Delgado et al v. Allstate Vehicle and Property Insurance Co. et al
Filing
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ORDER ADOPTING 28 Memorandum and Recommendation and REMANDING to the 281st Judicial District Court of Harris County. Case terminated on 2/19/2019.(Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PATRICIO DELGADO,
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Plaintiff,
v.
ALLSTATE TEXAS LLOYDS,
Defendant.
February 19, 2019
David J. Bradley, Clerk
CIVIL ACTION H-18-1059
MEMORANDUM OPINION AND ORDER OF REMAND
Pending before the court is a memorandum and recommendation (“M&R”) filed by
Magistrate Judge Nancy Johnson. Dkt. 28. The Magistrate Judge recommends remanding the action
for lack of subject matter jurisdiction. Id. Both plaintiff Patricio Delgado and defendant Allstate
Texas Lloyds (“Allstate”) have objected. Dkts. 29, 32. After considering the M&R, objections,
evidence, and applicable law, the court is of the opinion that the M&R should be ADOPTED IN
FULL and the case should be REMANDED.
I. BACKGROUND
This case was removed to federal court based on diversity jurisdiction. Dkt. 1 at 1. Four
insured plaintiffs sued Allstate in state court for damage to four different properties on four different
dates. Dkt. 10 at 3. Allstate removed and moved to dismiss the improperly joined parties, or in the
alternative, sever the suit into four separate lawsuits. Dkts. 1, 10. Judge Johnson found the claims
were “factually unrelated” and severed the claims. Dkt. 12. Judge Johnson ordered each plaintiff
to file an amended complaint that related solely to his or her claims. Id. at 2. After severing the
claims, Judge Johnson ordered Allstate to show the basis for jurisdiction. Dkt. 21. Judge Johnson
concluded that the court lacked subject matter jurisdiction because it was “unclear on what basis
Plaintiff could be awarded in excess of $75,000.” Dkt. 28 at 5. Both Delgado and Allstate have
objected that the court has subject matter jurisdiction because the amount in controversy has been
met. Dkts. 29, 32.
II. STANDARD OF REVIEW
A party may file objections to a Magistrate Judge's ruling within fourteen days of being
served with a copy of a written order. Fed. R. Civ. P. 72; see also 28 U.S.C. § 636(b)(1)(c). The
standard of review used by the district court depends on whether the Magistrate Judge ruled on a
dispositive or non-dispositive motion. See Fed. R. Civ. P. 72; see also 28 U.S.C. § 636(b)(1)(c). For
dispositive matters, the court “determine(s) de novo any part of the magistrate judge’s disposition
that has been properly objected to.” Fed. R. Civ. P. 72(b)(3). “The district judge may accept, reject,
or modify the recommended disposition; receive further evidence; or return the matter to the
magistrate judge with instructions.” Id. Motions to remand are considered dispositive motions.
Davidson v. Georgia-Pac, L.L.C., 819 F.3d 758, 765 (5th Cir. 2016).
III. OBJECTIONS
Both parties objected to the M&R. Dkts. 29, 32.
A.
No amended complaint
First, Allstate objects that Delgado’s original complaint meets the amount in controversy and
that the Magistrate Judge incorrectly found that Delgado filed an amended complaint. Dkt. 29 at 3.
Allstate argues that the original complaint is Delgado’s only affirmative pleading and it states that
“Plaintiff individually seeks monetary relief over $200,000.” Id. According to Allstate, the use of
“Plaintiff” in the singular form and the fact that the Texas Rules of Civil Procedure do not permit
the pleading in the aggregate amount means the Magistrate erred in finding that the amount in the
original complaint represents the aggregate amount. Id.
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Although Allstate is correct in that Delgado did not file an amended complaint, the
Magistrate Judge did not err in concluding that the original complaint specified damages in the
aggregate. The original complaint filed in state court included the claims of all four misjoined
plaintiffs. Dkt. 1-7. Even Delgado expressly acknowledged that the monetary relief specified in the
original complaint represented the amount sought by all four plaintiffs collectively. Dkt. 32 at 2.
Because the amount sought in the original petition represented the damages sought by all four
plaintiffs and Delgado did not file an amended complaint, the court will proceed as though Delgado
did not specify the amount of damages.
B
Burden to prove amount in controversy
Second, Allstate argues that the Magistrate incorrectly placed the burden on Allstate to
establish the amount in controversy because the complaint alleged a specific amount of damages.
Dkt. 29 at 5. Allstate also argues that plaintiff Delgado never contested the federal court’s
jurisdiction and has repeatedly invoked the federal court’s jurisdiction. Id. at 3. Delgado objects
that the amount in controversy does exceed the jurisdictional amount. Dkt. 32.
Generally, the removing party has the burden to show that federal jurisdiction exists and that
removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.
2002). “When a complaint does not allege a specific amount of damages, the party invoking federal
jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds
the jurisdictional amount.” St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir.
1998). To establish the jurisdictional amount, the district court (a) “must first examine the complaint
to determine whether it is ‘facially apparent’ that the claims exceed the jurisdictional amount” or (b)
“rely on ‘summary judgment-type’ evidence to ascertain the amount in controversy.” Id.
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Here, Delgado did not specify the amount of damages he was individually seeking after the
claims were severed. Therefore, the amount in controversy must be shown by a preponderance of
the evidence.
Regardless of which party had the burden, both parties would fail. Allstate did not produce
evidence that establishes the actual amount in controversy exceeds the jurisdictional amount. Even
if Delgado had the burden to prove the amount in controversy exceeded the jurisdictional amount,
Delgado would also fail.
Delgado relies on Bates v. Laminack, 938 F. Supp. 2d 649, for the
proposition that the $11,700 specified in the pre-suit notice letter exceeds the jurisdictional amount.
Id. at 4. Further, Delgado argues that after additional discovery, Delgado has retained an expert that
will establish actual damages of $35,585.29. Id. at 5. Delgado alleges that trebling this estimated
amount alone meets the jurisdictional amount. Id.
Delgado misconstrues the Bates’ court’s holding. The Bates court held that when a plaintiff’s
good faith allegation supports the required amount, a defendant must show to a legal certainty that
a plaintiff cannot actually meet that threshold. 938 F. Supp. 2d at 654. Here, Delgado did not file
an amended complaint, as such, there is no good faith allegation that supports the required amount.
Further, while Delgado states he has retained an expert that will testify that Delgado suffered actual
damages of $35,585.29, Delgado did not attach any evidence to support this proposition. The court
has no basis for which to conclude that Delgado’s claim exceeds the jurisdictional requirement.
Finally, it is irrelevant that the plaintiff has never contested the federal court’s jurisdiction.
Giannakos v. M/V Bravo Trader, 762 F.2d 1295, 1297 (5th Cir. 1985) (“The question of subject
matter jurisdiction can never be waived. Nor can jurisdiction be conferred by conduct or consent
of the parties.”)
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C.
Effect of post-removal severance on jurisdiction
Third, Allstate argues that the Magistrate Judge erred when she concluded that post-removal
severance can destroy federal jurisdiction and when she disregarded the general rule that the court
looks to the jurisdictional facts at the time of removal to determine whether the court has
jurisdiction. Dkt. 29 at 3.
Allstate is correct that in general, post-removal severance does not destroy federal court
jurisdiction because the amount of controversy is determined at filing. However, when claims have
been improperly joined, the claims must be remanded if they do not meet the jurisdictional amount.
See Accardo v. Lafayette Ins. Co., No. CIV.A. 06-8568, 2007 WL 325368, (E.D. La. Jan. 30, 2007)
(remanding the severed claims of plaintiffs that did not meet the jurisdictional amount); see also
Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996), abrogated on other grounds,
Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000) (holding that the misjoinder of plaintiffs
may be as fraudulent as the misjoinder of defendants to circumvent diversity jurisdiction); In re
Benjamin Moore & Co., 309 F.3d 296, 298 (5th Cir.2002) (“[I]t might be concluded that misjoinder
of plaintiffs should not be allowed to defeat diversity jurisdiction.”) (citing Tapscott ). Here, the
Magistrate Judge found that the claims were improperly joined and severed them. Because
Delgado’s remaining claim does not meet the amount in controversy, it must be remanded to state
court.
Allstate also argues that the Magistrate Judge misstates the proposition for which she cited
Louisiana v. American Nat. Property Cas. Co., 746 F.3d 633. Id. Allstate argues that Louisiana
stands for the “proposition that a post-removal severance based on improper joinder does not destroy
federal court jurisdiction.” Id. at 6–7. Like the Magistrate Judge, the court finds Louisiana
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distinguishable because its jurisdictional analysis centers on the Class Action Fairness Act. As such,
the court does not have subject matter jurisdiction over Delgado’s severed claim.
IV.
CONCLUSION
Allstate and Delgado’s objections to the M&R (Dkts. 29, 32) are OVERRULED.
Accordingly, the M&R (Dkt. 28) is ADOPTED IN FULL and the action is REMANDED to the 281st
Judicial District Court of Harris County.
Signed at Houston, Texas on February 19, 2019.
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Gray H. Miller
Senior United States District Judge
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