Quintana v. Yost et al
Filing
30
MEMORANDUM OPINION AND ORDER denying 18 Opposed MOTION to Remand to State Court by District Judge James O. Browning. (vv)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
VICTOR QUINTANA,
Plaintiff,
vs.
No. CIV 17-0701 JB/JHR
ANDREW C. YOST;
AMERICAN ALTERNATIVE
INSURANCE
CORPORATION; DOES 1-5
and ENTITIES,
CORPORATIONS, and
PARTNERSHIPS 1-5,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on the Plaintiff’s Motion to Remand, filed
September 28, 2017 (Doc. 18)(“Motion”). The Court held a hearing on June 7, 2018. The
primary issue is whether 28 U.S.C. § 1332(a)’s amount-in-controversy requirement is met when
it exceeds $75,000.00 at the time of removal, but dips below $75,000.00 after removal, because
the parties stipulated to Defendant American Alternative Insurance Corporation’s dismissal, and
because the sole insurance policy at issue now is limited to $50,000.00. The Court concludes
that it must calculate the amount in controversy at the time of removal. Accordingly, the
insurance policy’s $50,000.00 limit does not extinguish the Court’s jurisdiction. The Court
therefore denies the Motion. Although the Court concludes that the amount-in-controversy
requirement is met, there is insufficient evidence to conclude that the parties are diverse.
Accordingly, the Court orders Defendant Andrew C. Yost to show cause within ten calendar
days why the Court should not remand the case.
FACTUAL BACKGROUND
The Court takes the facts from Plaintiff Victor Quintana’s Complaint for Personal
Injuries and Damages, D-101-CV-2017-00158, filed January 18, 2017 (First Judicial District,
County of Santa Fe, State of New Mexico), filed in federal court July 5, 2017 (Doc. 11)(“Complaint”) and from Defendant American Alternative Insurance Corporation’s Notice of
Removal, filed July 5, 2017 (Doc. 1)(“Notice of Removal”). The Court provides these facts for
background. It does not adopt them as the truth, and it recognizes that the facts are largely
Quintana’s version of events.
On March 4, 2014, Yost crashed a 1999 Volkswagen into the rear end of the 2008 Dodge
that Quintana was driving. See Complaint ¶¶ 10-11, at 3. As a result of the crash, Quintana was
injured, and the Dodge “sustained heavy and disabling damage.” Complaint ¶ 15, at 4. See id.
¶ 14, at 3. Armano Beltran d/b/a Santa Fe Tow owns the Dodge, but Quintana was lawfully
operating it when Yost crashed into the car. See Complaint ¶ 10, at 3. American Alternative
insures the Dodge. See Complaint ¶ 10, at 3.
Quintana lives in Santa Fe, New Mexico. See Complaint ¶ 1, at 1. Yost “has lived in
Minnesota for over two years” and intends to remain there. Notice of Removal ¶ 17, at 4. See
Notice of Removal ¶ 16, at 4. American Alternative is domiciled in Delaware. See Notice of
Removal ¶ 19, at 4. Its principle place of business “is not in New Mexico.” Notice of Removal
¶ 19, at 4.
PROCEDURAL BACKGROUND
Quintana sues Yost asserting negligence and negligence per se. See Complaint ¶¶ 12- 28,
at 3-5. According to Quintana, he suffered damages in the form of “severe and permanent
physical injuries, past and future medical expenses, loss of life’s enjoyment, loss of household
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services, past and future lost wages, lost earning capacity, past and future emotional and physical
pain and suffering.”
Complaint ¶ 28, at 5.
Quintana also sues American Alternative for
underinsured motorist benefits contending that the injuries Yost caused exceed Yost’s insurance
policy’s bodily injury liability coverage. See Complaint ¶¶ 37-42, at 7-8. Finally, Quintana
alleges that Yost’s conduct warrants punitive damages. See Complaint ¶¶ 29-36, at 6-7. Thus,
Quintana seeks compensatory and punitive damages, attorney’s fees, all pre- and post-judgment
interest, and any other relief the Court deems proper. See Complaint at 8.
American Alternative removes under 28 U.S.C. § 1441 and asserts that the Court has
original jurisdiction under 28 U.S.C. § 1332(a). See Notice of Removal at 1. It contends that
there is complete diversity, because Quintana is a New Mexico resident, whereas Yost and
American Alternative are not. See Notice of Removal ¶¶ 14-19, 21, at 3-5. It asserts that the
amount in controversy exceeds $75,000.00, because Quintana “denies that he is seeking damages
less than $75,000.00 against both Yost and American Alternative,” and because Quintana seeks
punitive damages. Notice of Removal ¶ 23, at 5 (citing Requests for Admission Nos. 4-5, at 3-4,
filed July 5, 2017 (Doc. 1-2)(“Requests for Admission”)). See Notice of Removal ¶ 26, at 6.
After American Alternative filed its Notice of Removal, the parties stipulated to American
Alternative’s dismissal without prejudice. See Amended Stipulation of Dismissal of Defendant
American
Alternative
Insurance
Corporation
at
1,
filed
September
19,
2017
(Doc. 15)(“Stipulation”).
1.
The Motion.
Quintana moves to remand to state court. See Motion at 1. He contends that Yost’s
vehicle insurance coverage for bodily injury is limited to $50,000.00. See Motion ¶ 4, at 1. Yost
argues, accordingly, that, because he does not seek to recover from Yost personally, and because
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American Alternative is no longer a defendant, the amount in controversy is necessarily less than
$75,000.00. See Motion ¶¶ 9-11, at 2.
2.
The Response.
Yost responds.
See Response to Motion For Remand, filed October 12, 2017
(Doc. 22)(“Response”).
He contends that the Court may still exercise subject-matter
jurisdiction, because Quintana refused to stipulate, at the time of removal, that he sought less
than $75,000.00. See Response at 2-3. Yost also asserts that, on the basis of the pre-litigation
settlement demand, the amount in controversy at the time of removal is at least $90,000.00,
because: (i) Quintana’s medical expenses equal $15,466.38; (ii) the Court has reasoned, in
another case, that personal injury cases customarily settle for three times the medical expenses;
and (iii) punitive damages are often calculated to equal the settlement amount. See Response at
5 (citing Aranda v. Foamex Int’l, 884 F. Supp. 2d 1186, 1207 (D.N.M. 2012)(Browning, J.)). He
argues that Quintana’s willingness to now stipulate to a $50,000.00 cap is irrelevant, because the
amount in controversy is determined at the time of removal. See Response at 3 (citing Pfeiffer v.
Hartford Fire Ins. Co., 929 F.2d 1484, 1488 (10th Cir. 1991)); Response at 4 (“Once jurisdiction
attaches, ‘events subsequently defeating it by reducing the amount in controversy are
unavailing.’”)(quoting Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998)). Yost
requests, accordingly, that the Court deny the Motion. See Response at 6.
3.
The Reply.
Quintana replies. See Plaintiff’s Reply in Support of Motion to Remand at 1, filed
October 23, 2017 (Doc. 23)(“Reply”). Quintana argues that it is “legally certain” that he cannot
recover more than $75,000.00, because of the $50,000.00 policy limit. Reply at 1 (citing
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McPhail v. Deere & Co., 529 F.3d 947, 955 (10th Cir. 2008)). He concludes, accordingly, that
the Court must remand for lack of subject-matter jurisdiction. See Reply at 2.
4.
The Hearing.
The Court held a hearing. See Draft Transcript of Motion Proceedings at 1:4 (taken June
7, 2018)(Court)(“Tr.”).1 The Court began by asking whether Quintana would concede that, at
the time of removal, the Court had jurisdiction. See Tr. at 4:6-8 (Court). Quintana conceded that
point. See Tr. at 4:9 (Solon)(“Yes, your Honor, we would concede that.”). Quintana argued that
the difference after removal is that American Alternative is no longer a party, so recovery “is
capped at $50,000.” Tr. at 5:3-9 (Solon). Quintana noted that he had not filed a stipulation
capping recovery, but stated that he was willing to agree to such a stipulation if it would get him
back into state court. See Tr. at 5:19-22 (Solon); id. at 6:4-13 (Solon).
Yost argued that Quintana’s stipulation to limit damages now is irrelevant, because the
relevant question is whether the Court had jurisdiction at the time of removal. See Tr. at 7:238:1 (Jones); id. at 8:18-25 (Jones); id. at 9:14-10:10 (Jones)(“You’ve got to make that stipulation
before removal, because anything you do afterwards . . . does not divest the Court of
jurisdiction.”). Yost asserted that American Alternative’s stipulated dismissal does not change
the analysis, because, to calculate the amount in controversy, the Court cannot aggregate claim
amounts. See Tr. at 12:6-8 (Jones). Yost argued, however, that he has always met the amountin-controversy requirement, because: (i) Quintana refused to admit before removal that he would
not seek more than $75,000.00 against Yost; and, (ii) using Quintana’s medical bills and a
1
The Court’s citations to the hearing transcript refer to the court reporter’s original,
unedited version. If a final transcript is made, it may contain slightly different page and/or line
numbers.
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calculation which the Court has used previously, the amount in controversy is at least
$90,000.00. See Tr. at 12:9-16 (Jones); id. at 13:17-14:4 (Jones).
Quintana conceded that, once the Court has jurisdiction, the Court does not lose
jurisdiction based on a plaintiff’s stipulation capping recovery. See Tr. at 17:25-18:8 (Court,
Solon). He also conceded that, based on his medical bills, the possibility of pain and suffering,
and punitive damages “it’s conceivable that we could have recovered in excess of $75,000.”
Tr. at 18:22-25 (Solon). Finally he admitted that, “at the time this case was filed, it would be
difficult for the Court to find that there is a legal certainty that this case was [valued] less than
$75,000.” Tr. at 19:5-10 (Court, Solon). The parties ended by asking the Court to give them
thirty days to possibly work out an agreement, eliminating the need for the Court to rule on the
Motion. See Tr. at 19:12-16 (Solon); id. at 20:18-21 (Jones).2
LAW REGARDING REMOVAL
“If a civil action filed in state court satisfies the requirements for original federal
jurisdiction, the defendant may invoke 28 U.S.C. § 1441(a) to remove the action to the federal
district court ‘embracing the place where such action is pending.’” Thompson v. Intel Corp.,
2012 WL 3860748, at *4 (D.N.M. Aug. 27, 2012)(Browning, J.)(quoting 28 U.S.C. § 1441(a)).
See Huffman v. Saul Holdings Ltd. P’ship., 194 F.3d 1072, 1076 (10th Cir. 1999)). Defendants
may remove a civil action to federal court where the district court would have original
jurisdiction over the case based upon diversity of citizenship. See Huffman v. Saul Holdings
Ltd. P’ship., 194 F.3d at 1076 (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)).
Nonetheless, federal courts “are to . . . narrowly [construe removal statutes] in light of our
constitutional role as limited tribunals.” Pritchett v. Office Depot, Inc., 404 F.3d 1090, 1095
2
The parties indicated to the Court’s courtroom deputy that they were unable to reach an
agreement.
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(10th Cir. 2005)(citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). See
United States ex rel. King v. Hillcrest Health Ctr., 264 F.3d 1271, 1280 (10th Cir. 2001)). “All
doubts are to be resolved against removal.” Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333
(10th Cir. 1982). The defendant seeking to remove an action to federal court bears the burden of
establishing the district court’s subject-matter jurisdiction over the case. See Montoya v. Chao,
296 F.3d 952, 955 (10th Cir. 2002).
1.
The Presumption Against Removal.
Federal courts are courts of limited jurisdiction; thus, there is some measure of a
presumption against removal jurisdiction which the defendant seeking removal must overcome.
See Fajen v. Found. Reserve Ins. Co., 683 F.2d at 333; Bonadeo v. Lujan, 2009 WL 1324119, *4
(D.N.M. 2009)(Browning, J.)(“Removal statutes are strictly construed, and ambiguities should
be resolved in favor of remand.”). The Supreme Court of the United States of America recently
clarified that a defendant seeking removal to federal court need only include in the notice of
removal a plausible allegation that the amount in controversy exceeds the jurisdictional
threshold. See Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. at 554. When
contested, the defendant seeking removal must establish that federal court jurisdiction is proper
“by a preponderance of the evidence.” McPhail v. Deere & Co., 529 F.3d at 953. See also
Bonadeo v. Lujan, 2009 WL 1324119, at *4 (“As the removing party, the defendant bears the
burden of proving all jurisdictional facts and of establishing a right to removal.”).
2.
Procedural Requirements for Removal.
Section 1446 of Title 28 of the United States Code governs the procedure for removal.
“Because removal is entirely a statutory right, the relevant procedures to effect removal must be
followed.” Thompson v. Intel Corp., 2012 WL 3860748, at *5. A removal that does not comply
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with the express statutory requirements is defective, and the case must be remanded to state
court. See Huffman v. Saul Holdings Ltd. P’ship, 194 F .3d at 1077. See also Chavez v.
Kincaid, 15 F. Supp. 2d 1118, 1119 (D.N.M. 1998)(Campos, J.)(“The [r]ight to remove a case
that was originally in state court to federal court is purely statutory, not constitutional.”).
Section 1446(a) of Title 28 of the United States Code provides that a party seeking
removal of a matter to federal court shall file a notice of removal in the district and division
where the state action is pending, “containing a short and plain statement of the grounds for
removal, together with a copy of all process, pleadings, and orders served upon such defendant
or defendants in such action.” 28 U.S.C. § 1446(a). Such notice of removal is proper if filed
within thirty-days from the date when the case qualifies for federal jurisdiction. See Caterpillar
Inc. v. Lewis, 519 U.S. at 68-69; 28 U.S.C. § 1446(b). The United States Court of Appeals for
the Tenth Circuit has further elaborated that, for the thirty-day period to begin to run, “this court
requires clear and unequivocal notice from the [initial] pleading itself” that federal jurisdiction is
available. Akin v. Ashland Chem. Co., 156 F.3d 1030, 1036 (10th Cir. 1998). The Tenth Circuit
specifically disagrees with “cases from other jurisdictions which impose a duty to investigate and
determine removability where the initial pleading indicates that the right to remove may exist.”
Akin v. Ashland Chem. Co., 156 F.3d at 1036.
3.
Amendment of the Notice of Removal.
In Caterpillar, Inc. v. Lewis, the Supreme Court held that a defect in subject-matter
jurisdiction cured before entry of judgment did not warrant reversal or remand to state court. See
519 U.S. at 70-78. Similarly, citing Caterpillar, Inc. v. Lewis, the Tenth Circuit has held that “a
defect in removal procedure, standing alone, is not sufficient to warrant vacating judgment and
remand to state court if subject matter jurisdiction existed in the federal court.” Browning v.
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Am. Family Mut. Ins. Co., 196 F. App’x 496, 505-06 (10th Cir. 2010). In McMahon v. Bunn-OMatic Corp., 150 F.3d 651 (7th Cir. 1998)(Easterbrook, J.), the United States Court of Appeals
for the Seventh Circuit found on appeal defects in the notice of removal, including that the notice
failed to properly allege diversity of citizenship. See 150 F.3d at 653 (“As it happens, no one
paid attention to subject-matter jurisdiction . . . .”). The Seventh Circuit permitted the defective
notice of removal to be amended on appeal to properly establish subject-matter jurisdiction. See
150 F.3d at 653-54.
The Tenth Circuit has allowed defendants to remedy defects in their petition or notice of
removal.
See Jenkins v. MTGLQ Investors, 218 F. App’x. 719, 723 (10th Cir.
2007)(unpublished)(granting unopposed motion to amend notice of removal to properly allege
jurisdictional facts)3; Watkins v. Terminix Int’l Co., 1997 WL 34676226, at *2 (10th Cir.
1997)(per curiam)(unpublished)(reminding the defendant that, on remand, it should move to
amend the notice of removal to properly allege jurisdictional facts); Lopez v. Denver & Rio
Grande W.R.R. Co., 277 F.2d 830, 832 (10th Cir. 1960)(“Appellee’s motion to amend its
petition for removal to supply sufficient allegations of citizenship and principal place of business
existing at the time of commencement of this action is hereby granted, and diversity jurisdiction
is therefore present.”). The Tenth Circuit has further reasoned that disallowing amendments to
3
Jenkins v. MTGLQ Investors is an unpublished Tenth Circuit opinion, but the Court can
rely on an unpublished Tenth Circuit opinion to the extent its reasoned analysis is persuasive in
the case before it. See 10th Cir. R. 32.1(A), 28 U.S.C. (“Unpublished opinions are not
precedential, but may be cited for their persuasive value.”). The Tenth Circuit has stated: “In this
circuit, unpublished orders are not binding precedent, . . . and . . . citation to unpublished
opinions is not favored. . . . However, if an unpublished opinion . . . has persuasive value with
respect to a material issue in a case and would assist the court in its disposition, we allow a
citation to that decision.” United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The
Court concludes that Jenkins v. MTGLQ Investors, Browning v. Am. Family Mut. Ins. Co., and
Watkins v. Terminix Int’l Co. have persuasive value with respect to a material issue, and will
assist the Court in its preparation of this Memorandum Opinion and Order.
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the notice of removal, even after the thirty-day removal window expired, when the defendant
made simple errors in its jurisdictional allegations, “would be too grudging with reference to the
controlling statute, too prone to equate imperfect allegations of jurisdiction with the total absence
of jurisdictional foundations, and would tend unduly to exalt form over substance and legal flawpicking over the orderly disposition of cases properly committed to federal courts.” Hendrix v.
New Amsterdam Cas. Co., 390 F.2d 299, 301 (10th Cir. 1968). The Tenth Circuit noted that a
simple error in a jurisdictional allegation included failing to identify a corporation’s principal
place of business or referring to an individual’s state of residence rather than citizenship. See
Hendrix v. New Amsterdam Cas. Co., 390 F.2d at 301. In McEntire v. Kmart Corp., 2010 WL
553443 (D.N.M. 2010)(Browning, J.), when faced with insufficient allegations in the notice of
removal -- allegations of “residence” not “citizenship” -- this Court granted the defendants leave
to amend their notice of removal to cure the errors in some of the “formalistic technical
requirements.” 2010 WL 553443, at *8 (citing Hendrix v. New Amsterdam Cas. Co., 390 F.2d
299, 300-02 (10th Cir. 1968)). Further, in Thompson v. Intel Corp., this Court permitted the
defendant Intel Corp. to amend its notice of removal to include missing jurisdictional elements,
including evidence that its principal place of business and corporate headquarters -- the center of
Intel Corp.’s direction, control, and coordination of activities -- is out of state, so that the
diversity requirements were met. See 2012 WL 3860748, at *1.
There are limits to the defects which may be cured by an amended notice of removal, as
Professors Wright and Miller have explained:
[A]n amendment of the removal notice may seek to accomplish any of several
objectives: It may correct an imperfect statement of citizenship, state the
previously articulated grounds more fully, or clarify the jurisdictional amount. In
most circumstances, however, defendants may not add completely new grounds
for removal or furnish missing allegations, even if the court rejects the firstproffered basis of removal, and the court will not, on its own motion, retain
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jurisdiction on the basis of a ground that is present but that defendants have not
relied upon.
14 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 3733, at 651-59
(4th ed. 2009)(footnotes omitted). Professor Moore has similarly recognized: “[A]mendment
may be permitted after the 30-day period if the amendment corrects defective allegations of
jurisdiction, but not to add a new basis for removal jurisdiction.” 16 James William Moore,
Moore’s Federal Practice, § 107.30[2][a][iv], at 107-184 (3d ed. 2012).
4.
Consideration of Post-Removal Evidence.
As this Court has previously explained, the Tenth Circuit looks both to evidence in the
complaint and to evidence submitted after the complaint, in determining whether the criteria
necessary for removal are met. See Thompson v. Intel Corp., 2012 WL 3860748, at *8 (citing
McPhail v. Deere & Co., 529 F.3d at 956). The Tenth Circuit explained in McPhail v. Deere &
Co. that a district court may have evidence presented to a district court after a notice of removal
has been filed, even if produced at a hearing on subject-matter jurisdiction, to determine if the
jurisdictional requirements are met. See 529 F.3d at 593. “[B]eyond the complaint itself, other
documentation can provide the basis for determining the amount in controversy -- either
interrogatories obtained in state court before removal was filed, or affidavits or other evidence
submitted in federal court afterward.” 529 F.3d at 593 (citing Meridian Secs. Ins. Co. v.
Sadowski, 441 F.3d 536, 541-42 (7th Cir. 2006)(Easterbrook, J.), and Manguno v. Prudential
Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)). As this Court has explained, “the
Seventh Circuit, on which the Tenth Circuit has heavily relied when addressing the amount in
controversy, has recognized that ‘events subsequent to removal may clarify what the plaintiff
was actually seeking when the case was removed.’” Aranda v. Foamex Int’l, 2012 WL 2923183,
at *18 (D.N.M. 2012)(Browning, J.)(quoting Carroll v. Stryker Corp., 658 F.3d 675, 681 (7th
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Cir. 2011)).7 Thus, when determining if the requirements for federal jurisdiction are met in a
matter removed from state court, a district court may consider evidence submitted after removal.
7
The Court has concluded that the language in McPhail v. Deere & Co., to some extent,
conflicts with older Tenth Circuit decisions, but nevertheless defines the scope of evidence a
district court may consider when determining its jurisdiction over a matter removed from state
court:
McPhail v. Deere & Co. appears to conflict with the Tenth Circuit’s previous
decisions in Laughlin v. Kmart Corp., and Martin v. Franklin Capital Corp.. In
Laughlin v. Kmart Corp., the Tenth Circuit held that “Kmart’s economic analysis
of Laughlin’s claims for damages prepared after the motion for removal and
purporting to demonstrate the jurisdictional minimum does not establish the
existence of jurisdiction at the time the motion was made.” 50 F.3d at 873. In
Martin v. Franklin Capital Corp., the Tenth Circuit held that the defendant’s
summary of the allegations and the requested relief “[did] not provide the
requisite facts lacking in the complaint.” 251 F.3d at 1291.
Aranda v. Foamex Int’l, 2012 WL 2923183, at * 15. The Court explained that, although there is
some conflicting precedent within the Tenth Circuit on this matter, it is appropriate to consider
post-removal evidence to determine whether subject-matter jurisdiction exists, in light of the
Tenth Circuit’s clarification of its precedents in McPhail v. Deere & Co. See Aranda v. Foamex
Int’l, 2012 WL 2923183, at *11-12. Indeed, the Tenth Circuit admits that its “opinions have not
been entirely clear on [this amount-in-controversy] issue,” but held that its ruling in McPhail v.
Deere & Co. is consistent with the Tenth Circuit’s prior holdings and analysis. McPhail v. Deere
& Co., 529 F.3d at 954-55. Describing its holding in Martin v. Franklin Capital Corp., in which
the Tenth Circuit stated that a defendant must “establish the jurisdictional amount by a
preponderance of the evidence,” the Tenth Circuit said “it would have been more precise to say
that the defendant must affirmatively establish jurisdiction by proving jurisdictional facts that
made it possible that $75,000 was in play, which the defendants in Martin failed to do.” McPhail
v. Deere & Co., 529 F.3d at 955 (emphasis in original). With respect to Laughlin v. Kmart
Corp., the Tenth Circuit clarified that it was “presented with a petition and a notice of removal
that both only referred to damages in excess of $10,000.” McPhail v. Deere & Co., 529 F.3d at
955. Furthermore, the notice of removal in Laughlin v. Kmart Corp. referred only to the removal
statute and “thus no jurisdictional amounts are incorporated into the removal notice by reference
to the statute.” Laughlin v. Kmart Corp., 50 F.3d at 873. Accordingly, even though there
appears to be some tension between these decisions, because the Tenth Circuit in McPhail v.
Deere & Co. characterized its holding as consistent with its prior decisions and because McPhail
v. Deere & Co. is the Tenth Circuit’s most recent and most thorough discussion how to
determine the amount in controversy, the Court will focus its analysis on that case. The Court
thus concludes that the Tenth Circuit’s approach in Laughlin v. Kmart is “one of the most
restrictive approaches to removal,” and the Tenth Circuit has clarified its stance to allow a court
to consider post-removal evidence when determining if federal court jurisdictional requirements
are met. Aranda v. Foamex Int’l, 2012 WL 2923183, at n.11.
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See Thompson v. Intel Corp., 2012 WL 3860748, at *14 (“[I]t is appropriate to consider postremoval evidence to determine whether subject-matter jurisdiction exists.”).
LAW REGARDING DIVERSITY JURISDICTION
“Subject-matter jurisdiction under 28 U.S.C. § 1332(a)(1) requires: (i) complete diversity
among the parties; and (ii) that ‘the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs.’” Thompson v. Intel Corp., 2012 WL 3860748, at *12 (citing 28
U.S.C. § 1332(a)). As the Court has previously explained, “[t]he Supreme Court of the United
States has described this statutory diversity requirement as ‘complete diversity,’ and it is present
only when no party on one side of a dispute shares citizenship with any party on the other side of
a dispute.”
McEntire v. Kmart Corp., 2010 U.S. Dist. LEXIS 13373, at *3 (D.N.M.
2010)(Browning, J.)(citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267-68 (1806),
overruled in part by Louisville & N.R. Co. v. Mottley, 211 U.S. 149 (1908); McPhail v. Deere &
Co., 529 F.3d at 951). The amount-in-controversy requirement is an “estimate of the amount
that will be put at issue in the course of the litigation.” Valdez v. Metro. Prop. & Cas. Ins. Co.,
867 F. Supp. 2d 1143, 1163 (D.N.M. 2012)(Browning, J.)(citing McPhail v. Deere & Co., 529
F.3d at 956). The Court will discuss the two requirements in turn.
1.
Diversity in Citizenship.
For diversity jurisdiction purposes, a person’s domicile determines citizenship. See
Crowley v. Glaze, 710 F.2d 676, 678 (10th Cir. 2013). “A person’s domicile is defined as the
place in which the party has a residence in fact and an intent to remain indefinitely, as of the time
of the filing of the lawsuit.” McEntire v. Kmart Corp., 2010 U.S. Dist. LEXIS 13373, at *3
(citing Crowley v. Glaze, 710 F.2d at 678). See Freeport-McMoRan, Inc. v. KN Energy, Inc.,
498 U.S. 426, 428 (1991)(“We have consistently held that if jurisdiction exists at the time an
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action is commenced such jurisdiction may not be divested by subsequent events.”). If neither a
person’s residence nor the location where the person has an intent to remain can be established,
the person’s domicile is that of his or her parents at the time of the person’s birth. See Gates v.
Comm’r of Internal Revenue, 199 F.2d 291, 294 (10th Cir. 1952)(“[T]he law assigns to every
child at its birth a domicile of origin. The domicile of origin which the law attributes to an
individual is the domicile of
his parents.
It continues until another domicile is lawfully
acquired.”). A corporation on the other hand, is “‘deemed to be a citizen of any State by which it
has been incorporated and of the State where it has its principal place of business.’” Gadlin v.
Sybron Int’l Corp., 222 F.3d 797, 799 (10th Cir. 2000)(quoting 28 U.S.C. § 1332(c)(1)).
2.
Amount in Controversy.
The statutory amount-in-controversy requirement, which presently stands at $75,000.00,
must be satisfied as between a single plaintiff and a single defendant for a federal district court to
have original jurisdiction over the dispute; “a plaintiff cannot aggregate independent claims
against multiple defendants to satisfy the amount-in-controversy requirement,” nor can multiple
plaintiffs aggregate their claims against a single defendant to exceed the threshold. Martinez v.
Martinez, 2010 U.S. Dist. LEXIS 38109, at *18 (D.N.M. 2010)(Browning, J.). If multiple
defendants are jointly liable, or jointly and severally liable, on some of the claims, however, the
amounts of those claims may be aggregated to satisfy the amount-in-controversy requirement as
to all defendants jointly liable for the claims. See Alberty v. W. Sur. Co., 249 F.2d 537, 538
(10th Cir. 1957); Martinez v. Martinez, 2010 U.S. Dist. LEXIS 38109, at *18. Similarly,
multiple plaintiffs may aggregate the amounts of their claims against a single defendant if the
claims are not “separate and distinct.” Martin v. Franklin Capital Corp., 251 F.3d 1284, 1292
(10th Cir. 2001)(Seymour, C.J.), abrogated on other grounds by Dart Cherokee Basin Operating
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Co. v Owens, 135 S. Ct. 547 (2014). Multiple claims by the same plaintiff against the same
defendant may be aggregated, even if the claims are entirely unrelated. See 14A Charles A.
Wright et al., Federal Practice and Procedure, Jurisdiction § 3704, at 566-95 (4th ed. 2011).
While the rules on aggregation sound complicated, they are not in practice: if a single plaintiff -regardless whether he or she is the only plaintiff who will share in the recovery -- can recover
over $75,000.00 from a single defendant -- regardless whether the defendant has jointly liable
co-defendants -- then the court has original jurisdiction over the dispute between that plaintiff
and that defendant. The court can then exercise supplemental jurisdiction over other claims and
parties that “form part of the same case or controversy under Article III,” 28 U.S.C. § 1367(a),
meaning that they “derive from a common nucleus or operative fact.” United Mine Workers of
Am. v. Gibbs, 383 U.S. 715, 725 (1996).
Satisfaction of the amount-in-controversy requirement must be established by a
preponderance of the evidence. See McPhail v. Deere & Co., 529 F.3d at 953, 955 (“[T]he
defendant must affirmatively establish jurisdiction by proving jurisdictional facts that ma[k]e it
possible that $75,000 [i]s in play.”). In the context of establishing an amount in controversy, the
defendant seeking removal could appear to be bound by the plaintiff’s chosen amount of
damages in the complaint, which would seem to allow a plaintiff to avoid federal jurisdiction
“merely by declining to allege the jurisdictional amount [in controversy].” McPhail v. Deere &
Co., 529 F.3d at 955. The Tenth Circuit’s decision in McPhail v. Deere & Co. has foreclosed
such an option from a plaintiff who wishes to remain in state court. McPhail v. Deere & Co.
holds that a defendant’s burden in establishing jurisdictional facts is met if the defendant proves
“jurisdictional facts that make it possible that $75,000 [is] in play.” 529 F.3d at 955.
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The Supreme Court recently has stated that a defendant seeking removal to federal court
need only include in the notice of removal a plausible allegation that the amount in controversy
exceeds the jurisdictional threshold. See Dart Cherokee Basin Operating Co., LLC v. Owens,
135 S. Ct. at 554.
The district court should consider outside evidence and find by a
preponderance of the evidence whether the amount in controversy is satisfied “only when the
plaintiff contests, or the court questions, the defendant’s allegation.” Dart Cherokee Basin
Operating Co., LLP v. Owens, 135 S. Ct. at 554.
ANALYSIS
Quintana contends that the Court must remand the case to state court, because the amount
in controversy is capped at Yost’s insurance liability coverage of 50,000.00. Because Quintana
contests the amount in controversy, the Court must find, by a preponderance of the evidence, that
the amount in controversy exceeds the jurisdictional threshold.
See Dart Cherokee Basin
Operating Co., LLC v. Owens, 135 S. Ct. at 553-54 (citing 28 U.S.C. § 1446(c)(2)(B)). To meet
that burden, a defendant may rely on an “estimate of the potential damages from the allegations
in the complaint,” a proposed settlement amount, or other summary-judgment-type
documentation. McPhail v. Deere & Co., 529 F.3d at 955-56. Should the defendant meet his or
her burden, the jurisdictional threshold is satisfied, unless it is “legally certain” that $75,000.00
or less is at stake. McPhail v. Deere & Co., 529 F.3d at 954. The relevant inquiry is the amount
in controversy at the time of removal. See Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484,
1488 (10th Cir. 1991)(“[T]he propriety of removal is judged on the complaint as it stands at the
time of the removal.”)(citing Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939)); Sweich v. Fred
Loya Insurance Co., 264 F. Supp. 3d 1113, 1132 (D.N.M. 2017)(Browning, J.)(“The defendants
need only affirmatively establish jurisdiction by proving jurisdictional facts that ma[k]e it
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possible that $75,000 [is] in play at the time of removal.”). See also Chavez v. JPMorgan Chase
& Co., 888 F.3d 413, 417 (9th Cir. 2018)(“When we say that the amount in controversy is
assessed at the time of removal, we mean that we consider damages that are claimed at the time
the case is removed by the defendant.”). Reflecting that rule, “[o]nce jurisdiction has attached,
events subsequently defeating it by reducing the amount in controversy are unavailing.” Miera
v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998)(citing St. Paul Mercury Indem. Co.
v. Red Cab Co., 303 U.S. 283, 288-89 (1938)).
Quintana admitted at the hearing that the Court had jurisdiction at the time of removal.
See Tr. at 18:22-25 (Solon); id. at 19:5-10 (Court, Solon). Because the amount in controversy is
jurisdictional, however, the Court examines it despite Quintana’s admission.
Based on
summary-judgment-like documentation submitted and estimations arising from the Complaint’s
allegations, the Court concludes that the amount in controversy exceeds $75,000.00. First,
before removal, Quintana denied in the Requests for Admission that he sought less than
$75,000.00 against Yost. See Requests for Admission No. 4, at 3; McPhail v. Deere & Co., 529
F.3d at 956-57 (stating that Plaintiff’s representations that she seeks more than $75,000.00 is
evidence “support[ing] diversity jurisdiction”).
Second, a pre-litigation settlement demand
shows that Quintana’s medical damages equal $15,466.38. See Letter from Linda J. Rios to
Viola Amador, State Farm Insurance at 2 (dated July 28, 2016), filed October 12, 2017
(Doc. 22)(“Medical Letter”). As the Court has held previously, “[i]t is common in personal
injury to settle on the basis of three times the medical expenses.” Aranda v. Foamex Int’l, 884
F. Supp. 2d at 1207. Using that multiplier, a settlement figure for just compensatory damages
would equal $46,399.14. Quintana’s Complaint requests more than compensatory damages,
however. See Complaint ¶¶ 29-36, at 6-7 (requesting punitive damages); id. at 8 (requesting
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compensatory damages, attorneys’ fees, and all pre- and post-judgment interest on all sums
awarded). When a party seeks punitive damages, “applying a one-to-one ratio” is appropriate,
Aranda v. Foamex Int’l, 884 F. Supp. 2d at 1207, which makes damages $92,798.28.4 This
figure comfortably exceeds the jurisdictional threshold even without counting attorneys’ fees.
That Yost’s insurance policy is limited to $50,000.00 does not change the analysis. It is
established that “policy limits” do not legally “determine the amount in controversy” when the
case involves “the applicability of an insurance policy to a particular occurrence.” Hartford Ins.
Group v. Lou-Con Inc., 293 F.3d 908, 911 (5th Cir. 2002). See, e.g., Budget Rent-A-Car, Inc. v.
Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997)(“Because the applicability of Budget’s
liability coverage to a particular occurrence is at issue, the amount in controversy is the value of
the underlying potential tort action.”); Pierre v. Government Employees Ins. Co., 2017 WL
2062012, at *2 (M.D. Fla. May 13, 2017)(Covington, J.); 14B Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice and Procedure: Jurisdiction 3d § 3710 (3d ed.
2009). Rather, the amount in controversy “is measured by the value of the underlying claim.”
Hartford Ins. Group v. Lou-Con, 293 F.3d at 911. Accordingly, the $50,000.00 policy limit does
not affect the Court’s conclusion.
Although not contested, the Court considers whether the parties are diverse. Yost has
lived in Minnesota for two years “with the intent to make Minnesota his home.” Notice of
4
If American Alternative was still a party, the amount-in-controversy calculation against
Yost would not change. When calculating the amount in controversy, the Court may not
“aggregate independent claims against multiple defendants.” Martinez v. Martinez, 2010
1608884, at *18 (D.N.M. Mar. 30, 2010)(Browning, J.)(citing Wright & Miller, Federal Practice
and Procedure: Jurisdiction § 3704, at 146-50 (3d ed. 2009)). Quintana’s claims against Yost
and American Alternative are independent; Quintana sues Yost for negligence, negligence per se,
and punitive damages, whereas Quintana sues American Alternative for underinsured motorist
benefits. Accordingly, even if American Alternative were still a party, the Court would not
aggregate the claims to determine the amount in controversy.
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Removal ¶ 16, at 4. See id. ¶ 17, at 4. Accordingly, Yost is domiciled in Minnesota, so he is
considered a Minnesota citizen for diversity purposes. See Middleton v. Stephenson, 749 F.3d at
1200 (10th Cir. 2014). Quintana, on the other hand, alleges that he is “a resident of Santa Fe,
Santa Fe County, State of New Mexico.” Complaint ¶ 1, at 1. See Notice of Removal ¶ 14, at 3.
Residency, however, does not establish domicile or citizenship for diversity purposes without
additional evidence. See Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1238
(10th Cir. 2015)(“An individual’s residence is not equivalent to his domicile and it is domicile
that is relevant for determining citizenship.”). Although Quintana admitted that the Court had
jurisdiction “at the time [he] filed [his] complaint,” suggesting that Quintana conceded that his
domicile was New Mexico -- or, at least, a state other than Minnesota or Delaware -- whether
diversity exists goes to the Court’s power to hear the case. Accordingly, the Court needs more
than Quintana’s concession, which occurred when the parties were not discussing citizenship.
The Court, therefore, orders that, within ten days of the date that this Memorandum Opinion and
Order is entered, Yost shall show cause why the Court should not remand this action to the First
Judicial District Court, County of Santa Fe, State of New Mexico, for lack of diverse citizenship.
IT IS ORDERED that: (i) the Plaintiff’s Motion to Remand, filed September 28, 2017
(Doc. 18), is denied; and (ii) Defendant Andrew C. Yost shall show cause, within ten calendar
days of the date of this Memorandum Opinion and Order, why the Court should not remand this
action to the First Judicial District Court, County of Santa Fe, State of New Mexico, for lack of
diverse citizenship.
_______________________________
UNITED STATES DISTRICT JUDGE
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Counsel:
Linda J Rios
Michael G. Solon
Rios Law Firm
Albuquerque, New Mexico
Attorneys for the Plaintiff
Jeffrey E. Jones
Law Office of Jeffrey E. Jones
Santa Fe, New Mexico
Attorney for Defendant Andrew C. Yost
David W. Peterson
Keleher & McLeod, P.A.
Albuquerque, New Mexico
Attorney for Defendant American Alternative Insurance Corporation
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