Garcia v. Standard Insurance Company

Filing 25

ORDER. IT IS HEREBY ORDERED that 12 plaintiff's motion to remand is GRANTED, and this matter is remanded back to state court. IT IS FURTHER ORDERED that 13 the motion for summary judgment is DENIED as moot. IT IS FURTHER ORDERED that 20 the motion for leave to file a surreply to the motion for summary judgment is DENIED as moot. IT IS FURTHER ORDERED that 21 the motion to stay further briefing pending motion for remand is DENIED as moot. The clerk is instructed to enter judgment accordingly and close the case. Signed by Judge James C. Mahan on 11/9/17. (Copies have been distributed pursuant to the NEF; cc: Certified Copy of Order and Docket Sheet Sent to State Court - ADR)

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7

AURORA GARCIA,

8

Plaintiff(s),

9
10

Case No. 2:17-CV-858 JCM (VCF)
ORDER

v.
STANDARD INSURANCE COMPANY,

11

Defendant(s).

12
13

Presently before the court is plaintiff Aurora Garcia’s motion to remand the instant matter back

14

to state court. (ECF No. 12). Defendant Standard Insurance Company responded. (ECF No. 14).

15

Garcia replied. (ECF No. 15).

16
17
18

I.

Facts
Garcia alleges that the amount in controversy does not exceed $75,000.00. See 28 U.S.C.

§ 1332(a). She does not dispute diversity of citizenship.

19

“The district courts shall have original jurisdiction of all civil actions where the matter in

20

controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between

21

. . . citizens of different states.” 28 U.S.C. § 1332(a). If the amount in controversy does not exceed

22

$75,000, this court does not have subject matter jurisdiction and must remand.

23

This case is about an automobile accident in which, Garcia alleges, she “suffered serious

24

permanent injuries, including the complete loss of all four fingers on her left hand,” and the “loss

25

of use of her left hand.” (ECF No. 1-1 at 6). The parties agree that Garcia worked for the Clark

26

County School District and was covered under a group policy of accidental death and

27

dismemberment insurance that Standard issued to the school district. (ECF No. 1 at 1). Garcia

28

seeks benefits under the policy for the loss of her fingers. Id. Standard denied Garcia’s claim,

James C. Mahan
U.S. District Judge

1

according to the complaint, primarily due to a disagreement on the meaning of the contract and

2

whether her injury constituted a covered loss. (ECF No. 1-1 at 7–8).

3

Garcia’s complaint alleges claims for (1) breach of contract, (2) contractual breach of the

4

implied covenant of good faith and fair dealing, and (3) unfair trade practices. (ECF No. 1-1). For

5

each claim, Garcia alleged that Standard caused damages in excess of $15,000 as a result of

6

Standard’s conduct alleged in that claim. Id. In the complaint’s prayer for relief, Garcia requests

7

the following judgment:

8

1. For general damages sustained by Plaintiff in an amount in excess of $15,000.00;

9

2. For special damages sustained by Plaintiff in excess of $15,000.000;

10

3. For punitive damages in an amount to be determined at trial;

11

4. For reasonable attorney’s fees and costs of suit;

12

5. For interest at the statutory rate; and

13

6. For any such other relief as the Court deems just and proper.

14

(ECF No. 1-1 at 11).

15

In Standard’s petition for removal, Standard argues that “[b]y alleging punitive damages,

16

Garcia has placed a great deal more in controversy than the jurisdictional minimum.” (ECF No. 1

17

at 3). Standard listed many case examples in which a jury award of punitive damages far exceeded

18

$75,000, when the contract damages were less than are available here.

19

In Garcia’s motion to remand, she backpedals from her request for punitive damages. (ECF

20

No. 12). In essence, she argues that all of her claims sound in contract, not tort, and therefore

21

argues that punitive damages are unavailable. See Nev. Rev. Stat. § 42.005(1).

22

II.

Legal Standard

23

Federal courts are presumed to lack jurisdiction unless a party affirmatively shows

24

jurisdiction exists. Stock West, Inc. v. Confederated Tribes of the Colville Res., 873 F.2d 1221,

25

1225 (9th Cir. 1989). To determine whether the amount in controversy is over $75,000.00, a

26

district court should first look to the complaint to determine whether it is “facially apparent” that

27

the amount in controversy meets the requirement. Abrego v. Dow Chem. Co., 443 F.3d 676, 690

28

(9th Cir. 2006) (quoting Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.

James C. Mahan
U.S. District Judge

-2-

1

1997). “If not, the court may consider facts in the removal petition, and may ‘require the parties

2

to submit summary-judgment-type evidence relevant to the amount in controversy at the time of

3

removal.” Id. The party seeking to prove the amount in controversy exceeds $75,000 need only

4

do so by a preponderance of evidence. Id. at 683.

5

III.

Discussion

6

No party argues that general and special damages alone here could exceed the $75,000

7

limit. Therefore, the question is whether Garcia has pleaded a facially valid claim for punitive

8

damages. The only claim that allows for punitive damages is the unfair trade practices claim.

9

In Nevada, victims of insurance fraud may pursue private actions against the insurer

10

under Nevada’s Unfair Insurance Practices Act, Nevada Revised Statute § 686A.010 et

11

seq. Humana Inc. v. Forsyth, 525 U.S. 299, 311–13 (1999). “The Unfair Insurance

12

Practices Act authorizes a private right of action for violations of a number of unfair

13

insurance practices, including ‘[m]isrepresenting to insureds or claimants pertinent facts or

14

insurance policy provisions relating to any coverage.’” Id. at 312 (citing Nev. Rev. Stat. §

15

868A.310(1)(a)).

16

damages if a jury finds clear and convincing evidence that the insurer is guilty of

17

‘oppression, fraud or malice.’” Id. at 313 (citing Nev. Rev. Stat. § 42.005(1) (1995)).

“Furthermore, aggrieved insured parties may be awarded punitive

18

Nevada’s damages statute states, in relevant part, as follows:

19

NRS 42.005 Exemplary and punitive damages: In general; limitations
on amount of award; determination in subsequent proceeding.

20
21
22
23
24
25
26
27

1. Except as otherwise provided in NRS 42.007, in an action for the breach of
an obligation not arising from contract, where it is proven by clear and convincing
evidence that the defendant has been guilty of oppression, fraud or malice, express
or implied, the plaintiff, in addition to the compensatory damages, may recover
damages for the sake of example and by way of punishing the defendant. Except as
otherwise provided in this section or by specific statute, an award of exemplary or
punitive damages made pursuant to this section may not exceed:
...
2. The limitations on the amount of an award of exemplary or punitive
damages prescribed in subsection 1 do not apply to an action brought against:
...
(b) An insurer who acts in bad faith regarding its obligations to provide
insurance coverage;1
...

28
1

James C. Mahan
U.S. District Judge

In other cases, the limit on punitive damages is never less than $300,000.
-3-

5. For the purposes of an action brought against an insurer who acts in bad
faith regarding its obligations to provide insurance coverage, the definitions set
forth in NRS 42.001 are not applicable and the corresponding provisions of the
common law apply.

1
2
3

Nev. Rev. Stat. § 42.005 (italics added).

4
5
6
7
8

In cases where there is no allegation of bad faith by an insurer, the statutory definition of
fraud is “an intentional misrepresentation, deception or concealment of a material fact known to
the person with the intent to deprive another person of his or her rights or property or otherwise
injure another person.” Nev. Rev. Stat. § 42.001(2). Otherwise, if the insurer is alleged to have
acted in bad faith, the common law definition of fraud applies. NRS 42.005(5).

9
10
11
12
13

Finally, an allegation of fraud must be pleaded with particularity. Fed. R. Civ. P. 9(b);
Nev. R. Civ. P. 9(b). “To plead with particularity, plaintiffs must include in their complaint
averments to the time, the place, the identity of the parties involved, and the nature of the fraud.”
Rocker v. KPMG LLP, 148 P.3d 703, 704 (Nev. 2006), abrogated on other grounds by Buzz Stew,
LLC v. City of N. Las Vegas, 181 P.3d 670 (Nev. 2008).

14

Here, the complaint alleges as follows:

15

Defendant has engaged in unfair trade practices, including, but not limited to, for
failure to properly settle Plaintiff’s claim, failure to properly review Plaintiff’s
claim, misrepresenting to Plaintiff pertinent facts or policy provisions, and for
attempting to settle a claim for less the amount to which a reasonable person would
have believed from advertising and other written materials.

16
17
18
19
20
21
22
23

(ECF No. 1-1 at 10). Specifically, the complaint alleges that Standard misrepresented
coverage in the insurance contract to Garcia. See id. at 7–8. In a letter of denial to Garcia,
Standard represented that the contract limited coverage of a hand or foot inury to instances
of “actual and permanent severance from the body at or above the wrist or ankle joint.” Id.
at 7.
However, Garcia alleges, “the Policy does not define ‘permanent severance from

24

the body at or above the wrist,’ as is described in the Denial, as only being a loss ‘if the

25

entire hand is amputated at or above the metacarpophalangeal joint (wrist).” Id. at 8. And

26
27
28
James C. Mahan
U.S. District Judge

the complaint alleges that the letter of denial instructed Garcia to “‘[p]lease consult your
Certificate of Insurance or Summary Plan Description for a complete description of your
rights under the terms of the Clark County School District Group Policy,’ but Defendant
-4-

1

did not provide either of those documents to Plaintiff at any time on, around, or after the

2

Denial’s issuance.” Id.

3

This complaint adequately alleges the time, place, and parties involved. But it does

4

not adequately plead the “nature of the fraud” with particularity. Rocker, 148 P.3d at 704.

5

While the complaint alleges a “misrepresentation,” it does not plead any state of mind of

6

the defendant or allege bad faith against the defendant. When an insurer is alleged to act

7

in bad faith, then punitive damages are available if the insurer committed an act of common

8

law fraud in relation to the unfair insurances practices claim. If the insurer is not alleged

9

to act in bad faith, then there must be an allegation of an intentional misrepresentation.

10

Therefore, failure to plead bad faith and failure to plead intent defeats a claim for punitive

11

damages for an unfair insurance practice claim. See NRS 42.005, NRS 42.001. Punitive

12

damages are not available upon this complaint.

13

The facts in the removal petition do not affirmatively prove that the amount in

14

controversy at the time of removal exceeds $75,000. (ECF No. 1). The petition’s

15

allegations rely on punitive damages to raise the amount in controversy over $75,000, and

16

this court has concluded that punitive damages are unavailable. While the removal petition

17

also notes that the request for damages “in excess of $15,000” is simply boilerplate

18

language required by statute, defendant still fails to demonstrate with specific facts how

19

the amount in controversy will exceed $75,000 without punitive damages. Finally, Garcia

20

clarifies that her complaint does not seek more than $50,000 in damages, noting that her

21

complaint seeks only $30,000 to $50,000. (ECF No. 12 at 1–2). Therefore, even

22

considering the additional facts in the removal petition, this court did not have jurisdiction

23

at the time of removal because the complaint does not seek more than $75,000.

24

IV.

Conclusion

25

Given the allegations in the complaint, the factual circumstances of the complaint,

26

and lack of availability of punitive damages here, this court finds that Standard has failed

27

to affirmatively prove that the amount in controversy exceeds $75,000. Therefore, this

28

court lacks subject matter jurisdiction over this matter.

James C. Mahan
U.S. District Judge

-5-

1

Accordingly,

2

IT IS HEREBY ORDERED that plaintiff’s motion to remand (ECF No. 12) is

3
4
5
6
7
8
9

GRANTED, and this matter is remanded back to state court.
IT IS FURTHER ORDERED that the motion for summary judgment (ECF No. 13)
is DENIED as moot.
IT IS FURTHER ORDERED that the motion for leave to file a surreply to the
motion for summary judgment (ECF No. 20) is DENIED as moot.
IT IS FURTHER ORDERED that the motion to stay further briefing pending
motion for remand (ECF No. 21) is DENIED as moot.

10

The clerk is instructed to enter judgment accordingly and close the case.

11

DATED November 9, 2017.

12
13

__________________________________________
UNITED STATES DISTRICT JUDGE

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
James C. Mahan
U.S. District Judge

-6-