Williams et al v. GeoVera Specialty Insurance Company

Filing 9

ORDER REMANDING CASE granting 6 Motion to Remand. This action is REMANDED to the County Court at Law (District Court Section), Kleberg County, Texas, the court from which it was removed.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
RONALD WILLIAMS, et al,
Plaintiffs,
VS.
GEOVERA SPECIALTY INSURANCE
COMPANY,
Defendant.

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§ CIVIL ACTION NO. 2:14-CV-360
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ORDER REMANDING CASE
Ronald and Maria Williams (Plaintiffs) sued GeoVera Specialty Insurance
Company (GeoVera) in the County Court at Law, District Court Section of Kleberg
County on July 16, 2014. D.E. 1-3, 1-4. The lawsuit alleges state law claims for breach
of contract, negligence, negligent misrepresentation, fraud, and violations of the Texas
Insurance Code and Texas Deceptive Trade Practices Act for intentional and knowing
conduct, including underpayment of their homeowner’s policy claim for hail and
windstorm damage. D.E. 1-3. GeoVera was served with summons on July 28, 2014, and
answered the suit on August 4, 2014. D.E. 1, 1-5. GeoVera then timely removed the
case to this Court on August 27, 2014. D.E. 1.
According to the Notice of Removal (D.E. 1), federal jurisdiction is predicated
exclusively on diversity jurisdiction.

28 U.S.C. § 1332.

It is undisputed that the

citizenship of the parties is diverse. Pending before the Court is Plaintiffs’ Motion to
Remand (D.E. 6), arguing that the $75,000.00 amount-in-controversy requirement of 28

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U.S.C. § 1332 is not met. For the reasons set out below, the Motion to Remand (D.E. 6)
is GRANTED.
When Plaintiffs filed their state court petition, it contained on its face the
following disclaimer:
The total damages sought by Plaintiff [sic] against
Defendants [sic] for all elements of damage does [sic] not
exceed the sum of $74,999, including exemplary and punitive
damages, penalties, and attorneys’ fees, but exclusive of
interest and costs. Plaintiff [sic] will not seek or accept any
damages, recovery or award that may be rendered in the
above-captioned matter in excessive [sic] of $74,999.00.
Further, Plaintiffs herein hereby renounces [sic] any judgment
in excessive [sic] of $74,999, exclusive of interest and costs
which might be rendered in his [sic] favor.
D.E. 1-3, pp. 5-6. Attached to the Petition was a Stipulation, which reads as follows:
Plaintiffs, RONALD AND MARIA WILLIAMS, hereby
stipulate that the amount in controversy in the above-styled
and numbered cause does not exceed the sum or value of
$74,999.00, exclusive of interest and costs. Specifically,
RONALD AND MARIA WILLIAMS, Plaintiffs, stipulate
and agree that the “amount in controversy” includes any and
all damages, exclusive of interest and costs, of which
Plaintiffs seek to recover by and through the lawsuit filed
herein.
Plaintiffs, RONALD AND MARIA WILLIAMS, understand
that this stipulation will be filed with the Court and
understand that the stipulation will bind the parties in the
above-referenced lawsuit to the terms stated herein and
through their legal counsel hereby agree that they will refuse
to execute on the amount exceeding $74,999.00.
Counsel for Plaintiffs, Douglas Pennebaker of the
PENNEBAKER LAW FIRM, agrees to waive any award in
excess of $74,999.00.

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D.E. 1-3, p. 26. This stipulation is signed by attorney Douglas E. Pennebaker and is
notarized. According to GeoVera, the party that bears the burden of proving federal court
jurisdiction,1 Plaintiffs’ disclaimer was not pled in good faith and the stipulation was not
sufficiently clear, acknowledged, and binding on Plaintiffs (as opposed to their counsel).
The argument that the pleading was not made in good faith is predicated, in part,
on Texas Rule of Civil Procedure 47, which provides that plaintiffs plead damages in
specific increments, none of which increments indicate a $75,000.00 threshold. GeoVera
offers no authority that suggests that such a variance from the Rule 47 increments is any
indication of bad faith. While Plaintiffs’ pleading was likely formulated to defeat federal
jurisdiction in addition to complying with Rule 47, that additional purpose and specificity
does not necessarily qualify as “bad faith” requiring the Court to disregard it.
GeoVera also asserts that Plaintiffs’ claims trigger policy coverage amounts in
excess of $75,000, along with other actual, additional, or exemplary damages that could
easily bring the total amount in controversy to a sum exceeding this Court’s jurisdictional
limits. Ordinarily, this Court would agree that, if the nature of the pleadings would allow
a judgment in excess of the necessary amount in controversy, then ambiguous, bad faith,
or disingenuous arguments about the potential monetary judgment could be viewed with
skepticism and the Court could infer a greater amount.

See generally, St. Paul

Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998).
Here, however, Plaintiffs are not making a post-removal argument that their
ambiguous pleadings should be construed to limit their potential recovery to an amount
1

Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).

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less than $75,000.00. Instead, Plaintiffs expressly limited their damages in their pleading
in the state court and filed a stipulation to support that pleading. While a plaintiff is not
permitted to manipulate jurisdiction with disingenuous, ambiguous, and non-binding
pleadings as to damages, a plaintiff can be held to his own definitive pleading, supported
by binding stipulation. De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995).
The Court rejects GeoVera’s argument that the capped damages pleading was not in good
faith and should be disregarded.
GeoVera’s challenge to the legal sufficiency of Plaintiffs’ stipulation is based on
three arguments: (1) that a party may be relieved from the effect of a stipulation,
meaning that stipulations are never fully binding; (2) that the stipulation binds only
Plaintiffs’ counsel and not Plaintiffs, and (3) the stipulation, itself, is ambiguous. D.E. 8.
The Court disagrees with each of these arguments.
The case upon which GeoVera relies to indicate that parties can be relieved from
their stipulations, Brinson v. Tomlinson, 264 F.2d 30, 34 (5th Cir. 1959), was not
concerned with amounts in controversy or subject matter jurisdiction. Instead, it was an
Internal Revenue Service tax case in which stipulations were considered binding,
rejecting the application of any rule allowing that stipulations be set aside when entered
under a misapprehension or without full knowledge of all the facts, or as the result of
mistake. There is no argument here that Plaintiffs entered into their stipulation under a
misconception of its significance.
GeoVera’s argument that the stipulation is improperly executed without authority
is both speculative and moot. For an agreement regarding the prosecution of a lawsuit to
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be binding in Texas, the agreement need only be in writing, signed, and filed of record.
Tex. R. Civ. P. 11. All of those requirements were met here. Acknowledgment and
notarization are not required. While GeoVera argues that attorney Pennebaker might
have executed the stipulation without authority from his clients, there is no evidence to
support any finding in that regard. Attorney Pennebaker is the attorney of record for
Plaintiffs (D.E. 1-3) and, absent a sworn, written motion raising a challenge, his authority
to act on their behalf is presumed. Tex. R. Civ. P. 7, 8, 12, 13. Again, should the
stipulation be set aside for any reason, GeoVera’s right to remove would be triggered at
that time.
Last, GeoVera argues that the stipulation, itself, is ambiguous and therefore
insufficient to bind Plaintiffs. Courts, in unpublished cases, have expressed approval of a
form of such a stipulation that includes language to the effect of: “I will not accept
damages exceeding $75,000.” See Ditcharo v. United Parcel Service, Inc., 376 Fed.
App'x 432, 437 (5th Cir. 2010) (per curiam); Tovar v. Target Corp., No. SA–04–CA–
557–XR, 2004 WL 2283536, 2004 U.S. Dist. LEXIS 20160, *2–3, 10–14 (W.D. Tex.
Oct. 7, 2004). The language of Plaintiffs’ stipulation is not appreciably different. In both
their pleading and their stipulation, they clearly renounce any right to recover more than
$74,999.00, exclusive of interest and costs. The Court rejects GeoVera’s challenge to the
sufficiency of the stipulation.
CONCLUSION
For the reasons set out above, the Court finds that the amount-in-controversy
requirement of 28 U.S.C. § 1332 is not met in this case. Therefore, this Court does not
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have subject matter jurisdiction to proceed. This action is REMANDED to the County
Court at Law (District Court Section), Kleberg County, Texas, the court from which it
was removed.

ORDERED this 31st day of October, 2014.

___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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