Gaudet et al v. American Home Shield Corporation

Filing 13

ORDER and REASONS - IT IS ORDERED that the "Motion to Remand" 7 is DENIED as stated within document. Signed by Judge Kurt D. Engelhardt on 2/22/2012. (cab)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BRIDGETTE, the wife of, AND
WILLIAM GAUDET

CIVIL ACTION

VERSUS

NO. 11-1857

AMERICAN HOME SHIELD
CORPORATION

SECTION “N” (1)

ORDER AND REASONS
Before the Court is the “Motion to Remand” (Rec. Doc. 7), filed by Plaintiffs Bridgette
and William Gaudet (“Plaintiffs”). This motion is opposed by Defendant American Home Shield
Corporation (“Defendant”) (Rec. Doc. 11). After considering the memoranda filed by the parties,
the Court rules as set forth herein.

I.

BACKGROUND
On or about June 23, 2011, Plaintiff filed this putative class action against Defendant in

the Civil District Court for the Parish of Orleans. On August 3, 2011, Defendant removed this
case to this Court claiming federal jurisdiction based on the Class Action Fairness Act (“CAFA”)

and general federal diversity jurisdiction. On August 31, 2011, Plaintiffs filed the instant motion
to remand alleging that this Court does not have jurisdiction to hear this case based on the sole
argument that the amount in controversy does not satisfy the jurisdictional amount required by
CAFA and 28 U.S.C. § 1332.
Defendant services, administers, and sells home service contracts, sometimes called
“home warranty contracts,” to residential homeowners throughout the United States. Plaintiffs
allege that Defendant has systematically and improperly denied coverage to policyholders for
repair and replacement claims in violation of the terms of the policies it sold. Plaintiffs seek to
represent a class of “[a]ll current or former American Home Shield Corporation home warranty
policyholders, who have made a claim for relief or replacement from October 20, 2009 to the
present date . . . to whom coverage is due or owed as a result of a wrongfully denied claim for
repair or replacement of a home component, appliance or HVAC system, on an alleged failure to
clean or maintain or for a pre-existing condition.” Exhibit A to Rec. Doc. 1, p. 7. Plaintiffs
assert that their damages for two denied claims, one in 2007 and one in 2010, total $14,500 and
that their putative class consists of thousands of persons.

II.

ARGUMENTS OF THE PARTIES
Plaintiffs maintain that the amount in controversy is not satisfied in this case under either

CAFA or 28 U.S.C. § 1332, while Defendant asserts that the amount in controversy is met under
both provisions.

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III.

ANALYSIS
Generally, a defendant may remove a civil action from state court to federal court if the

federal court would have had original jurisdiction over the action. See 28 U.S.C. § 1441(a). In
assessing the propriety of removal, the Court is guided by the principle, grounded in notions of
comity and recognition that federal courts are courts of limited jurisdiction, that removal statutes
should be strictly construed. See, e.g., Manguno v. Prudential Property and Cas. Ins. Co., 276
F.3d 720, 723 (5th Cir. 2002). The removing party bears the burden of showing that federal
jurisdiction exists at the time of removal. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335
(5th Cir. 1995); see also De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).
CAFA amended the general diversity jurisdiction statute to expand federal court class
action jurisdiction. 28 U.S.C. § 1332(d). It grants original jurisdiction to federal courts over
class actions when any member of a plaintiff class of more than 100 people is diverse from any
defendant and where the amount in controversy exceeds $5,000,000 in the aggregate for the
entire class, exclusive of interest and costs. Id. Here, named Plaintiffs are citizens of Louisiana,
while Defendant is a Delaware corporation with its principal place of business in Tennessee,
making it a citizen of Delaware and Tennessee for purposes of diversity jurisdiction. Exhibit A
to Rec. Doc. 1 at 1; Exhibit B to Rec. Doc. 1 at 1; see 28 U.S.C. § 1332 (c)(1). Plaintiffs allege
that the class they seek to represent consists of thousands of people. Exhibit A to Rec. Doc. 1 at
8. As such, all other requirements for CAFA jurisdiction are met in this case, and the only issue
in dispute is the amount in controversy.
Federal courts normally look to the state court petition in order to determine whether the
amount in controversy is satisfied. Manguno, 276 F.3d at 723. However, Louisiana law
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prohibits a plaintiff from pleading a specific dollar amount in his prayer for relief. La. Code.
Civ. Pro. Ann. Art. 893(A)(1). The United States Court of Appeals for the Fifth Circuit has thus
held that a defendant removing a case from a Louisiana court to federal court may demonstrate
by a preponderance of the evidence that the plaintiff’s claim satisfies the amount in controversy.
Cf. Grant v. Chvron Phillips Chem. Co. L.P., 309 F.3d 864, 868 (5th Cir. 2002). The defendant
may meet this burden by (1) showing that it is facially apparent from the plaintiff’s petition that
the claims will likely exceed the amount in controversy, or (2) by presenting summary judgment
type evidence of facts in controversy that support a finding of the requisite amount. Id. (quoting
Allen, 63 F.3d at 1335; accord, Manguno, 276 F.3d at 723; Simon v. Wal-Mart Stores, Inc., 193
F.3d 848, 850 (5th Cir. 1999); Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999)).
In this case, Plaintiffs’ complaint alleges that as a result of Defendant’s failure to abide by
the terms of their policy, they were forced to spend $14,500 replacing air conditioning units that
should have been covered by Defendants. Plaintiffs further suggest that $7000 of that total is not
recoverable in this suit because it is barred by a prior class action settlement entered into in
Fraught v. American Home Shield Corporation, Civil Action No. 07-1928, Northern District of
Alabama, Southern Division. Thus, Plaintiffs seek $7500 in contractual damages in this suit.
Plaintiffs also seek to recover for pain and suffering, mental anguish, and emotional distress.
Further, Plaintiffs allege that their class consists of thousands of people. Based on these
assertions in Plaintiffs’ complaint alone, it would be reasonable infer that CAFA’s $5,000,000
amount in controversy requirement is satisfied in this case.
However, the Court need not rely on Plaintiff’s assertions in determining whether
CAFA’s amount in controversy is satisfied; Defendant has submitted evidence in the form of an
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affidavit of Christian Morgan, an underwriting manager with Defendant. Mr. Morgan states that
based on his review of company data, he estimates that Defendant denied air conditioning claims
totaling more than $5,000,000 based on improper maintenance or lack of maintenance and that
the total for all claims would be higher. Based on this evidence, the Court finds that there is at
least $5,000,000 in controversy in this suit. CAFA’s amount in controversy is therefore satisfied,
and the Court has jurisdiction over this suit. Because the Court has jurisdiction under CAFA,
Plaintiff’s motion is denied.

IV.

CONCLUSION
Considering the foregoing, IT IS ORDERED that the “Motion to Remand” (Rec. Doc.

7) is DENIED.
New Orleans, Louisiana, this 22nd day of February 2012.

_______________________________________
KURT D. ENGELHARDT
United States District Judge

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