Milner v. Farmers Insurance Company of Oregon
Filing
17
ORDER & REASONS denying 11 Motion to Remand to State Court. Signed by Judge Sarah S. Vance on 12/29/2016. (mmm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TONY E. MILNER
CIVIL ACTION
VERSUS
NO. 16-6754
FARMERS INSURANCE COMPANY
OF OREGON
SECTION “R” (5)
ORDER AND REASONS
Before the Court is plaintiff Tony Milner’s motion to remand this case
to state court. Because the Court finds that the jurisdictional amount is
satisfied, the Court DENIES the motion.
I.
BACKGROUND
This case arises out of a July 3, 2014 car accident involving plaintiff
and another motorist, Madison Pleasant. 1 At the time of the accident,
Pleasant had in force a State Farm Mutual Automobile Insurance Company
(State Farm) insurance policy that provided $50,000 in coverage.2 Plaintiff
had in force an underinsured motorist (UM) insurance policy with defendant
Farmers Insurance Company of Oregon (Farmers) valued at $100,000. 3
1
2
3
R. Doc. 1-3 at 10.
R. Doc. 1-8 at 3.
R. Doc. 1 at 3 ¶ 7.
On July 2, 2015, plaintiff filed suit in the Civil District Court for the
Parish of Orleans against Pleasant and State Farm. 4 On April 19, 2016,
plaintiff filed a supplemental and amending petition naming Farmers as an
additional defendant. 5 After State Farm paid plaintiff $50,000, 6 on April 29,
2016, plaintiff voluntarily dismissed Pleasant and State Farm with
prejudice.7 Thus, the only remaining defendant in this case is Farmers, and
plaintiff’s only live claims involve his Farmers UM insurance policy.
Specifically, plaintiff alleges that because his damages exceed $50,000,
Pleasant is an underinsured motorist, and plaintiff is entitled to proceeds
under his UM insurance policy.8 Plaintiff also seeks statutory penalties and
attorney’s fees under La. R.S. § 22:1973 and 22:1892. 9 On May 20, 2016,
Farmers removed the case to this Court on the basis of diversity
jurisdiction. 10 Plaintiff now moves to remand the action to state court.
4
5
6
7
8
9
10
R. Doc. 1-3 at 10.
Id. at 5.
R. Doc. 1-8 at 3.
R. Doc. 1-7.
R. Doc. 1-3 at 6.
Id. at 6-7.
R. Doc. 1.
2
II.
DISCUSSION
A.
Removal
A defendant may generally remove a civil action filed in state court if
the federal court has original jurisdiction over the action. See 28 U.S.C. §
1441(a). The removing party bears the burden of showing that federal
jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th
Cir. 1995). In assessing whether removal is appropriate, the Court is guided
by the principle, grounded in notions of comity and the recognition that
federal courts are courts of limited jurisdiction, that removal statutes should
be strictly construed. See, e.g., Manguno v. Prudential Prop. & Cas. Ins. Co.,
276 F.3d 720, 723 (5th Cir. 2002). Though the Court must remand the case
to state court if at any time before final judgment it appears that it lacks
subject matter jurisdiction, the Court’s jurisdiction is fixed as of the time of
removal. See 28 U.S.C. § 1447(c); Doddy v. Oxy USA, Inc., 101 F.3d 448, 456
(5th Cir. 1996).
B.
Jurisdictional Amount
Under Fifth Circuit law, a removing defendant’s burden of showing
that the amount in controversy is sufficient to support federal jurisdiction
depends on whether the plaintiff’s complaint alleges a specific amount of
monetary damages. See Allen, 63 F.3d at 1335. When the plaintiff alleges a
3
damage figure in excess of the required amount in controversy, “that amount
controls if made in good faith.” Id. (citing St. Paul Mercury Indem. Co. v.
Red Cab Co., 303 U.S. 283, 289 (1938)). If a plaintiff pleads damages less
than the jurisdictional amount, this figure will also generally control, barring
removal. Allen, 63 F.3d at 1335. “Thus, in the typical diversity case, the
plaintiff is the master of his complaint.” Id.
Here, however, plaintiff filed his complaint in Louisiana state court,
and Louisiana law ordinarily does not permit plaintiffs to plead a specific
amount of monetary damages. See La. Code Civ. Proc. art. 893(A)(1) (“No
specific monetary amount of damages shall be included in the allegations or
prayer for relief of any original, amended, or incidental demand.”). When,
as here, a plaintiff has alleged an indeterminate amount of damages, the Fifth
Circuit requires the removing defendant to prove by a preponderance of the
evidence that the amount in controversy exceeds $75,000. See Simon v. WalMart Stores, 193 F.3d 848, 850 (5th Cir. 1999); Allen, 63 F.3d at 1335; De
Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995). A defendant
satisfies this burden either by showing that it is facially apparent that the
plaintiff’s claims exceed the jurisdictional amount or by setting forth the facts
in dispute that support finding that the jurisdictional amount is satisfied.
Allen, 63 F.3d at 1335. Where the “facially apparent” test is not met, it is
4
appropriate for the Court to consider summary-judgment-type evidence
relevant to the amount in controversy as of the time of removal. Allen, 63
F.3d at 1336.
If the defendant meets its burden of showing the requisite amount in
controversy, the plaintiff can defeat removal only by establishing with legal
certainty that the claims are for less than $75,000. De Aguilar, 47 F.3d at
1412. In De Aguilar, the Fifth Circuit stated that absent a statute limiting
recovery, “litigants who want to prevent removal must file a binding
stipulation or affidavit with their complaints; once a defendant has removed
the case, St. Paul makes later filings irrelevant.” Id. (quoting In re Shell Oil
Co., 970 F.2d 355, 356 (7th Cir. 1992)) (emphasis added). The general
principle is that plaintiffs will have to show that they are bound irrevocably
by their state pleadings. Id. at 1412 n.10. Because Louisiana plaintiffs are
not limited to recovery of the damages requested in their pleadings, a
plaintiff must affirmatively renounce the right to accept $75,000 for his preremoval state court pleadings in stipulations sufficient to bind him. See La.
Code. Civ. Proc. art. 862 (“[A] final judgment shall grant the relief to which
the party in whose favor it is rendered is entitled, even if the party has not
demanded such relief in his pleadings.”); Sterns v. Scottsdale Ins. Co., No.
09-6449, 2010 WL 2733771, at *3 (E.D. La. July 8, 2010) (stating that for
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pre-removal stipulations to be binding, Louisiana plaintiffs must
affirmatively renounce the right to accept a judgment in excess of $75,000);
Levith v. State Farm Fire & Cas. Co., No. 06-2785, 2006 WL 2947905, at *2
(E.D. La. Oct. 11, 2006) (same). Plaintiff here did not file a stipulation with
his petition.
Post-removal affidavits or stipulations may be considered only in
limited circumstances. If the amount in controversy is ambiguous at the time
of removal, the Court may consider a post-removal stipulation, but only to
determine the amount in controversy as of the date of removal. Gebbia v.
Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); see also
Associacion Nacional de Pescadores v. Dow Quimica de Colombia S.A., 988
F.2d 559, 565 (5th Cir. 1993) (stating that when the affidavit clarifies a
petition that left the jurisdictional question ambiguous, the court may
consider the affidavit in determining whether remand is proper), abrogated
on other grounds, Marathon Oil Co. v. A.G. Ruhrgas, 145 F.3d 211 (5th Cir.
1998). When, on the other hand, the amount in controversy is clear from the
face of the complaint, post-removal stipulations purporting to reduce the
amount of damages plaintiffs seek cannot deprive the Court of jurisdiction.
Gebbia, 233 F.3d at 883.
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III. DISCUSSION
Farmers has asserted federal jurisdiction based on diversity of
citizenship. See 28 U.S.C. § 1332. Diversity jurisdiction exists only when the
parties are citizens of different states, and the amount in controversy exceeds
$75,000. White v. FCI USA, Inc., 319 F.3d 672, 674 (5th Cir. 2003). Because
the parties agree that they are citizens of different states, the Court need
consider only whether the amount in controversy requirement is met.
A.
Policy Limits
Plaintiff’s lawsuit seeks to recover payments under an insurance policy.
When a plaintiff seeks such a recovery, the amount in controversy is
governed by the lesser of the value of the claim under the policy or the value
of the policy limit. Hartford Ins. Grp. v. Lou–Con Inc., 293 F.3d 908, 911
(5th Cir. 2002) (noting that “when a claim exceeds the policy limits, the
policy limits, rather than the larger value of the claim, determine the amount
in controversy”); Mercier v. Allstate Ins. Co., No. 06-9861, 2007 WL 210786,
at *2 (E.D. La. Jan. 17, 2007) (“In a claim based on recovery under an
insurance policy, it is the value of the claim, not the value of the underlying
policy, that determines the amount in controversy, unless the value of the
claim exceeds the value of the policy.”); see also 14AA Fed. Prac. & Proc.
Juris. § 3710 (4th ed.) (“[I]f the claim exceeds the policy limits, the maximum
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limit of the insurer’s liability under the policy for the particular claim is the
measure for determining whether the statutorily required amount in
controversy is satisfied.”).
Here, plaintiff’s policy limits Farmers’ maximum liability to
$100,000. 11 The policy, however, includes a clause that reduces the limit of
Farmers’ liability by the amount of any other insurance coverage available to
plaintiff arising out of the accident. 12 Since plaintiff has received $50,000
from State Farm, the terms of the policy would reduce Farmers’ maximum
liability from $100,000 to $50,000.
Plaintiff and defendant dispute whether the law of Oregon (where the
contract was signed) or Louisiana controls the enforceability of the liability
reduction clause. Plaintiff contends, and defendant does not dispute, that if
Louisiana law governs, the clause is void. Plaintiff alleges that defendant
concedes that it owes plaintiff at least $50,000,13 so because the choice-oflaw issue places $50,000 in question, plaintiff argues that the amount in
controversy is only $50,000. See Freeland v. Liberty Mutual Ins. Co., 632
F.3d 250 (6th Cir. 2011).
11
12
13
R. Doc. 11-2 at 2.
Id.
R. Doc. 11-1 at 4.
8
Contrary to plaintiff’s allegations, defendant argues that it concedes no
liability. It contends that the maximum contribution that plaintiff’s claim
can make towards the amount in controversy is either $50,000 or $100,000,
depending on the enforceability of the liability reduction clause. 14 See Payne
v. State Farm Mut. Auto. Ins. Co., 266 F.2d 63, 66 (5th Cir. 1959) (holding
that jurisdictional amount was controlled by the maximum value of
insurance policy and not the amount of alleged damages); Wheeler v.
Farmers Ins. Exch., No. 13-0951, 2013 WL 4432097, at *2 (W.D. La. Aug. 16,
2013), aff’d, No. 13-0951, 2014 WL 280356 (W.D. La. Jan. 22, 2014) (holding
that jurisdictional amount was controlled by the extent of UM insurer’s
potential liability to plaintiff, not including the amount of plaintiff’s recovery
against underinsured motorist).15 Defendant also points out that plaintiff
has not filed a post-removal stipulation stating that the total value in
controversy does not exceed $75,000. 16 Given that defendant does not
concede liability, if the limit of the policy is $100,000, then the amount in
controversy requirement is clearly met. As explained below, because the
R. Doc. 12 at 10-11.
Though the Court recognizes that a division of the Western
District of Louisiana reached the opposite result in Briley v. State Farm, No.
10-1350, 2012 WL 219431 (W.D. La. Jan 23, 2012), it finds the result in
Wheeler more persuasive.
16
R. Doc. 12 at 6.
9
14
15
Court finds that the amount in controversy requirement is met regardless of
whether the clause is enforced, the Court does not address the choice-of-law
issue.
B. Statutory Penalties and Attorney’s Fees
In addition to a claim for UM insurance proceeds, plaintiff seeks
statutory penalties and attorney’s fees under La. R.S. § 22:1973 and
22:1892.17 Under these circumstances, the Court is to consider these claims
in assessing the amount in controversy. See, e.g., Manguno, 276 F.3d at 72324 (including claim for attorney’s fees in calculating the amount in
controversy); St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253
(5th Cir. 1998) (“[I]n addition to policy limits and potential attorney’s fees,
items to be considered in ascertaining the amount in controversy when the
insurer could be liable for those sums under state law are inter alia penalties,
statutory damages, and punitive damages—not just interest or costs.”);
Henderson v. Allstate Fire and Casualty Insurance Company, 154 F. Supp.
3d 428, 433 (E.D. La. 2015).
A plaintiff cannot recover penalties under both La. R.S. § 22:1973 and
22:1892 for the same conduct; rather, a plaintiff recovers the higher penalty.
Calogero v. Safeway Ins. Co., 753 So.2d 170, 174 (La. 2000); see also Riley
17
R. Doc. 1-3 at 6-7.
10
v. S. Fid. Ins. Co., No. 11-1482, 2011 WL 3567515, at *4 (E.D. La. Aug. 12,
2011). Section 22:1973 provides that an insurer that breaches its “duty to
adjust claims fairly and promptly and to make a reasonable effort to settle
claims” is subject to penalties “in an amount not to exceed two times the
damages sustained or five thousand dollars, whichever is greater.” La. R.S. §
22:1973. The plaintiff, however, must show proof of actual damages arising
from the breach to recover any more than $5,000. See Hannover Corp. of
America v. State Farm Mutual Auto. Ins. Co., 67 F.3d 70, 76 (5th Cir. 1995).
Plaintiff does not allege in his petition an amount or type of damages, if any,
that he sustained from Farmers’ breach. And Farmers provides no evidence
to show that plaintiff could recover more than $5,000 for damages arising
from its alleged breach of contract.
Under Section 22:1892, the insurer is subject to a penalty, “in addition
to the amount of the loss, of fifty percent damages on the amount found to
be due from the insurer to the insured, or one thousand dollars, whichever is
greater,” whenever it arbitrarily, capriciously, or without probable cause fails
to pay within 30 days of satisfactory proof of loss. La. R.S. § 22:1898. The
penalty that could be imposed against Farmers under this provision is
$25,000 at a minimum, and at most, $50,000, depending on the amount
due under the terms of the policy. Even assuming that the liability reduction
11
applies, the contribution that this penalty makes towards the amount in
controversy is $25,000. Therefore, the policy itself plus the penalties under
La. R.S. § 22:1898 brings the amount in controversy to exactly $75,000.
La. R.S. § 22:1898 also allows for recovery of “reasonable attorney fees
and costs.” Id. Plaintiff’s amended petition against Farmers seeks these
costs and fees. 18 Though plaintiff has not submitted evidence as to his
attorney’s fees or costs, it is safe to assume that they are at least .01¢.
Therefore, the amount in controversy from the policy and the penalties and
attorney’s fees and costs pursuant to La. R.S. § 1898 is at least $75,000.01.
Because it is facially apparent that the amount in controversy is greater than
$75.000, defendant has carried its burden.
IV.
CONCLUSION
For the foregoing reasons, the Court DENIES plaintiff’s motion to
remand.
29th
New Orleans, Louisiana, this _____ day of December, 2016.
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
18
Id. at 7.
12
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