Wright v. USAA Casualty Insurance Company

Filing 10

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs motion to remand this action [Doc. #8] is granted. IT IS FURTHER ORDERED that the Clerk of the Court shall remand this action to the Twenty-Second Judicial Circuit Court of Missouri (City o f St. Louis) from which it was removed. IT IS FURTHER ORDERED that plaintiffs request for attorneys fees and costs for the removal is denied. (mailed copy to Twenty-Second Judicial Circuit Court of Missouri City of St. Louis) Signed by District Judge Carol E. Jackson on 10/10/2014. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MELVIN WRIGHT, JR.,

)
)
Plaintiff,
)
)
vs.
)
)
USAA CASUALTY INSURANCE COMPANY, )
)
Defendant.
)

Case No. 4:14-CV-01525-CEJ

MEMORANDUM AND ORDER
This matter is before the court on plaintiff’s motion to remand this case to
the Twenty-Second Judicial Circuit Court of St. Louis, Missouri. This is a breach of
contract and vexatious refusal to pay action arising from the defendant’s denial of
plaintiff’s claim for coverage under an underinsured motorist provision in an
insurance policy. In removing the action, the defendant asserted jurisdiction based
on diversity of citizenship. 28 U.S.C. § 1332. In the motion for remand, plaintiff
argues that the amount in controversy requirement for diversity jurisdiction cannot
be established.

Plaintiff seeks an award of attorney’s fees and costs for the

improper removal. The defendant has filed a response in opposition, and the issues
are fully briefed.
I.

Background

The plaintiff alleges that he was injured when the automobile he was driving
was struck by an underinsured motorist. At the time of the accident, plaintiff was
insured under a policy of insurance issued by defendant that includes coverage for
injury caused by an underinsured motorist. The underinsured motorist coverage
limit is $50,000.

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After the defendant denied his claim under the policy, plaintiff sued for
breach of contract and vexation refusal to pay.

See Mo. Ann. Stat. § 375.420

(West 2013). In the complaint, plaintiff seeks to recover damages in an unspecified
amount, costs, attorney’s fees, and statutory damages under the vexatious refusal
statute.1 Plaintiff received $50,000 in settlement of his claim against the other
driver.
II.

Legal Standard

“A defendant may remove a state law claim to federal court only if the action
originally could have been filed there.” In re Prempro Products Liability Litigation,
591 F.3d 613, 619 (8th Cir. 2010) (citing Phipps v. FDIC, 417 F.3d 1006, 1010 (8th
Cir. 2005)). “The defendant bears the burden of establishing federal jurisdiction by
a preponderance of the evidence.” Altimore v. Mount Mercy College, 420 F.3d 763,
768 (8th Cir. 2005). Diversity jurisdiction requires an amount in controversy
greater than $75,000, exclusive of interest and costs, and complete diversity of
citizenship among the litigants. 28 U.S.C. § 1332(a). Here, there is no dispute that
the parties are citizens of different states.

A vexatious refusal to pay claim is a creature of Missouri law that provides some
statutory remedies for an insurance company’s breach of contract when it refuses
to pay a valid claim. “In any action against any insurance company to recover the
amount of any loss under a policy of automobile, fire, cyclone, lightning, life,
health, accident, employers' liability, burglary, theft, embezzlement, fidelity,
indemnity, marine or other insurance except automobile liability insurance, if it
appears from the evidence that such company has refused to pay such loss without
reasonable cause or excuse, the court or jury may, in addition to the amount
thereof and interest, allow the plaintiff damages not to exceed twenty percent of
the first fifteen hundred dollars of the loss, and ten percent of the amount of the
loss in excess of fifteen hundred dollars and a reasonable attorney's fee; and the
court shall enter judgment for the aggregate sum found in the verdict.” Mo. Ann.
Stat. § 375.420.
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When, as here, “the complaint alleges no specific amount of damages or an
amount under the jurisdictional minimum,” the

removing party must prove by a

preponderance of the evidence that the amount in controversy requirement has
been met.

In re Minnesota Mut. Life Ins. Co. Sales Practices Litig., 346 F.3d 830,

834 (8th Cir. 2003). “Once the removing party has established by a preponderance
of the evidence that the jurisdictional minimum is satisfied, remand is only
appropriate if the plaintiff can establish to a legal certainty that the claim is less
than the requisite amount.” Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009).
“Under the preponderance standard, ‘the jurisdictional fact . . . is not whether the
damages are greater than the requisite amount, but whether a fact finder might
legally conclude that they are . . . .’” Id. at 959 (quoting Kopp v. Kopp, 280 F.3d
883, 885 (8th Cir. 2002)). “It is the substance of the claim, not the conclusory
recitation of its worth, that will determine if federal jurisdiction is extant.” Rodgers
v. Wolfe, 4:05-CV-01600-ERW, 2006 WL 335716 (E.D. Mo. Feb. 14, 2006)
(quotation and citation omitted).
Attorney’s fees are properly considered, along with damages and statutory
penalties, in determining the amount in controversy.

Rasmussen v. State Farm

Mut. Auto Ins. Co., 410 F.3d 1029, 1031 (8th Cir. 2005). Whether to award
attorney’s fees and in what reasonable amount is a question of fact for the trial
court. Delph v. Dr. Pepper Bottling Co. of Paragould, 130 F.3d 349, 358 (8th Cir.
1997) (citing Shrader v. OMC Aluminum Boat Grp., Inc., 128 F.3d 1218, 1220 (8th
Cir. 1997)); see also Tate v. Golden Rule Ins. Co., 859 S.W.2d 831, 835 (Mo. Ct.
App. 1993) (“[Missouri’s vexatious refusal to pay statute] allows for an award of
attorney's fees. The award is not mandatory. Therefore, the granting or refusal to

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grant attorney's fees by the trial judge is primarily discretionary and will not be
disturbed absent the showing of an abuse of discretion.” (quotation marks and
citation omitted)).
“All doubts about federal jurisdiction should be resolved in favor of remand
to state court.” In re Prempro Products Liability Litigation, 591 F.3d at 620 (citing
Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007)). A case must be
remanded if, at any time, it appears that the district court lacks subject matter
jurisdiction. 28 U.S.C. § 1447(c); Fed. R. Civ. P. 12(h)(3).
III.

Discussion
A. Amount in Controversy Requirement

Because of the policy limit, the maximum amount that plaintiff could recover
against defendant for breach of contract is $50,000. Under the statutory formula,
the maximum amount recoverable on the vexatious refusal claim is $5,150. Mo.
Ann. Stat. § 375.420. Thus, the damages in this case cannot exceed $55,150,
However, the court can consider attorney’s fees in determining the amount in
controversy. Rasmussen, 410 F.3d at 1031. To meet the amount in controversy in
this case, the defendant must prove by a preponderance of the evidence that a
reasonable trier of fact could award plaintiff attorney’s fees of at least $19,850,
which would be roughly 35.993% of his potential maximum damages. See Bell, 557
F.3d at 956. To meet its burden, the defendant must present “some specific facts or
evidence.” Abernathy v. Bank of America, N.A., 4:09-CV-134-HEA, 2009 WL
702785, at *2 (E.D. Mo. Mar. 16, 2009) (citing Hill v. Ford Motor Co., 324 F. Supp.
2d 1028, 1036 (E.D. Mo. 2004)). “That evidence may include citations to similar
cases in which punitive damages and attorney's fees were awarded.” Harris v.

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TransAmerica Life Ins. Co., 4:14-CV-186-CEJ, 2014 WL 1316245 (E.D. Mo. Apr. 2,
2014).

The evidence the defendant submits on this issue consists of an affidavit of

its attorney and a report by the National Center for State Courts (NSCS).
In her affidavit, defendant’s attorney states that she believes, based on
experience, that the attorney’s fees in this case could exceed $19,850. The court
finds defense counsel’s assertion in support of her client’s position to be
unpersuasive. The NCSC report discusses the costs of litigating automobile accident
cases—as “measured” by a survey of American Board of Trial Advocates members’
estimates of the number of hours spent on a “typical automobile tort case,” as
opposed to, say, data culled from the attorney fee requests submitted in cases
where such fees were considered. Because the “typical automobile tort case” is not
defined in the report, the relevance of the data the report contains is uncertain.
Further, the estimates of a select group of lawyers as to the cost of litigating typical
automobile tort cases are of dubious value. As a result, the court finds the report
of no use in determining whether the attorney’s fees awarded in this case would
likely equal $19,850.
For the reasons discussed above, the court finds that the defendant has not
met its burden of proving that the amount in controversy requirement for diversity
jurisdiction has been met. Therefore, remand of this action is appropriate.
B. Attorney’s Fees and Costs
The plaintiff asks that the court order defendant to pay the costs and
attorney’s fees incurred as a result of removal, as permitted by 28 U.S.C. §
1447(c). “[T]he standard for awarding fees should turn on the reasonableness of
the removal. Absent unusual circumstances, courts may award attorney’s fees

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under § 1447(c) only where the removing party lacked an objectively reasonable
basis for seeking removal. Conversely, when an objectively reasonable basis exists,
fees should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)
(citations omitted).

The defendant had an objectively reasonable basis to seek

removal here because it believed that an attorney fee award in this case could
increase the plaintiff’s total recovery to an amount that would meet the amount in
controversy requirement. Therefore, the plaintiff’s request for attorney’s fees and
costs will be denied.
***
For the reasons discussed above,
IT IS HEREBY ORDERED that plaintiff’s motion to remand this action [Doc.
#8] is granted.
IT IS FURTHER ORDERED that the Clerk of the Court shall remand this
action to the Twenty-Second Judicial Circuit Court of Missouri (City of St. Louis)
from which it was removed.
IT IS FURTHER ORDERED that plaintiff’s request for attorney’s fees and
costs for the removal is denied.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE

Dated this 10th day of October, 2014.

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