ins. Co., 897 F.Supp. 447

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(S.D.Cal.1995); Miller v. Michigan Millers Ins. Co., No. 96–4480, 1997 WL 136242

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(N.D.Cal.1997). “A speculative argument regarding the potential value of the award is

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insufficient.” Singer, 116 F.3d at 376.

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It is well established that the plaintiff is “master of her complaint” and can plead to

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avoid federal jurisdiction. See, e.g., Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc.,

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535 U.S. 826, 831 (2002); Caterpillar Inc. v. Williams, 482 U.S. 386, 398–99(1987); Valles v. Ivy

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Hill Corp., 410 F.3d 1071, 1075 (9th Cir. 2005). Accordingly, subject to a “good faith”

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requirement in pleading, a plaintiff may sue for less than the amount she may be entitled to if she

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wishes to avoid federal jurisdiction and remain in state court. St. Paul Mercury Indem. Co. v. Red

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Cab Co., 303 U.S. 283, 288–89 (1938). In determining diversity jurisdiction, “the sum claimed

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by the plaintiff controls.” Id. at 289. Where the plaintiff has alleged her facts and pled her

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damages, and there is no evidence of bad faith, the defendant must not only contradict the

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plaintiff’s own assessment of damages, but must overcome the presumption against federal

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jurisdiction. See id. at 290.

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III.

DISCUSSION
A.

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Motion to Remand
Here, Beyer unequivocally claims a maximum entitlement to $74,500 dollars in

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damages, notwithstanding its possible entitlement to more money. See Compl. ¶ 40(5). Evanston

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does not contend Beyer pleads this amount in bad faith, but instead contends Beyer does not

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affirmatively state it is not seeking to recover an amount within the jurisdictional limit. Opp’n at

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5. However, jurisdiction is not established simply because a plaintiff does not confirm its claims

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do not exceed the jurisdictional amount, for a lack of explicit confirmation does not conclusively

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establish the amount in controversy is met. See Valle v. State Farm Mutual Auto. Ins., 1997 WL

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564047 (N.D.Cal.1997) (declining to find a refusal to stipulate to damages below the

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jurisdictional amount is even persuasive in evaluating the worth of the claims in a complaint);

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Miller v. Michigan Millers Ins. Co., 1997 WL 136242 (N.D.Cal.1997) (same). Beyer’s complaint

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establishes jurisdiction is not proper in this court, so its motion to remand is GRANTED.

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B.

Request for Attorneys’ Fees
Beyer contends it is entitled to attorneys’ fees due to Evanston’s allegedly

improper removal. Remov. Mot. at 5.
Absent unusual circumstances, courts may award attorneys’ fees under the fee

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provision of the removal statute only where the removing party lacked an objectively reasonable

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basis for seeking removal; conversely, when an objectively reasonable basis exists, fees should be

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denied. Martin v. Franklin Capital Corp., 546 U.S. 132, 139 (2005). Removal is not objectively

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unreasonable solely because the removing party’s arguments lack merit, or else attorneys’ fees

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would always be awarded whenever remand is granted. Lussier v. Dollar Tree Stores, Inc., 518

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F.3d 1062, 1065 (9th Cir. 2008). The decision to grant attorneys’ fees is one of “discretion.”

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Martin, 546 U.S. at 136.

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Here, the court concludes attorneys’ fees are not warranted. Given that the

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complaint alleges Evanston’s actions resulted in Beyer’s having to pay $ 177,260.91 to a plaintiff

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in an arbitration dispute, it was not implausible for Evanston to contend the amount in

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controversy actually exceeded $75,000. Beyer’s motion for attorneys’ fees is DENIED.
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IV.

CONCLUSION

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In sum, Beyer’s motion to remand this case is GRANTED. Beyer’s request for

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attorneys’ fees is DENIED. This case is REMANDED to Sacramento County Superior Court.

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This resolves ECF No. 5.

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IT IS SO ORDERED.

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DATED: September 8, 2016.

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UNITED STATES DISTRICT JUDGE
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