Thomas v. Kemper Specialty Company
ORDER denying 9 Motion to Remand; denying 9 Motion to Stay. Signed by Judge Brian Morris on 9/30/2015. (SLL, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
TINA THOMAS for herself and on
behalf of MADISON TRI,
KEMPER SPECIALITY CO., d/b/a
ALPHA PROPERTY AND
CASUALTY INSURANCE CO.
Defendants, Kemper Specialty Company, Alpha Property and Casualty
Insurance (“Kemper”), filed a notice of removal on July 27, 2015. (Doc. 1.)
Plaintiff, Tina Thomas for herself and on behalf of Madison Tri (“Thomas”),
moved this court, on August 24, 2015, to remand the action to the Montana Eighth
Judicial District and to order a stay in the case now pending until this motion has
been decided. (Doc. 9 at 1.) Kemper has opposed the motion. (Doc. 11.)
A. Amount in Controversy
A federal district court must remand a case to state court if subject matter
jurisdiction is lacking. 28 U.S.C. § 1447(c). District courts possess diversity
jurisdiction over all civil actions between citizens of different states where the
amount in controversy exceeds $75,000, exclusive of interests and costs. 28 U.S.C.
§ 1332. The party seeking removal carries the burden of establishing federal
jurisdiction. Emrich v. Touche Ross & Co., 846 F.2 1190, 1195 (9th Cir. 1988).
Courts strictly construe removal statutes against removal jurisdiction and will
reject jurisdiction if any doubt as to the right of removal exists. Gaus v. Miles, Inc.,
980 F.2 564, 566 (9th Cir. 1992).
The party seeking removal has satisfied its burden when the plaintiff’s
complaint establishes the jurisdictional amount in controversy. Singer v. State
Farm Mut. Auto. Ins. Co., 1116 F.3 373, 377 (9th Cir. 1997). If the complaint does
not claim an amount over $75,000, the removing defendant must prove by a
preponderance of the evidence that the amount in controversy requirement has
been met. Gaus, 980 F.2d at 566-567. The district court may consider the facts in
the removal petition, and may “require parties to submit summary-judgment-type
evidence relevant to the amount in controversy at the time of removal.” Singer, 116
F.3d at 377 (internal quotations omitted).
The jurisdictional amount in controversy excludes “interest and costs,” but
includes punitive damages and attorneys’ fees. Guglielmino v. McKee Food Corp.,
506 F.3d 696, 700 (9th Cir. 2007) (citing 28 U.S.C. § 1332). “Where both actual
and punitive damages are recoverable under a complaint each must be considered
to the extent claimed in determining jurisdictional amount.” Bell v. Preferred Life
Assur. Soc of Montgomery, Ala., 320 U.S. 238, 241 (1943).
Thomas has alleged at least $50,000 in compensatory damages in her
complaint. (Doc. 7 at 6-7.) Kemper must show that an additional $25,001 is in
controversy in order to satisfy the jurisdictional amount in controversy
requirement. Kemper has argued that the additional $25,001 may be found in
Plaintiff’s request for punitive damages. (Doc. 11 at 4.)
Thomas has requested punitive damages under Count II, the bad faith claim,
and Count III, the breach of implied covenants of good faith and fair dealing claim.
(Doc. 7 at 4-5). Thomas has asserted that punitive damages should be based on
Kemper’s net worth Id. at 7. Thomas claims that Kemper is part of a “$3 billion
Chicago based financial services company.” Id. at 1. A punitive damages award of
$25,001 appears reasonable given the amount requested in compensatory damages
and Kemper’s alleged net worth. Accordingly, it appears that the face of Thomas’s
First Amended Complaint satisfies the amount in controversy.
A defendant may introduce evidence of jury verdicts in cases involving
similar facts where, as here, the amount of punitive damages sought remains
unclear. Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002).
Kemper has highlighted several insurance coverage cases in Montana in which the
jury awarded substantial punitive damage awards. (Doc. 11 at 7.) For example, a
jury for the U.S. District Court of Montana, Billings Division, awarded $2.5
million in punitive damages in addition to $100,000 in contract damages. The case
involved an insurer’s alleged breach of contract and bad faith in failing to pay
claims. (King v. Geico, CV 12-92-RWA, Doc. 3 at 6; Doc. 122.) The plaintiff’s
husband had been killed in a collision with an uninsured driver who was under the
influence of drugs. (Doc. 3 at 2.) In another Montana District Court case, Chilcote
v. Fireman’s Funds Insurance Company, the jury awarded $3.5 million in punitive
damages. (CV 06-47-DWM, Doc. 130). The plaintiff brought a breach of contract
action after an insurance company failed to pay her medical bills when she had
been involved in a crash with an underinsured motorist. (CV 06-47-DWM, Doc. 45
The cited cases by Kemper fail to provide a comprehensive representation of
all similar insurance cases. In light of the large punitive damages awards in those
two cases and the facts of the current case, however, punitive damages of at least
$25,001 do not appear excessive or unreasonable. The underlying case presents
facts where an estranged husband kidnapped Thomas and her child. (Doc. 9 at 45.) Thomas owned the truck used in the kidnapping. Thomas has alleged that
Kemper insured the truck. Id. Kemper denied Thomas insurance coverage on the
truck. Id. The jurisdictional amount in controversy is established by a
preponderance of the evidence.
B. Abstention Doctrine
Thomas has argued that this Court should abstain from exercising federal
subject matter jurisdiction pursuant to Brillhart v. Excess Ins. Co. of America, 316
U.S. 491 (1942), to determine “complex Montana insurance law issues presented
in [the] complaint.” (Doc. 9 at 8.) Brillhart addressed a situation in which another
suit was pending in state court. Brillhart, 316 U.S. at 495. The procedural posture
involved parallel proceedings in two different courts. Id. Brillhart did not address a
case involving removal or remand.
Thomas also relied on National Union Fire Ins. Co. of Pittsburg, v. Davis,
No: CV-10-443-RMP (E.D. Wash. June 01, 2011) at the hearing on the current
motion. The plaintiff in Davis filed a federal action while the underlying state
action was pending in a Montana state court. Id. The procedural posture, similar to
Brillhart, involved parallel proceedings in two separate courts. The court applied
the Brillhart factors to decline jurisdiction. Thomas’s reliance on Davis and
Brillhart is misplaced.
Thomas originally filed this action in state court. Kemper removed the case
to federal court pursuant to 28 U.S.C. § 1441. No lawsuit remains pending in state
court. No party has filed a separate action under the federal Declaratory Judgments
Act. (Doc. 11 at 10). No parallel proceedings exist in this matter that could explain
the reasoning of Brillhart or Davis.
Thomas also has argued that federal district courts possess discretion to
decline jurisdiction in cases where the primary issue in the case involves insurance
regulation and policy. (Doc. 9 at 9-10.) Thomas has cited to American National
Fire Insurance Company v. Hungerford, 53 F.3d 1012 (9th Cir. 1995) and Golden
Eagle Insurance Company v. Travelers Companies, 103 F.3d 750, 752 (9th Cir.
1996), in support of her argument. The Ninth Circuit overruled both cases in
Government Employees Insurance Company v. Dizol, 133 F. 3d 1220 (9th Cir.
The Ninth Circuit explained that federal courts should not remand or decline
a declaratory action in cases as a general rule where “other claims are joined with
an action for declaratory relief (e.g., bad faith, breach of contract, breach of
fiduciary duty, rescission, or claims for other monetary relief).” Dizol, 133 F.3d at
1225. The Ninth Circuit reasoned that the district court lacks discretion to remand
these causes of action “[b]ecause claims of bad faith [and] breach of contract . . .
provide an independent basis for federal diversity jurisdiction.” Id. at 1226, fn. 6.
Similar to the plaintiff in Dizol, Thomas combines other claims with her
declaratory action. Thomas brings claims for declaratory judgment, first party bad
faith, breach of the implied covenants of good faith and fair dealing, negligence,
and breach of contract. (Doc. 7.) The state courts may be best positioned to hear
actions involving insurance regulations and policies. The other claims in this action
provide an independent basis for federal diversity jurisdiction. This Court lacks the
discretion to decline to entertain these causes of action.
IT IS ORDERED that Thomas’s Motion to Remand (Doc. 9.) is DENIED.
DATED this 30th day of September, 2015.
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