Lang et al v. State Farm Fire and Casualty Company

Filing 18

ORDER AND REASONS granting 7 Motion to Remand to State Court. Signed by Judge Ivan L.R. Lemelle. (ijg)(cc CDC Orleans Parish) (Additional attachment(s) added on 5/30/2014: # 1 Remand Letter) (ijg).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MERCEDES LANG AND
DOIDY LAND

CIVIL ACTION

VERSUS

NO. 14-450

STATE FARM FIRE AND
CASUALTY COMPANY

SECTION "B"(1)

ORDER AND REASONS
Facts and Procedural History
Plaintiffs Mercedes and Doidy Lang (collectively
“Plaintiffs”) brought the instant suit against State Farm Fire
and Casualty Company (“State Farm”) in state court seeking
insurance payments following property damage caused by Hurricane
Isaac. In their state court complaint, Plaintiffs included the
following language:
Upon information and belief, the value of this claim
exceeds $50,000, but is less than $75,000, with penalties
and attorney fees, but exclusive of interest and costs.
Plaintiffs and undersigned counsel stipulate they will not
amend these pleadings to seek greater than a $75,000, total
award, including penalties and attorney's fees, but
exclusive of interest and costs. Plaintiffs and undersigned
counsel further stipulate that they renounce any right to
enforce any judgment amount over and above $75,000,
exclusive of interest and costs.
Petition for Damages, (Rec. Doc. No. 1-1 at ¶ 32).
State Farm removed to this Court, claiming jurisdiction under 28
U.S.C. § 1332. Plaintiffs now seek remand, contending that the
amount in controversy for federal diversity jurisdiction is not
present.
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Accordingly, and for the reasons articulated below, IT IS
ORDERED that Plaintiffs’ Motion to Remand (Rec. Doc. No. 7) is
GRANTED and the instant case is REMANDED to the Civil District
Court for the Parish of Orleans.
Law and Analysis
Federal Courts are courts of limited jurisdiction. Coury v.
Prot, 85 F.3d 244, 248 (5th Cir. 1996). A defendant may remove a
civil action pending in state court only where a federal court
has original jurisdiction over the action. 28 U.S.C. § 1441(a).
Once removal jurisdiction is challenged the removing defendant
has the burden of establishing facts that would show federal
jurisdiction. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335
(5th Cir. 1995); Howery v. Allstate Ins. Co., 243 F.3d 912, 916
(5th Cir. 2001). Any ambiguities should be construed against
removal, and in favor of remand. Manguno v. Prudential Prop. And
Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).
It is well settled that plaintiffs may avoid removal by
tailoring their state court complaint to preclude federal
jurisdiction, including pleading damages below the
jurisdictional minimum for diversity jurisdiction. Allen at
1335; In re 1994 Exxon Chem. Fire, 558 F.3d 378, 387 (5th Cir.
2009). A plaintiff seeking to remain in state court however
faces difficulty in states, like Louisiana, that prohibit state
court plaintiffs from pleading a specific amount of damages in
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their state court complaint. La. Code Civ. Proc. Ann. art. 893.
In cases removed from these states, the federal amount in
controversy requirement is measured by whether “it is facially
apparent from the plaintiffs’ complaint that their claims are
likely above $75,000.” Garcia v. Koch Oil Co. of Texas Inc., 351
F.3d 636, 639 (5th Cir. 2003) (internal quotations and
alterations omitted).
Plaintiffs wishing to remain in state court and comply with
state rules of civil procedure may “prevent removal [by]
fil[ing] a binding stipulation or affidavit with their
complaints” so long as the stipulation establishes to a “legal
certainty” that the federal amount in controversy is not
present. De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir.
1995).1 Louisiana law expressly permits this practice. See La.
Code Civ. Proc. art. 893 (“The prayer for relief shall be for
such damages as are reasonable in the premises except that if a
specific amount of damages is necessary to establish . . . the
lack of jurisdiction of federal courts due to insufficiency of
damages, or for other purposes, a general allegation that the
claim exceeds or is less than the requisite amount is
required.”).
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A stipulation limiting damages may not however be used in a proposed class
action case where the class has not yet been certified. Since no class is
proposed here, the analysis is unaffected by this rule. Ditcharo v. United
Parcel Serv., Inc., 376 F. App'x 432, 437 (5th Cir. 2010); Cf. Standard Fire
Ins. Co. v. Knowles, 133 S. Ct. 1345, 1350 (2013) (stipulation on damages
ineffective pre-class certification in Class Action Fairness Act case).

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The stipulation itself must meet certain requirements to
deny the federal court removal jurisdiction. The stipulation
must be irrevocable on plaintiff’s part, and not represent an
attempt to “manipulate their state pleadings to avoid federal
court while retaining the possibility of recovering greater
damages in state court following remand.” De Aguilar at 1411–12;
see also Sterns v. Scottsdale Ins. Co., 2010 WL 2733771 (E.D.
La. July 8, 2010) (Engelhardt, J.) (stipulation must
“affirmatively renounce the right to accept a judgment in excess
of $75,000”). The stipulation must also occur pre-removal, since
post-removal stipulations generally have no effect. Gebbia v.
Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000).
The use of a stipulation limiting recovery has become more
commonplace in recent years. Whereas the Fifth Circuit
originally expressed skepticism over the practice, calling it “a
bold effort to avoid federal court”, De Aguilar at 1409, several
courts have accepted the practice - including multiple judges
from this district - so long as the stipulation makes clear that
the plaintiff will not be able to seek recovery above the
federal jurisdictional minimum on remand. See, e.g., Lachney v.
State Farm Fire & Cas. Co., 2014 WL 1514172 (E.D. La. Apr. 16,
2014) (Feldman, J); Lilly v. Allstate Ins. Co., 2007 WL 4255616
(E.D. La. Nov. 30, 2007) (Vance, CJ); Akhtar v. Allstate Ins.
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Co., 2007 WL 4557754 (E.D. La. Dec. 21, 2007) (Barbier, J);
Engstrom v. L-3 Commc'ns Gov't Servs., Inc., 2004 WL 2984329
(E.D. La. Dec. 23, 2004) (Engelhardt, J).
Here, Plaintiffs have stipulated in their complaint that
they “renounce any right to enforce any judgment amount over and
above $75,000, exclusive of interest and costs.” Petition for
Damages, (Rec. Doc. No. 1-1 at ¶ 32). The Court finds this
waiver effective to limit the recovery amount. The waiver is
unambiguous. By its clear terms Plaintiffs have relinquished any
claim to any amount awarded over $75,000. This waiver of
recovery conclusively establishes that the federal amount in
controversy minimum is not met. Thus, the Court is deprived of
subject matter jurisdiction over the instant suit.
State Farm argues that the stipulation is not valid because
it was included in Plaintiffs’ complaint, rather than in a
separate affidavit. Judge Engelhardt rejected a similar argument
in Engstrom v. L-3 Commc'ns Gov't Servs., Inc., 2004 WL 2984329
(E.D. La. Dec. 23, 2004). There, the plaintiffs pled in their
state court complaint

“the aggregated monetary damages on all

counts ..., including penalties and statutory attorney's fees,
but exclusive of interests and costs, do not exceed $74,999; and
[each plaintiff] affirmatively and knowingly waives entitlement
to any damages ..., including penalties and statutory attorney's
fees, but exclusive of interest and costs, in excess of
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$74,999.” Id. at *2 (edits in original). No separate stipulation
or affidavit was attached to the complaint. Nonetheless, Judge
Engelhardt granted the plaintiffs’ motion to remand, reasoning
the language as pled in the complaint was a “judicial
confession” under La. Civ.Code art. 1853 which cannot be revoked
except as “an error of fact.” Id. Accordingly, Judge Engelhardt
found that the stipulation in the complaint established to a
legal certainty that less than $75,000 was at issue. Engstrom at
*5. Other courts analyzing Louisiana law have reached similar
conclusions regarding stipulations on damages contained in
plaintiff’s complaint. See, e.g., Blood v. Interstate Brands
Corp., 2011 WL 902001 (W.D. La. Mar. 10, 2011) (finding
“stipulation as to limitation of damages contained in
plaintiffs’ complaint is a valid and binding judicial confession
under Louisiana law”).
The Court concurs with the analysis in Engstrom.
Plaintiffs, by stipulating in their complaint that they will not
accept a damage award above $75,000, have judicially confessed
under Louisiana law that their relief is limited below that
amount. They will not be able to seek above that amount at the
conclusion of litigation. Accordingly, federal jurisdiction does
not exist.

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2

Because the Court finds the stipulation conclusively establishes that
federal jurisdiction is not met, there is no need to resolve the parties’

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State Farm also argues that Plaintiffs’ attorney cannot
bind them to the stipulation. This argument was rejected by
Chief Judge Vance in Lachney v. State Farm Fire & Cas. Co., 2014
WL 1514172 (E.D. La. Apr. 16, 2014) (finding “the plaintiffs are
bound by the stipulation signed by their attorney”); see also
La. Civ.Code art. 1853, cmt. (b) (“a declaration made by a
party's attorney . . . has the same effect as one made by the
party himself”). The argument is similarly rejected here.3
Accordingly, and for the reasons articulated above, IT IS
ORDERED that Plaintiffs’ Motion to Remand (Rec. Doc. No. 7) is
GRANTED and the instant case is REMANDED to the Civil District
Court for the Parish of Orleans.

New Orleans, Louisiana, this 28th day of May, 2014.

_______________________________
UNITED STATES DISTRICT JUDGE

additional dispute over depreciations, deductibles, and prior payments, and
their effect on the amount in controversy.
3
Given the foregoing factual and legal analysis, removing parties would be
wise to reconsider their positions in order to avoid similar results as here,
and the potential fee awards that would result from removals based on the
same grounds as here.

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