Gambrel v. American National Insurance Service Co.

Filing 9

OPINION & ORDER: The Court hereby ORDERs that the motion to remand (DE 6 ) is GRANTED and this matter is REMANDED to Whitley Circuit Court. To the extent that Gambrel seeks the payment of any attorneys fees or costs incurred as a result of the removal under 28 U.S.C. § 1447(c), that request is DENIED Case Terminated. Signed by Judge Karen K. Caldwell on 7/3/17.(SYD)cc: COR,certified copy to Whitley Circuit Court

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION -- LONDON
AMY GAMBREL formerly known as
Amy Freels

CIVIL ACTION NO. 6:16-302-KKC

Plaintiff,
V.

OPINION AND ORDER

AMERICAN NATIONAL INSURANCE
SERVICE COMPANY,
Defendant.
This matter is before the Court on the plaintiff’s motion to remand (DE 6) this action to
Whitley Circuit Court. The Court hereby ORDERS that the motion is GRANTED.
The plaintiff Amy Gambrel filed this complaint in state court alleging that the defendant
American National Insurance Service Company, her insurer, wrongfully denied her claim for
property damage. She asserts claims for breach of contract and statutory bad faith under
Kentucky’s Unfair Claims Settlement Practices Act, KRS § 304.12-230. Among the damages
she seeks are compensatory and punitive damages. In her complaint, however, Gambrel did
not specify the amount of damages.
American National removed the action to this Court asserting that federal subject matter
jurisdiction exists under 28 U.S.C. § 1332(a)(1). That statute grants federal courts jurisdiction
over civil actions between citizens of different states where the amount in controversy exceeds
$75,000. There is no dispute that Gambrel and American National are from different states. In
Gambrel’s motion to remand, however, she asserts that the amount in controversy does not
exceed $75,000. She states that she seeks contract damages of $15,000 and punitive damages
of $50,000 maximum and that, therefore, this case does not meet the federal amount in
controversy requirement.

Since American National removed this case from state court, it bears the burden of proving
that the requirements for diversity jurisdiction—including the amount in controversy—are
satisfied. Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th
Cir.2010). Where, as here, the complaint seeks an unspecified amount of damages “that is not
self-evidently greater or less than the federal amount-in-controversy requirement,” the
removing defendant must prove that it is more likely than not that the plaintiff’s claim
exceeds $75,000. Gafford v. Gen. Elec. Co., 997 F.2d 150, 158 (6th Cir.1993), abrogated on
other grounds by Hertz Corp. v. Friend, 130 S.Ct. 1181 (2010). This means that the defendant
does not have the “daunting burden of proving, to a legal certainty that the plaintiff’s damages
are not less than the amount-in-controversy requirement.” Id. at 159. Nor is the defendant
required to research and prove on its own the plaintiff’s claim for damages. Id. Nevertheless,
the defendant must show more than that the plaintiff’s claim “may” exceed $75,000.
Again, Gambrel asserts in her motion to remand that American National owes her $15,000
under the policy. In its response brief, American National does not dispute that the amount at
issue on the contract claim is $15,000. Gambrel also seeks attorney’s fees and prejudgment
interest. American National does not address the value of these damages in its response brief.
Instead, American National focuses on the value of Gambrel’s punitive damages claim. In
order to establish federal jurisdiction based only on compensatory and punitive damages,
American National must prove that it is more likely than not that Gambrel’s punitivedamages claim is worth at least $60,000.01, or more than four times the compensatory
damages that she seeks.
As evidence that the plaintiff’s punitive damages award would likely reach that amount,
American National cites the verdicts in three Kentucky cases in which the plaintiff asserted a
bad-faith claim against an insurer arising from the insurer’s denial of a property damage

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claim. (DE 7, Response at 7.) While some courts have found that a defendant may satisfy its
burden of establishing the amount in controversy “by proffering jury verdicts or punitive to
compensatory ratios in analogous cases, . . . the cases should be factually analogous.” Martin
v. Fifth Third Bank, Inc., No. 1:11-CV-00182-JHM, 2012 WL 1906506, at *3 (W.D. Ky. May 25,
2012). “If they are not, they are of little value in sustaining the defendant’s burden.” Id.
In the first case cited by American National, the plaintiff was awarded $71,013.47 in
compensatory damages and $2 million in punitive damages (approximately a 28:1 ratio of
punitive-to-compensatory damages). In the second, the plaintiff was awarded $925,000 for
emotional distress and $2.5 million in punitive damages (approximately 2.7:1 ratio). In the
third, American National asserts that the plaintiff was awarded $151,003.05 in compensatory
damages and $100,000 in punitive damages (approximately 2:3 ratio). American National also
cites a fourth case in which the plaintiff was awarded $200,000 in compensatory damages and
$2 million in punitive damages (10:1 ratio). That case, however, involved an insurance claim
by the estate of a man who was killed in a car crash. (DE 1-6, p. 3.)
Thus, American National cites only one case in which the punitive-to-compensatory
damages ratio was as high as four-to-one where a plaintiff alleged bad faith by an insurer who
denied a property damage claim. While that case certainly helps to prove that a punitive
damages award of more than $60,000 in this case is possible, it does not prove that it is likely.
“[T]he mere possibility of a punitive damages award is insufficient to prove that the amount in
controversy requirement has been met.” Martin, 2012 WL 1906506, at *3 (citing Burk v. Med.
Sav. Ins. Co., 348 F.Supp.2d 1063, 1069 (D.Ariz.2004)).
American National also points to a report by Kentucky Trial Court Review (DE 1-4)
showing that the plaintiff’s average award in bad faith cases between 1998 and 2013 in
Kentucky was $2,053,848 or $977,000 if one particularly high verdict is omitted from the

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calculation. American National does not, however, demonstrate that these cases are factually
similar to Gambrel’s. Thus, the Court cannot use these averages as a basis for predicting the
amount of punitive damages Gambrel will likely recover in this case. Further, American
National does not explain what portion of the average award consists of compensatory
damages. Thus, the average award does not provide any basis for this Court to conclude that
that Gambrel will likely receive punitive damages four times the amount of her compensatory
damages.
Because American National has not established that it is more likely than not that the
amount in controversy in this case exceeds $75,000, the Court hereby ORDERs that the
motion to remand (DE 6) is GRANTED and this matter is REMANDED to Whitley Circuit
Court.
To the extent that Gambrel seeks the payment of any attorney’s fees or costs incurred as a
result of the removal under 28 U.S.C. § 1447(c), that request is DENIED. A district court “may
award attorney's fees under § 1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141
(2005). While American National has failed to establish by a preponderance of the evidence
that more than $75,000 is in dispute in this case, removal of this action was not unreasonable.

Dated July 3, 2017.

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