Polanco v. AmGUARD Insurance Company
Filing
12
MEMORANDUM OPINION Signed by Judge Colm F. Connolly on 12/6/2018. (nmf)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JOSUE POLANCO,
Plaintiff,
v.
Civil Action No. 18-0331-CFC
AMGUARD INSURANCE
COMPANY,
Defendant. :
John S. Spadaro, JOHN SHEEHAN SPADARO, LLC, Smyrna, Delaware
Counsel for Plaintiff
Michael R. Abbott, CIPRIANI & WERNER, P.C., Wilmington, Delaware
Counsel for Defendant
MEMORANDUM OPINION
December 6, 2018
Wilmington, Delaware
CONNOLLY, UNITEDSiIBS DISTRICT JUDGE
Pending before me are two related motions. The first is Plaintiff Josue
Polanco's motion to remand this case to the Superior Court of the State of
Delaware from which it was removed to this Court by Defendant Amguard
Insurance Company. D.I. 3. The second is Amguard's Motion for Leave to
Perform Discovery in Order to Respond to Plaintiffs Motion to Remand. D.I. 6.
For the reasons discussed below, I will reserve decision on Polanco' s remand
motion and grant Amguard's discovery motion.
I.
BACKGROUND
Polanco initiated this tort action against Amguard with the filing of his
complaint in the Superior Court of Delaware on January 29, 2018. D.I. 1-1 at 1.
Polanco sought in his complaint (1) a declaratory judgment that Amguard had
failed to make reasonably timely payment of workers' compensation benefits owed
to Polanco for the injuries and disability he suffered as a result of a work-related
truck accident in August 2015; (2) compensatory and punitive damages for
Amguard' s "bad faith" breach of its workers' compensation insurance contract
with Polanco' s employer; and (3) compensatory and punitive damages for
intentional infliction of emotional distress. Id. at 1, 13-15. Consistent with
Delaware Superior Court Civil Rule 9(g), Polanco did not demand or identify in
his complaint a specific amount of damages.
On February 28, 2018, Amguard filed a notice of removal in this Court
pursuant to 28 U.S.C. § 1446. Amguard alleged in its notice that because of the
diversity of Polanco' s and Amguard' s citizenships and "because [Polanco] is
believed to be seeking compensatory damages in excess of $75,000, this Court has
original jurisdiction over all of [Polanco's] state law claims." D.I. 1 at 2.
On March 21, 2018, Polanco filed his motion to remand (D.I. 3) and a
memorandum in support of his motion (D.1. 4). On April 4, 2018, Amguard filed
its response to Polanco's motion (D.I. 5) and its own motion for leave "to perform
discovery in order to respond to" Polanco's motion (D.I. 6).
Amguard asserted in its response that it had paid Polanco approximately
$77,933.88 in indemnity payments related to his workers' compensation claim.
D.I. 5 at 3. It cited in support of this assertion, and attached as an exhibit to its
response, what appears to be an internal spreadsheet maintained by Amguard for
Polanco's workers' compensation claim. Amguard also attached to its response (1)
a stipulation filed by Polanco and his employer with Delaware's Industrial
Accident Board ("IAB"), the quasi-judicial body before which Polanco's workers'
compensation claim was adjudicated; and (2) the IAB's decision on Polanco's
Petition to Determine Compensation Due. Amguard cited these two documents as
2
support for its assertions that Polanco had incurred medical expenses of $16,043.44
and "indemnity expenses" of$25,446.31 as of October 2016 and had been awarded
$12,669.72 in attorney fees by the JAB. D.I. 5 at 3. Amguard argued in its
response that Polanco's "main goal seems to be to obtain punitive damages for the
alleged bad faith breach of contract and punitive damages for the alleged reckless
infliction of emotional distress." D.I. 5 at 3-4. Amguard stated further that it
"belie[ved] that [Polanco] is evaluating his case using these numbers" (i.e., the
identified sums for indemnity payments, medical expenses, and attorney fees) and
that these numbers "take [Polanco's] evaluation above the threshold" of the
$75,000 amount-in-controversy requirement of 28 U.S.C. § 1332(a). Id. Finally,
Amguard argued that "[i]n the alternative" {D.I. 5 at 4), the Court should grant its
separate motion for leave to conduct discovery "for the limited purpose of
addressing the amount in controversy" (D.I. 6 at 3).
Polanco filed a reply memorandum in support of his remand motion and in
opposition to Amguard's discovery motion on April 10, 2018. D.I. 7. He also
filed in June and July 2018 two letters in further support of his position. D.I. 8;
D.I. 9. Polanco has offered no evidence with respect to the amount in controversy
to counter the evidence offered by Amguard in its response.
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The case was reassigned to me on September 24, 2018. I have studied the
parties' filings and do not believe that oral argument is necessary or would be
helpful for me to decide the pending motions.
II.
LEGAL STANDARDS
"[A] defendant seeking to remove a case to federal court must file in the
federal forum a notice of removal 'containing a short and plain statement of the
grounds for removal"' pursuant to 28 U.S.C. § 1446(a). Dart Cherokee Basin
Operating Co. v. Owens, 135 S. Ct. 547, 553 (2014) (quoting 28 U.S.C. § 1446(a)).
The notice of removal "shall be filed within 30 days" of the defendant's receipt
"through service or otherwise, of a copy" of the plaintiffs state-court complaint. §
1446(b).
"When removal is based on diversity of citizenship, an amount-incontroversy requirement must be met." Dart, 135 S. Ct. at 553. Section 1332(a)
of Title 28 requires that the amount in controversy exceed $75,000. "When the
plaintiffs complaint [filed in state court] does not state the amount in controversy,
the defendant's notice of removal may do so." Id.; see also§ 1446(c)(2)(A)(ii)
("[T]he notice of removal may assert the amount in controversy ... if the initial
pleading seeks a money judgment[] but the State practice ... does not permit
demand for a specific sum ....").
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The amount-in-controversy allegation in a removal notice filed pursuant to§
1446(a) "should be accepted when not contested by the plaintiff or questioned by
the court." Dart, 135 S. Ct. at 553. If the plaintiff contests the defendant's
allegations, then "both sides [are to] submit proof and the court decides, by a
preponderance of the evidence, whether the amount-in-controversy requirement
has been satisfied." Id. at 554. The court may permit the parties to take discovery
on the question of whether the amount in controversy meets the jurisdictional
threshold of§ 1332(a). See id. ("[D]efendants may simply allege or assert that the
jurisdictional threshold has been met. Discovery may be taken with regard to that
question.") (quoting H.R. Rep. No. 112-10, p. 16 (2011)).
III.
DISCUSSION
Polanco argues that remand is required because of three deficiencies in
Amguard' s removal notice. Polanco intentionally decided not to offer evidence to
counter Amguard's assertion that the amount in controversy exceeds $75,000 and
the documentary evidence Amguard submitted with its response in support of that
assertion. I will first address Polanco's arguments about the removal notice's
deficiencies and then consider the implications of his decision not to offer
opposing evidence with respect to the amount in controversy.
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A. Polanco's Arguments That Amguard's Removal Notice is Deficient
Polanco contends that Amguard' s removal notice is deficient for three
reasons. He argues first that remand is required because Amguard' s removal
notice "offers no evidence of the amount in controversy." D.I. 4 at 1; see also id
at 2 ( arguing that "Amguard has defaulted on its burden of proving the
jurisdictional amount"). He next argues that Amguard' s removal notice "fails"
because its allegation of the amount in controversy is "conclusory" and "do[es] not
meet the plausibility threshold," which Polanco claims was established by Ashcroft
v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007). D.I. 4 at 4. Finally, Polanco argues that Amguard's notice "fails" because
it states an amount in controversy "upon information and belief." Id. I am
persuaded by none of these arguments.
First, in Dart, the Supreme Court expressly rejected the argument that a
notice of removal must offer evidence of the amount in controversy. The Court
could not have been clearer on this point. In the Court's words, a removal notice
"need not contain evidentiary submissions," and "evidence establishing the amount
in controversy is required by§ 1446(c)(2)(B) only when the plaintiff contests, or
the court questions, the allegation." Dart, 135 S. Ct. at 551, 554. As the Court
noted in Dart: "Of course, a dispute about a defendant's jurisdictional allegations
cannot arise until after the defendant files a notice of removal containing those
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allegations." Id. at 554 (emphasis in original). Thus, unless and until a plaintiff or
the court questions the defendant's amount-in-controversy allegation set forth in
the removal notice, a defendant need not offer evidence to establish that the
amount-in-controversy requirement of§ 1332(a) is met.
Second, a defendant's "conclusory" assertion in the removal notice that the
amount in controversy meets the $75,000 threshold of§ 1332(a) does not render
the notice deficient or deprive this Court of jurisdiction. "Conclusory" means
"consisting of or relating to a conclusion or assertion/or which no supporting
evidence is offered." MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY 258 (11th
ed. 2005) (emphasis added). As just noted, the Court unambiguously held in Dart
that a defendant need not offer evidence in its removal notice to support an
amount-in-controversy allegation. Thus, as a matter of logic, Polanco's argument
cannot stand in the face of Dart's holding.
It is also clear from the text of Dart that the Court understood that a
defendant's removal notice will typically make a conclusory allegation of the
amount in controversy when a plaintiff's state-court complaint does not specify
that amount. Quoting with approval from a House Judiciary Committee Report on
§ 1446, the Court stated in Dart that "defendants may simply allege or assert [in a
removal notice] that the jurisdictional threshold has been met." Id. at 554 (quoting
H.R. Rep. No. 112-10, p. 16).
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Polanco asks me to focus on the paragraph in Dart that immediately follows
the statement quoted by the Court from the House Judiciary Committee Report. In
that paragraph, the Court stated that "a defendant's notice of removal need only
include a plausible allegation that the amount in controversy exceeds the
jurisdictional threshold." See id. Polanco argues that "[i]n the wake of Iqbal and
Twombly ... it is axiomatic that conclusory allegations do not meet the plausibility
threshold." D.I. 5 at 4. But neither Twombly nor Iqbal hold that a conclusory
allegation of the amount in controversy is implausible or otherwise inadequate.
See Twombly, 550 U.S. at 555-57 (holding that a plaintiffs complaint must offer
more than "labels and conclusions" when alleging a violation of the Sherman Act);
Iqbal, 556 U.S. at 680-81 (applying test from Twombly and finding that plaintiff
failed to state a plausible claim for purposeful and unlawful discrimination in his
complaint). In any event, Dart, which was decided after Twombly and Iqbal,
makes clear that a simple allegation or assertion of the amount in controversy is
plausible if made in good faith. See 135 S. Ct. at 553 (noting that "when a plaintiff
invokes federal court jurisdiction, the plaintiffs amount-in-controversy allegation
is accepted if made in good faith" and "[s]imilarly, when a defendant seeks
federal-court adjudication, the defendant's amount-in-controversy allegation
should be accepted when not contested by the plaintiff or questioned by the
court"); Mt. Healthy City Bd. ofEd. v. Doyle, 429 U.S. 274,276 (1977) ("[T]he
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sum claimed by the plaintiff controls if the claim is apparently made in good
faith.") (alteration in original) (quoting St. Paul Mercury Indemnity Co. v. Red Cab
Co., 303 U.S. 283,288 (1938)); Mankodi v. Trump Marina Assocs., Inc., 525 F.
App'x 161, 162 (3d Cir. 2013) (holding that amount-in-controversy allegation that
damages were "in excess of $75,000" was "adequately pleaded" where "[t]here
[wa]s no indication that [the plaintiff] asserted [his] claims in bad faith").
Third, because the operative question in determining the adequacy of an
amount-in-controversy allegation for pleading purposes is whether the defendant
alleged the amount in good faith, it is irrelevant that the defendant made the
allegation upon information and belief. When the plaintiffs complaint is silent
with respect to the amount of damages sought, one would expect that in almost all
cases (and certainly in all cases where punitive damages are sought) that a
defendant could only allege an amount in controversy on the bases of information
and belief. Unless the plaintiff has disclosed the amount of damages he intends to
seek, the defendant would have no way of knowing that amount. In this case,
Amguard asserted in its removal notice that "because [Polanco] is believed to be
seeking compensatory damages in excess of $75,000, this Court has original
jurisdiction over all of [Polanco's] state law claims." D.I. 1 at 2. Because there is
no indication that the allegation was made in bad faith, the allegation is adequately
pied. Cf Lewis v. Rego Co., 757 F.2d 66, 68-69 (3d Cir. 1985) {"The
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effectiveness of the removal petition was not vitiated by the fact that in an
abundance of caution it characterized the information about [the plaintiff's]
citizenship as being based on information and belief.").
In sum, I reject Polanco's arguments that the amount-in-controversy
allegation in Amguard' s removal notice was deficient.
B. Polanco's Decision Not to Offer Opposing Evidence
As the Court noted in Dart, Congress's passage of§ 1446(c)(2)(b) in 2011
"clarifie[d] the procedure in order when a defendant's assertion of the amount in
controversy [in a removal notice] is challenged." 135 S. Ct. at 554. Dart leaves no
doubt what the procedure is: "[B]oth sides [are to] submit proof' and then the court
is to "decide[], by a preponderance of the evidence, whether the amount-incontroversy requirement has been satisfied." Id. (emphasis added). The Court in
Dart also made clear that post-removal discovery is allowed to determine whether
§ 1332(a)'s jurisdictional amount is satisfied: "Discovery may be taken with regard
to th[e] question" of the amount in controversy. Id. (quoting H.R. Rep. No. 11210, p. 16).
Polanco first challenged Amguard's amount-in-controversy allegation in his
remand motion. In its response to that motion, Amguard submitted a copy of the
IAB' s decision on Polanco' s workers' compensation claim, a stipulation filed by
Polanco with the JAB, and a spreadsheet to support Amguard's assertions that
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Polanco incurred at least $77,000 in indemnifiable expenses (principally lost wages
and medical expenses resulting from his work-related accident) and $12,500 in
attorney fees to litigate his workers' compensation claim before the IAB.
Amguard says that it "believes" that Polanco "used" these numbers when he made
an evaluation of the amount of punitive damages he hoped to recover and that
these numbers "take [that] evaluation above" the $75,000 threshold of§ 1332(a).
D.I. 5 at 3-4.
In his reply memorandum, Polanco does not challenge the authenticity of the
documents submitted by Amguard or the accuracy of the indemnity payment,
medical expense, and attorney fee sums cited by Amguard. And although Polanco
correctly notes in his reply memorandum that a workers' compensation claim is
distinct from a bad faith claim that arises out of the insurer's handling of the
underlying workers' compensation claim, he does not deny Amguard's
commonsense assertion that Polanco' s ultimate demand for damages in this case
will be based in part on the amount of Polanco's indemnifiable expenses and
attorney fees.
Notwithstanding the fact that both parties quoted Dart in their filings, and
Amguard quoted specifically Dart's teaching that, when a removal notice's
amount-in-controversy allegation is challenged, "both sides [are to] submit proof'
(D.I. 5 at 2), Polanco elected not to submit any evidence to counter the evidence
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offered by Amguard. There is no doubt that Polanco' s decision not to offer
opposing evidence was calculated. He argues in his reply memorandum that
because Amguard did not plausibly allege the amount in controversy in its removal
notice, "Polanco has never been called upon to prove (or even allege) the amount
in controversy[,] and he has been careful to avoid any word or action that might
relieve Amguard of its burden of proof." D.I. 7 at 8.
Polanco asks me to ignore Amguard' s evidentiary submission because it was
made after§ 1446(b){l)'s 30-day deadline to file a removal notice (i.e., 30 days
after Amguard's receipt of Polanco's state-court complaint). According to
Polanco, the 3 0-day deadline "is jurisdictional in nature, and therefore cannot be
enlarged[,]" and Amguard "cannot rely on substantively new grounds for removal
tha[t] were [not] stated in the original notice." D.I. 7 at 3.
As an initial matter, Amguard's evidentiary submission did not add a new
substantive ground for removal jurisdiction but only provided evidentiary support
for the amount-in-controversy allegation it made in its removal notice. I also do
not see how Polanco's argument that such a submission must be made within§
1446(b)( 1)' s 3 0-day deadline can be reconciled with Dart's holding that "evidence
establishing the amount in controversy is required by§ 1446(c)(2)(B) only when
the plaintiff contests, or the court questions, the allegation." 135 S. Ct. at 554. A
plaintiff contests the adequacy of the removal notice's amount-in-controversy
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allegation by filing a remand motion. Section 1447(c) gives a plaintiff up to 30
days after the filing of the removal notice to file its remand motion. Thus, for
Dart's holding to have any meaning, it cannot be the case that a removing
defendant's evidentiary submission must be made within § 1446(b)( 1)' s 3 0-day
deadline. Under Polanco' s theory, even if a defendant filed its removal notice on
the same day it received the plaintiffs state-court complaint, the plaintiff could
wait 3 0 days to file its remand notice and thereby prevent the defendant from ever
having the opportunity to rebut the plaintiff's challenge to the removal notice's
amount-in-controversy allegation.
The cases cited by Polanco for the proposition that § 1446(b)( 1)' s 3 0-day
window cannot be extended are not from this circuit and are, in any event,
inapposite. They address situations where the removal notice was filed after the
30-day period had expired or where the defendant sought to do more than simply
clarify or add specificity to the grounds alleged in the notice after the 3 0 days had
run. See, e.g., ARCO Envtl. Remediation, L.L. C. v. Dep 't ofHealth & Envtl.
Quality, 213 F.3d 1108, 1117 (9th Cir. 2000) (barring defendant from amending
notice of removal after expiration of30-day deadline "to state alternative bases for
removal jurisdiction"); O'Halloran v. Univ. of Wash., 856 F.2d 1375, 1381 (9th
Cir. 1988) (barring amendment of removal notice after 30-day deadline "to add a
separate basis for removal jurisdiction"); Harris Corp. v. Kollsman, Inc., 97 F.
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Supp. 2d 1148, 1150, 1153 (M.D. Fla. 2000) (remanding case when notice of
removal was filed 104 days after plaintiffs state-court complaint was served on
defendant); Castle v. Laurel Creek Co., 848 F. Supp. 62, 66 (S.D.W. Va. 1994)
(barring amendment of removal notice after 30-day deadline to allege that plaintiff,
in attempt to defeat federal diversity jurisdiction, had fraudulently joined one of the
defendants in plaintiffs state-court complaint).
More important, Polanco fails to cite 28 U.S.C. § 1653 (providing that
"[d]efective allegations of jurisdiction may be amended, upon terms, in the trial
and appellate courts"); Willingham v. Morgan, 395 U.S. 402, 407 n.3 (1969)
(upholding removal where jurisdictional facts required to support removal were
contained in later-filed affidavits); or the Third Circuit's decision in USX Corp. v.
Adriatic Insurance Co., 345 F. 3d 190 (3d Cir. 2003). As the court held in USX:
Although we are mindful that courts construe removal
statutes strictly with all doubts resolved in favor of
remand, see Boyer v. Snap-On Tools Corp., 913 F.2d
108, 111 (3d Cir. 1990), we are satisfied that sections
1446(a) and 1653, together with the Supreme Court's
opinion in Willingham, permit a court to consider
jurisdictional facts contained in later-filed affidavits as
amendments to the removal petition where, as here, those
facts merely clarify (or correct technical deficiencies in)
the allegations already contained in the original notice.
345 F.3d at 205 n.12. Thus, even if Dart could be read as having left open the
question of whether the evidence and discovery it allows must be submitted to the
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court within§ 1446(a)'s 30-day window- and I do not think it can be reasonably
read that way -
USX and Dart read together make clear that the court may
consider evidence that clarifies or supports a removal notice's amount-incontroversy allegation and may permit discovery regarding such evidence after the
30-day period has run.
Because Polanco intentionally ignored Dart's explicit teaching that both
sides are to submit proof when the amount-in-controversy allegation is challenged,
I am tempted to deny Polanco's remand motion outright based on the unrebutted
evidence offered by Am.guard. Instead, I will reserve decision on Polanco' s
remand motion, grant Amguard' s motion to take discovery for the limited purpose
of addressing the challenged amount in controversy, and permit both parties to file
competing evidentiary submissions regarding the amount in controversy after such
discovery is concluded. 1
1
Polanco urges me to follow the Eleventh Circuit's holding in Lowery v.
Ala. Power Co., 483 F.3d 1184, 1217 (11th Cir. 2007) that courts "should not
reserve ruling on a motion to remand in order to allow defendant to discover the
potential factual basis of jurisdiction." Lowery, however, was decided seven years
before Dart; and, for the reasons discussed above, to the extent its holding was
intended to bar post-removal discovery regarding the amount in controversy, it was
overruled by Dart.
Polanco also relies heavily in his briefing on Vizant Technologies, LLC v.
Ocean State Jobbers, Inc., 2015 WL 500480 (E.D.P.A. Feb. 5, 2015), in which the
court stated that a conclusory amount-in-controversy allegation based on
information and belief is not a "plausible allegation" and renders a removal notice
deficient. D.I. 4 at 1, 3. I agree that language in Vizant supports Polanco's
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IV.
CONCLUSION
For the foregoing reasons, I will reserve decision on Plaintiffs Motion to
Remand (D.I. 3) and grant Defendant's Motion for Leave to Perform Discovery in
Order to Respond to Plaintiffs Motion to Remand (D.1. 6).
The Court will issue an order consistent with this Memorandum Opinion.
position, but that language is arguably dicta, as the plaintiff in Vizant had attached
to its complaint "an exhibit referencing a loss of $45,000" and, after the plaintiff
challenged the amount in controversy, the defendant "elected not to submit
evidence that the amount in controversy exceed[ed] $75,000." 2015 WL 500480,
at *3. In any event, I do not think the language from Vizant on which Polanco
relies can be squared with Dart; nor do I think it is consistent with Doyle, 429 U.S.
at 276 (stating that the amount in controversy claimed by the plaintiff"controls if
the claim is apparently made in good faith") (internal citation omitted); Mankodi,
525 F. App'x at 162 (holding that amount-in-controversy allegation that damages
were "in excess of $75,000" was "adequately pleaded" where "[t]here is no
indication that [the plaintiff] asserted [his] claims in bad faith"); and Lewis, 151
F .2d at 68-69 ("The effectiveness of the removal petition was not vitiated by the
fact that ... it characterized the information about [the plaintiffs] citizenship as
being based on information and belief.").
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