Peczkowski v. Westfield Insurance Company

Filing 20

OPINION AND ORDER granting 16 Motion to Remand to State Court. This case is REMANDED to St. Joseph Superior Court. Signed by Judge Rudy Lozano on 4/16/13. (mc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
KEN PECZKOWSKI d/b/a
GRIFFON BOOK STORE,
Plaintiff,
v.
WESTFIELD INSURANCE
COMPANY,
Defendant.

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No.

2:13-CV-16

OPINION AND ORDER
This matter is before the Court on the Petition for Remand,
filed by Plaintiff, Ken Peczkowski d/b/a Griffon Book Store, on
January 17, 2010.
remand is GRANTED.

For the reasons set forth below, the motion for
Accordingly, this case is

REMANDED to St.

Joseph Superior Court.

BACKGROUND
In December of 2012, Plaintiff, Ken Peczkowski d/b/a Griffon
Book Store (“Peczkowski”), filed a complaint in St. Joseph Superior
Court arising from an insurance dispute with Defendant, Westfield
Insurance Company (“Westfield”).
July 2012 windstorm caused
Griffon

According to the complaint, a

$17,525 in property damage to the

Book Store, and that property was covered under

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Peczkowski’s Westfield Insurance Policy.

Not only does Peczkowski

allege Westfield breached its contract by not paying for the storm
damage, but he also asserts Westfield engaged in bad faith in
denying his claim.

As

such,

Peczkowski

is seeking $17,525 to

compensate him for his actual loss and an addition $50,000 in
punitive damages.
On January 9, 2013, Westfield filed a petition for removal
based on diversity of jurisdiction.

Westfield explains that it is

an Ohio corporation with its principal place of business in Ohio,
while Peczkowski is a citizen of Indiana.

In addition, Westfield

also claims that there is a reasonable probability that the amount
in controversy exceeds $75,000.

Westfield bases this on the

compensatory damage claim of $17,525, the punitive damage claim of
$50,000, and the potential attorneys fees and costs.

Moreover, to

further substantiate the notion that the amount in controversy
exceeds $75,000, Westfield alleges that Peczkowski had made a
demand of $135,000.
Peczkowski has filed the instant motion asking this Court to
remand the case back to state court because Westfield has failed to
establish that the amount in controversy at the time of removal
exceeded $75,000.

DISCUSSION
Peczkowski argues that this case should be remanded back to
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state court for lack of jurisdiction because Westfield has failed
to prove the requisite amount in controversy.
Removal of this case would be appropriate if it could have
originally been filed here.

28 U.S.C. § 1441.

Westfield removed

the case from state court based on diversity jurisdiction.
U.S.C. § 1332.
are

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For diversity jurisdiction to exist, the parties

required to have diverse citizenship and the matter in

controversy must exceed the sum or value of $75,000.

28 U.S.C. §

1332(a); Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 957
(7th Cir. 1998).

It is Westfield’s burden to show complete

diversity exists between the parties as well as proving that
Peczkowski’s complaint stated a claim for more than $75,000 at the
time it filed its notice of removal. In re Brand Name Prescription
Drugs Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997); BEM I,
L.L.C.

v.

Anthropoligie,

Inc.,

301 F.3d 548, 552 (7th Cir.

2002)(teaching that the relevant date for determining whether the
minimum amount in controversy is present is the date of removal).
The parties do not really dispute1 that complete diversity exists.
What

is in dispute is whether Westfield has shown, by a

preponderance of the evidence, that the amount in controversy
exceeds $75,000.

Peczkowski does claim that the initial petition to remove failed to
state that Westfield was a citizen of Ohio on the date of filing the
complaint. However, the petition to remove clearly identifies Westfield is a
citizen of Ohio. (DE # 3, ¶ 7).
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In many states the starting point for determining the amount
in controversy is the face of the complaint, where the plaintiff
may value his request for relief. Chase v. Shop ’N Save Warehouse
Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).

However, this is

usually of no help in Indiana because Indiana’s civil procedure law
prohibits plaintiffs from requesting such specific relief.
Trial R. 8(A)(2).

Ind.

Thus, there is typically noad damnum clauses in

complaints filed in Indiana state courts.

Here, however, the Court

is presented with a unique si tuation; Peczkowski included an ad
damnum clause.

He requested “damages of $17,525.00 for plaintiff’s

actual loss, and an additional $50,000.00 in punitive damages . .
. and for all other just and proper relief.”

(DE# 1).

Aside from

the term of art, “for all other just and proper relief,” included
in the complaint, Peczkowski is seeking $67,525.00 in damages.
Westfield

tries to establish by a preponderance of the

evidence that Peczkowski’s claims meet the $75,000 jurisdictional
threshold in two ways.

First, it points to a correspondence from

Plaintiff’s counsel, which Westfield says constitutes a $135,000
demand.

This, Westfield argues, shows that the claim exceeds

$75,000.

However, taking a closer look at the relevant portions of

this correspondence from Plaintiff’s counsel illustrates that there
is no serious $135,000 demand from Peczkowski.
I am enclosing a revised repair estimate prepared by
Midland Engineering in the amount of $17,175.00. . . .
Westfield is liable for this.
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I am enclosing a property valuation, estimating the
121 W. Colfax Avenue property in the amount of $135,000.
I am uncertain as to why you are insisting on paying the
cash value of the property when your policy clearly
permits you to simply pay the repair costs.
If you insist on paying the cash value of the
property, rather than the repair costs, my clients will
be formally demanding payment in the amount of
$135,000.00.
(DE# 18-1).
Regardless, this letter was communicated after the complaint
was filed and, thus, has little value.
correspondence

So, the October 12, 2012,

does not help Westfield meet its burden of

establishing the jurisdictional requisite.
Westfield also attempts to get above the $75,000 threshold by
arguing that legal fees may count toward the amount in controversy.
And, since Plaintiff is seeking $67,525, Westfield asserts there is
a reasonable probability that attorney fees will get that figure
above $75,000. In support of this argument that attorney fees are
recoverable as damages here, Westfield cites to Indiana Code
section 34-52-1-1.

This section gives the court discretion to

award attorney fees when a party brings or defends frivolous
claims, or litigates in bad faith.

This has been expanded to

include when a plaintiff gets a ve rdict in a bad faith insurance
case.

Patel v. United Fire & Casualty Co., 80 F.Supp.2d 948, 962-

63 (N.D. Ind. 2000).

While

Patel instructs that this Court may

ultimately have the discretion to award attorney fees against
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Westfield, Patel does nothing to shed light on whether the Court
should include that potential attorney fee award in calculating the
amount in controversy.
This Court finds that such a potential award should generally
not be included in determining the amount in controversy.

It is

true that when attorney fees are sought as part of the underlying
claim,

they are properly considered part of the amount in

controversy.

Missouri State Life Ins. Co. V. Jones, 290 U.S. 199,

202 (1933).

However, the Seventh Circuit has taught that any

attorney fees awarded under a separate post-judgment right to
“costs,” such as those under section 34-52-1-1, rather than part of
a plaintiff’s underlying claim, should not be considered as part of
the amount in controversy.

El v. AmeriCredit Financial Services,

Inc., No. 12-3310 2013 WL 1150210, * 4 (7th Cir. March 20, 2013).
Because any attorney fees in

this case would be awarded as a

separate post-judgment right rather than part of Peczkowski’s
underlying claim, they are not considered part of the amount in
controversy.
Not only are any potential attorney fees under section 34-521-1 not to be included in the “amount in controversy,” but there is
a strong likelihood that the attorney fees would not be recoverable
in the first place.

Indeed,Patel acknowledged that, while section

34–52-1-1 allows a court to award attorney fees following a
plaintiff verdict in bad faith insurance litigation, that was
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likely not the purpose of section 34-52-1-1. Id.

Furthermore, it

is not commonplace for this Court to award such a sanction.

See

e.g. Wagler v. West Boggs Sewer Dist., Inc., 980 N.E.2d 363,
383(Ind. Ct. App. 2012)(noting that a trial court has broad
discretion in determining whether to award attorney’s fees under
section 34-52-1-1).

So, to include the possibility that Westfield

will have to pay Peczkowski’s attorney fees as a sanction in
calculating the amount in controversy would be improper.
Ultimately, neither the complaint itself nor any submitted
evidence demonstrates, by a preponderance of the evidence, that
there is a reasonable probability that the amount in controversy
exceeds $75,000.

To the contrary, it is quite certain that the

recovery will be below $75,000.

See Meridian Sec. Ins. Co. v.

Sadowski, 441 F.3d 536, 542 (7th Cir. 2006).

Therefore, the Court

is without subject m atter jurisdiction and this case must be
remanded back to state court.

CONCLUSION
For the reasons set forth above, the petition for remand is
GRANTED.

Accordingly, this case isREMANDED to St. Joseph Superior

Court.

DATED:

April 16, 2013

/s/RUDY LOZANO, Judge
United States District Court

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