Cartwright v. State Farm Mutual Automobile Insurance Company et al

Filing 59

MEMORANDUM OPINION re 58 Order on Motion to establish jurisdiction. Signed by Senior Judge Glen H. Davidson on 10/15/15. (tab)

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

GREENVILLE DIVISION

NAKENYA CARTWRIGHT
v.

PLAINTIFF
CIVIL ACTION NO. 4:14-cv-00057-GHD-JMV

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY and
STATE FARM INSURANCE COMPANIES

DEFENDANTS

MEMORANDUM OPINION RETAINING FEDERAL JURISDICTION
Presently before this Court is Plaintiffs motion to establish jurisdiction [51]. Defendants
have filed a response. The motion is now ripe for review. Upon due consideration, the Court
finds that the motion should be denied.
A. Factual and Procedural Background

On March 26, 2014, Plaintiff Nakenkya Cartwright ("Plaintiff') filed a complaint in the
Circuit Court of Bolivar County, Mississippi, First Judicial District, against Defendants State
Farm Mutual Automobile Insurance Company and State Farm Insurance Companies ("State
Farm"), I as well as Defendant Valerie Sproull, to recover for injuries Plaintiff allegedly
sustained as the result of an automobile accident. Plaintiff alleges that as a direct and proximate
result of the subject accident she suffered serious and permanent bodily injuries, which required
extensive medical treatment. Pl.'s State-Ct. Compl. [2]

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10. In addition, Plaintiffs complaint

presents claims for breach of contract, negligence, breach of legal duties, and related liability.
See id

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13, 17. Plaintiff avers that despite notifying State Farm of the subject accident and her

I State Farm Mutual Automobile Insurance Company maintains that it and State Farm Insurance
Companies are one and the same and that it is properly named "State Farm Mutual Automobile Insurance
Company." See State Farm's Answer & Aff. Defenses [3] ~ 3.

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claims for damages and injuries suffered as a result, State Farm failed to pay Plaintiff benefits
owed under her insurance policy, failed to promptly and adequately investigate the claims made
by Plaintiff and perform duties under the policy/contract, failed to comply with the terms of the
subject policy/contract, and committed other breaches of contract and failure to perform. Id.
12-17. Plaintiff seeks relief "in no amount less than $200,000.00." Id.

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17.

On April 21, 2014, State Farm filed a notice of removal [1] on the basis of diversity
jurisdiction.

Defendant Sproull did not join in the notice of removal.

Subsequently, all

Defendants filed answers to the complaint. On May 7, 2014, State Farm filed a motion to sever
[9] Plaintiffs claims against State Farm from those against Defendant Sproull; remand the case
against Defendant Sproull, if necessary; and permit the claims against State Farm to go forward
in federal district court. On May 8, 2014, Plaintiff filed a motion to remand the entire case to
state court [11] on the basis of lack of diversity jurisdiction. Plaintiff specifically argued that the
jurisdictional amount in controversy was not met and complete diversity of citizenship did not
exist between Plaintiff and Defendants.
In an Order [28] and memorandum opinion [29] entered December 8, 2014, this Court
denied in part and granted in part Plaintiff s motion for remand [11], finding that the Court's
diversity jurisdiction over Plaintiffs claims against State Farm was established at the time of
removal. The Court specifically found that the amount in controversy was satisfied at the time of
removal by the face of Plaintiffs complaint and was further supported by summary judgment­
type evidence presented by State Farm.

The Court also found that complete diversity of

citizenship was present between Plaintiff, a Mississippi citizen, and State Farm, an Illinois
citizen, and that the claims against Defendant Sproull were fraudulently misjoined and should be

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severed from the claims against State Farm and remanded to the Circuit Court of Bolivar County,
First Judicial District.
Subsequently, after the parties engaged in some discovery, Plaintiff filed the present
motion to establish jurisdiction [51J, wherein Plaintiff reasserts arguments made in the prior
motion for remand [11J and maintains that the Court should reconsider whether the amount in
controversy requirement is still met in the case sub judice.

B. Analysis and Discussion
In the present motion, Plaintiff maintains that-despite this Court's earlier ruling that
diversity jurisdiction was established in the case between Plaintiff and State Farm at the time of
removal-this Court should nevertheless reexamine its jurisdiction, conclude that diversity
jurisdiction does not exist, and remand the case to state court. In support, Plaintiff argues that
recent actions by State Farm concerning the amount in controversy "confirm this Court lacks
jurisdiction." Plaintiff "submits this [m]otion to have State Farm confirm once and for all its
position in regard to jurisdiction and the amount in controversy[,] which is obviously based on
the amount of underinsured motorists coverage available to Plaintiff as one of State Farm's
insureds." Plaintiff further maintains that State Farm has in the past admitted that Plaintiff had
underinsured motorists coverage of up to $150,000.00, but since that time has sent four letters to
Plaintiff stating that State Farm may have "no duty to pay, indemnify, defend, or otherwise
perform under the policy referenced" because there may be "other collectible insurance" and
"[Plaintiff] was not the first person named in the declarations page of the policy or a resident
spouse or relative as defined in the policy." Plaintiff maintains that State Farm's "inconsistent
positions from the removal to its current position ... that the maximum [underinsured motorists]
coverage is $50,000.00" strip this Court ofjurisdiction.
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State Fann responds that the Court's jurisdiction was established when Plaintiff filed her
initial complaint seeking no less than $200,000.00 in damages. State Fann further states that the
four letters referenced by Plaintiff were "reservation of rights" letters and "merely indicate that a
question exists as to whether [P]laintiff meets the definition of 'insured' as defined in the
uninsured motorist section of the policy" and do not disturb this Court's jurisdiction. Finally,
State Fann maintains that the six subject insurance policies contain a total of $150,000.00 in
potential coverage available to Plaintiff, "should she carry her burden that she qualified as an
'insured' under the tenns of all six policies."
The Court finds as follows. Federal courts are courts of limited jurisdiction. Epps v.
Bexar-Medina-Atascosa Cnties. Water Improvement Dist. No. J, 665 F.2d 594, 595 (5th Cir.
1982). Federal diversity jurisdiction requires complete diversity between all plaintiffs and all
defendants and an amount in controversy that exceeds $75,000.00. 28 U.S.C. § 1332(a). A case
may be remanded upon a motion filed within thirty days after the filing of the notice of removal
on any defect except subject matter jurisdiction, which can be raised at any time by any party or
sua sponte by the district court. Wachovia Bank, NA. v. PICC Prop. & Cas. Co., 328 F. App'x
946, 947 (5th Cir. 2009) (per curiam). "If at any time before final judgment it appears that the
district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
"[J]urisdictional requirements must be met throughout all phases of litigation." Anderson v. Dow
Chern. Co., 255 F. App'x 1, 3 (5th Cir. 2007) (per curiam) (citing Fed. R. Civ. P. 12(h)(3)).
However, "diversity jurisdiction is to be assessed at the time the lawsuit is commenced."
Freeport-McMoRan, Inc. v. KN Energy, Inc., 498 U.S. 426, 429, 111 S. Ct. 858, 112 L. Ed. 2d
951 (1991).

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Because Plaintiff challenges only the amount-in-controversy prong of this Court's
diversity jurisdiction, and this Court is satisfied that complete diversity of citizenship is present
between Plaintiff and State Farm, the Court cabins its analysis to the amount in controversy in
this case.
Removing defendants who seek to establish diversity jurisdiction must allege that the
jurisdictional amount in controversy is met, that is, that "the matter in controversy exceeds the
sum or value of $75,000[.00], exclusive of interest and costs[.]" See 28 U.S.C. § 1332(a). The
amount in controversy is determined at the time of removal. Gebbia v. Wal-Mart Stores, Inc.,
233 F.3d 880, 883 (5th Cir. 2000) (emphasis added). Courts generally begin the amount-in­
controversy analysis by " 'look[ing] only to the face of the complaint and ask[ing] whether the
amount in controversy exceeds' the jurisdictional threshold." Ervin v. Sprint Commc 'ns Co., 364
F. App'x 114, 117 (5th Cir. 2010) (per curiam) (quoting S. Ws. Erectors, Inc. v. In/ax, Inc., 72
F.3d 489, 492 (5th Cir. 1996». "The standard for determining the amount in controversy
depends on whether [Plaintiff] demanded a specific amount of damages in her complaint. If
[she] did demand a specific amount, '[t]he amount stated in the complaint is itself dispositive of
jurisdiction if the claim is apparently made in good faith.' " Scarlott v. Nissan N Am., Inc., 771
F.3d 883, 888 (5th Cir. 2014) (quoting Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1069
(5th Cir. 1984».
Because the amount in controversy is assessed as of the time of removal, upon review of
Plaintiffs motion for remand [11], this Court looked to the face of Plaintiffs state-court
complaint, which asserted that the amount of relief sought, with pre-judgment and post-judgment
interest, attorney's fees, costs and expenses, would be "in no event an amount less than
$200,000.00." See PI.'s State-Ct. Compl. [2]

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17. Keeping in mind that interest, attorney's

fees, and costs are not to be considered in the jurisdictional amount-in-controversy analysis, see
28 U.S.C. § 1332(a), the Court noted that Plaintiff had not parsed her prayer for relief to specify
the amount of damages sought exclusive of interest and costs. However, when the Fifth Circuit
looked at a complaint wherein a plaintiff had pled an amount ranging from $1.00 to $50,000.00,
the court reasoned: "Plaintiffs have labored to specify one 'magic' number in their complaint, i.e.
$50,000[.00]. We regard such a complaint as more like a claim for one sum rather than a claim
for an unlimited or an unspecified amount of damages; to reason otherwise would put form over
substance." De Aguilar, 47 F.3d at 1408. In applying case law such as De Aguilar and viewing
the allegations of the complaint in the case sub judice, this Court concluded that it was "facially
apparent" from Plaintiff s complaint that her claims exceeded the jurisdictional amount.
In her complaint, Plaintiff sought the following relief from Defendants:
[f]ull and complete payment, reimbursement, compensation[,] and
satisfaction for any and all injuries, losses[,] and damages suffered
as the result of the subject accident with [Defendant] Sproull and
payments under any and all insurance policies/contracts with [State
Farm] and all related damages which resulted from any breach of
legal duty, breach of contract, negligence, willful conduct[,] and
reckless [dis ]regard for the rights of Plaintiff.
PI. ' s State-Ct. Compl. [2] ~ 17. Plaintiff specifically sought "[plast, present[,] and future medical
expenses; [plast, present[,] and future lost wages and loss of wage [-]earning capacity; [plast,
present[,] and future emotional distress; [p]ast, present[,] and future pain and suffering; and
[o]ther damages which will [be] fully proven at trial." Id.

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11. In addition, although Plaintiffs

complaint did not explicitly state that she sought "punitive damages" or that State Farm acted
with "bad faith," the complaint asserted that State Farm "wrongfully, negligently[,] and
carelessly failed to honor [its] obligations under [its] insurance policies/contracts and failed to
pay Plaintiff benefits owed to her," id.

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12; "wrongfully, negligently[,] and recklessly failed to
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pay [Plaintiffs] medical expenses incurred" which is "a clear disregard for the rights of
[Plaintiffl," id.

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15 (emphases added); and that Plaintiff sought damages for "willful conduct

and reckless [dis]regard for the rights of Plaintiff," id.

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17 (emphasis added).

These allegations support a punitive damages claim under Mississippi law. See Miss.
Code Ann. § 11-1-65(1)(a)-(b) (punitive damages may be awarded if compensatory damages are
awarded and claimant proves by clear and convincing evidence that defendant "acted with actual
malice, gross negligence which evidences a willful, wanton[,] or reckless disregard for the safety
of others, or committed actual fraud"); Kincaid v. Minaet-Yates, LLC, No. 3:05-CV-550-HTW­
LRA, 2008 WL 4187050, at *8 (S.D. Miss. Sept. 3, 2008) (complaint's allegations that
defendants "acted in willful, malicious[,] and reckless disregard for the plaintiff's rights"
constituted "the plaintiffs attempt to bolster a punitive damages claim"). Federal courts in
Mississippi have consistently held that a claim for an unspecified amount of punitive damages
under Mississippi law is deemed to exceed the amount necessary for federal jurisdiction. See

Walker v. Scales, No. 1:13-CV-00227-SA-DAS, 2014 WL 670216, at *3 (N.D. Miss. Feb. 20,
2014) (citing Brasell v. Unumprovident Corp., No. 2:01CV202-D-B, 2001 WL 1530342, at *2
(N.D. Miss. Oct. 25, 2001) (in turn citing St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250,
1255 (5th Cir. 1998))); Allstate Ins. Co. v. Hilbun, 692 F. Supp. 698, 701 (S.D. Miss. 1988). For
all of these reasons, the Court found that the amount-in-controversy requirement was satisfied on
the face of Plaintiff's complaint.
However, even assuming arguendo that the amount-in-controversy requirement was not
satisfied on the face of Plaintiffs complaint, State Farm has presented "summary judgmenttype" evidence in both its response to Plaintiffs prior motion to remand and the present motion
to establish jurisdiction that leads to the conclusion that the amount in controversy is met. See
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Garcia v. Koch Oil Co. of Tex., Inc., 351 F.3d 636, 638-39 (5th Cir. 2003); White v. FCI USA,
Inc., 319 F.3d 672, 675 (5th Cir. 2003); St. Paul Reinsurance Co., 134 F.3d at 1253. As stated
above, State Farm maintained that the amount-in-controversy requirement was met by the
$150,000.00 in stacked uninsured motorist coverage provided by the six automobile policies
under which Plaintiff seeks recovery. Although Plaintiff maintains that State Farm has since
changed its position regarding the amount in controversy and cites reservation of rights letters
she received from State Farm, her argument is not well taken. State Farm attaches one such
letter to its response to the present motion. That letter provides as follows:
State Farm ... may have no duty to pay, indemnify, defend, or
otherwise perform under the policy referenced above because:
It is questionable whether the policy applies by reason of the
existence of other collectible insurance applicable in whole or in
part.
"It is questionable whether [Plaintiff] at the time of the accident
was the first person named in the declarations of the policy or the
resident spouse or relative, as defined in the policy[.]"

07/08/2015 Letter [53-2] at 1. If anything, this letter indicates that State Farm potentially denies

coverage for the subject incident. It is nonsensical not to expect a defendant automobile insurer
to potentially deny that coverage exists under an applicable insurance policy for a particular
incident. Further, such a position does not compromise the jurisdiction of the Court.
If a defendant establishes "by a preponderance of the evidence that the amount in
controversy is greater than the jurisdictional amount," a plaintiff may defeat removal only by
establishing to a legal certainty that his or her recovery will not exceed the statutory threshold.

In re 1994 Exxon Chern. Fire, 558 F.3d 378, 387 (5th Cir. 2009) (quotation marks and citation
omitted) (emphasis added); accord De Aguilar, 47 F.3d at 1411 ("[I]f a defendant can show that
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the amount in controversy actually exceeds the jurisdictional amount, the plaintiff must be able
to show that, as a matter of law, it is certain that he will not be able to recover more than the
damages for which he has prayed in the state court complaint."). Plaintiffs "who want to prevent
removal must file a binding stipulation or affidavit with their complaints ...." De Aguilar, 47
F.3d at 1412 (quotation marks and citation omitted). Although it is true that "the jurisdictional
facts that support removal must be judged at the time of the removal, ... post-removal affidavits
may be considered in determining the amount in controversy at the time of removal . . . if the
basis for jurisdiction is ambiguous at the time of removal." Gebbia, 233 F.3d at 883. But "any
post-petition affidavits are allowable only if relevant to [the time of removal]." Allen v. R & H
Oil & Gas Co., 63 F.3d 1326,1335 (5th Cir. 1995) (emphasis added).

Even assuming, arguendo, that the amount in controversy was ambiguous on the face of
Plaintiffs complaint, Plaintiff failed to file a binding stipulation or affidavit that would have
sufficiently clarified the issue for the Court. Plaintiff requested discovery on the amount in
controversy in this case and contended that if discovery were allowed, she might be able to admit
that the amount in controversy did not exceed $75,000.00 exclusive of interest and costs. "When
a plaintiff fails to admit or stipulate that he will not accept more than $75,000.00 in damages, a
federal court may deem that failure to be sufficient proof that the amount in controversy exceeds
$75,000.00."

Walker, 2014 WL 670216, at *3; Easley v. Lowe's Home Ctrs., Inc., No.

1:06CV291-D-D, 2007 WL 2127281, at *2 (N.D. Miss. July 23, 2007); Blount v. Hardcastle,
No. 2:04CV203-P-A, 2006 WL 278567, at *1-2 (N.D. Miss. Jan. 5, 2006); Holmes v.
Citifinancial Mortg. Co., 436 F. Supp. 2d 829 (N.D. Miss. 2006).

Merely allowing the

possibility that the amount in controversy may prove not to exceed the jurisdictional threshold is
insufficient.
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Further, and most pertinent in light of Plaintiff's arguments in the present motion, "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." See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 293, 58 S. Ct.
586, 82 L. Ed. 845 (1938). The Fifth Circuit has stated: "[A]n amendment to the complaint or
stipulation reducing the amount in controversy does not divest a federal court of such
jurisdiction." Anderson, 255 F. App'x at 3 (citations omitted); Hensgens v. Deere & Co., 833
F.2d 1179, 1181 (5th Cir. 1987) ("amendment of pleadings to below the jurisdictional amount ..
. will not divest the court of jurisdiction"); Garza v. Rodriguez, 559 F.2d 259, 260 (5th Cir.
1977) (same); Reisman v. NH Fire Ins. Co., 312 F.2d 17, 19 (5th Cir. 1963) (citations omitted)
("The decisions under 28 U.S.C.A. § 1447 make it clear that once jurisdiction has attached, it
cannot be subsequently divested. In order to require a remand back to the state court for lack of
jurisdiction, there must have been a lack of jurisdiction at the time of removal from the State to
the Federal court.

At the time of removal there was a bona fide claim in excess of [the

jurisdictional amount in controversy].

We find that the District Court had jurisdiction.").

Finally, "[t]he inability of plaintiff to recover an amount adequate to give the court jurisdiction
does not show his bad faith or oust the jurisdiction.

Nor does the fact that the complaint

discloses the existence of a valid defense to the claim." St. Paul Mercury Indem. Co., 303 U.S.
at 289, 58 S. Ct. 586. Therefore, even if Plaintiffs complaint does not satisfy the amount-in­
controversy requirement on its face, State Farm has shown by a preponderance of the evidence
that the amount-in-controversy requirement is met.

e.

Conclusion

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In sum, this Court's diversity jurisdiction over Plaintiffs claims against State Farm was
established at the time of removal, because complete diversity of citizenship was present
between Plaintiff, a Mississippi citizen, and State Farm, an Illinois citizen, and the jurisdictional
amount in controversy was satisfied on the face of Plaintiffs state-court complaint and is further
supported by summary judgment-type evidence.
Therefore, Plaintiff Nakenya Cartwright's motion to establish jurisdiction [53]
DENIED.
An order in acc~ce with this opinion shall issue this day.

IS ­

THIS, the _'_I day of October, 2015.

SENIOR U.S. DISTRICT JUDGE

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IS