Drago v. Sykes et al
Filing
63
ORDER and REASONS - Before the Court is a second motion to remand filed by the plaintiff 54 . IT IS ORDERED that: 1) Plaintiff's Motion to Remand (Rec. Doc. 54) is hereby DENIED; and 2) State Farm's request for sanctions is DENIED, as stated within document. Signed by Judge Kurt D. Engelhardt on 1/23/2014. (cbs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DAVID A. DRAGO
CIVIL ACTION
VERSUS
NO. 13-563
QIANA S. SYKES, ET AL
SECTION “N” (1)
ORDER AND REASONS
Before the Court is a second motion to remand filed by the plaintiff (Rec. Doc. 54).
I. BACKGROUND:
This case arises out of a car accident on September 26, 2011, in which the plaintiff
rear-ended a vehicle driven by Qiana Sykes in the Crescent City Connection toll plaza.
Plaintiff’s insurer, State Farm Mutual Automobile Insurance Company (“State Farm”), settled
without litigation the personal injury and property damage claims filed by Ms. Sykes. One year
after the accident, on September 25, 2012, plaintiff filed suit in the Civil District Court, Parish of
Orleans, against Sykes, her insurer (Geico Indemnity Company), and State Farm, alleging that
Sykes was at fault for the accident and that State Farm owes him underinsured motorist (“UM”)
coverage. (Rec. Doc. 4-3). On December 7, 2012, the plaintiff filed a motion to dismiss Sykes
and Geico after settling with Geico for policy limits of $30,000. (Rec. Docs. 4-5 at 7, 4-6).
Upon receiving notice of the dismissal, in March 2013, State Farm removed the case to this
Court on the basis of diversity. The plaintiff filed a motion to remand the case on grounds that
State Farm’s removal was untimely (Rec. Doc. 4), which this Court denied. See Rec. Doc. 12.
In addition to seeking payment of UM benefits from State Farm, the plaintiff has sought
statutory penalties1 against State Farm on two grounds: (1) an alleged misrepresentation by a
State Farm representative regarding plaintiff’s right to make a claim under his UM policy; and
(2) State Farm’s failure to tender UM benefits in response to medical records provided to State
Farm after suit was filed. See Rec. Docs. 14-5 at 8 of 9, 14-6. State Farm moved to dismiss the
latter of these two claims on partial summary judgment. See Rec. Docs. 14. The issue
presented in this motion was whether plaintiff could support an essential element of his statutory
claim, namely that he had presented satisfactory proof to State Farm that Sykes was underinsured and at fault, such that State Farm had no reasonable basis for withholding tender of UM
benefits. The Court found that while the plaintiff had come forward with sufficient evidence to
demonstrate a genuine dispute as to whether Sykes might bear a small portion of fault for the
accident, he had failed to demonstrate a genuine dispute as to whether he had provided State
Farm with satisfactory proof of loss as to Sykes’ under-insured status. Rec. Doc. 34 at 7. Thus,
the Court concluded that State Farm was entitled to judgment as a matter of law dismissing the
statutory claim to the extent it rests on State Farm’s failure to tender UM benefits. Id. State
Farm did not seek summary judgment as to plaintiff’s claim for UM benefits or as to plaintiff’s
claim for penalties based on the alleged misrepresentation of a State Farm representative. These
claims remain pending.
1
See La. Rev. Stat. §§ 22:1892 and 22:1973.
2
II. LAW AND ANALYSIS:
After the Court’s ruling dismissing plaintiff’s claim for statutory penalties based on
failure to tender UM benefits, plaintiff filed the instant motion remand, arguing that the Court is
without subject matter jurisdiction because the jurisdictional amount is not satisfied. According
to the plaintiff, the Court dismissed the failure-to-tender claim because “the Court did not see
damages exceeding $30,000” and “concluded that the value of the case...was valued at less than
$75,000.” Rec. Doc. 54-1 at 1, 3. The motion fails for several reasons.
First, it is well settled that the post-removal dismissal of claims does not oust a federal
court’s jurisdiction, even if it reduces the amount recoverable below the jurisdictional amount.
See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293 (1938) (“Thus events
occurring subsequent to removal which reduce the amount recoverable, whether beyond the
plaintiff’s control or the result of his volition, do not oust the district court’s jurisdiction once it
has attached.”); Reisman v. New Hampshire Fire Ins. Co., 312 F.2d 17, 19 (5th Cir. 1963) (where
at the time of removal plaintiff had a good faith claim in excess of the $10,000 jurisdictional
threshold, district court’s granting of summary judgment as to all claims in excess of $9,000.00
did not divest the court of jurisdiction because “once jurisdiction has attached, it cannot be
subsequently divested”); cf. Symes v. Harris, 472 F.3d 754, 759 (10th Cir. 2006) (“[I]t is well
settled that a district court does not lack § 1332 jurisdiction if a plaintiff ultimately recovers less
than the required jurisdictional amount, if the district court dismisses part of the plaintiff’s claim
on a motion for summary judgment (thereby reducing the plaintiff’s remaining claim below the
requisite jurisdictional amount), or if the plaintiff’s complaint reveals that a perfect defense
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might be interposed to reduce the alleged amount in controversy below the jurisdictional
amount.”); Hall v. EarthLink Network, Inc., 396 F.3d 500, 507 (2nd Cir. 2005) (“In a case like the
one before us, where the amount necessary for diversity jurisdiction, see 28 U.S.C. § 1332(a),
rests on the aggregation of state law claims, a summary judgment dismissing one or more
aggregated claims does not defeat jurisdiction even when it reduces the amount in controversy to
below the jurisdictional threshold.”). The plaintiff asserted at the time of removal (and
continues to assert) claims for UM benefits and for statutory penalties that well exceed the
jurisdictional threshold.2
Thus, even if the Court’s ruling on partial summary judgment had
reduced the amount recoverable below the jurisdictional amount (which it did not), it could have
no effect on the Court’s subject matter jurisdiction.
Second, the plaintiff’s argument is based upon a serious misunderstanding of the Court’s
ruling on partial summary judgment. The plaintiff argues that the Court “struck Drago’s bad
faith claim for failure to make a tender” because “the Court did not see damages exceeding
$30,000” and “concluded that the value of the case...was valued at less than $75,000.” Rec. Doc.
42-1 at 1, 3. He is mistaken. In dismissing the failure-to-tender claim, the Court made no
findings or conclusions regarding the extent of plaintiff’s damages. The Court simply found that
plaintiff had failed to establish a genuine dispute as to whether he had provided State Farm with
2
See Notice of Removal, Rec. Doc. 1 at 3-4 (showing that plaintiff’s claims for general
damages, medical billing expenses, lost wages and lost earning capacity, property damage,
diminution in value, penalties, and attorney’s fees, if successful, would exceed $75,000); see
also Rec. Doc. 4-1 (plaintiff arguing that State Farm had earlier notice that amount in
controversy exceeded $75,000). Interestingly, at the time of removal, the plaintiff had not even
articulated the failure-to-tender theory for penalties that has now been dismissed. Compare Rec.
Doc. 14-5 at pp. 8 and 9 of 9, with Rec. Doc. 14-6.
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satisfactory proof that Sykes was under-insured, such that State Farm would have no reasonable
basis for refusing to tender UM benefits. Plaintiff has asserted (and continues to assert) that his
actual damages far exceed the $75,000 jurisdictional amount. The Court’s ruling on partial
summary judgment in no way limits plaintiff’s ability to establish and recover such damages at
trial. Thus, for all of these reasons, the plaintiff’s motion fails.
III.
SANCTIONS:
In opposing plaintiff’s motion, State Farm requests that the plaintiff be sanctioned
pursuant to 28 U.S.C. § 1927 because the motion is without basis in law or fact. Section 1927
provides:
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses,
and attorneys’ fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. An award under section 1927 requires “evidence of bad faith, improper
motive, or reckless disregard of the duty owed to the court.” Lawyers Title Ins. Corp. v.
Doubletree Partners, L.P., — F.3d — , 2014 WL 127131 at *17 (5th Cir. Jan. 14, 2014) (quoting
Cambridge Toxicology Grp., Inc. v. Exnicios, 495 F.3d 169, 180 (5th Cir.2007) (internal
quotations omitted). The sanctions authorized under section 1927 are “‘punitive in nature and
require clear and convincing evidence’ that sanctions are justified.”
Lawyers Title, 2014 WL
127131 at *17 (quoting Bryant v. Military Dep’t of Miss., 597 F.3d 678, 694 (5th Cir. 2010))
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(internal quotation marks and citation omitted). Thus, such sanctions are “sparingly applied”3
and “should be employed ‘only in instances evidencing a serious and standard disregard for the
orderly process of justice.’” Lawyers Title, 2014 WL 127131 at *17 (quoting FDIC v. Conner,
20 F.3d 1376, 1384 (5th Cir. 1994)) (internal quotation marks and citations omitted).
Here, the Court has been presented with no evidence, much less clear and convincing
evidence, that plaintiff’s second motion to remand was filed as a result of bad faith, improper
motive, or reckless disregard of any duty owed the court. Therefore, State Farm’s request for
sanctions is denied. Accordingly;
IT IS ORDERED that:
1)
Plaintiff’s Motion to Remand (Rec. Doc. 54) is hereby DENIED; and
2)
State Farm’s request for sanctions is DENIED.
New Orleans, Louisiana, this 23rd day of January, 2014.
___________________________________
KURT D. ENGELHARDT
United States District Judge
3
Lawyers Title, 2014 WL 127131 at *17 (quoting Meadowbriar Home for Children, Inc.
v. Gunn, 81 F.3d 521, 535 (5th Cir. 1996)) (internal quotation marks and citation omitted).
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