Garcia et al v. Geovera Specialty Insurance Company

Filing 9

ORDER re: 7 Motion to Remand.(Signed by Judge Micaela Alvarez) Parties notified.(bgarces, )

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
SAMUEL GARCIA, et al,
Plaintiffs,
VS.
GEOVERA SPECIALTY INSURANCE
COMPANY,
Defendant.

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§ CIVIL ACTION NO. 7:13-CV-114
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ORDER
Pending before the Court is the self-styled “Motion to Remand”1 filed by Plaintiffs
Samuel and Marisela Garcia (collectively, “Plaintiffs”). Defendant Geovera Specialty Insurance
Company (“Geovera”) has filed a response in opposition (“Response”).2 After considering the
motion, response, record, and relevant authorities, the Court DENIES the motion to remand.
I. BACKGROUND
On February 10, 2013, Plaintiffs filed suit in state court, asserting that Geovera had
violated the terms of a property insurance policy with regard to a hailstorm claim.3 Geovera was
served with citation on or about February 15, 2013, and filed its answer in state court on March
5, 2013.4 Geovera thereafter removed the case to this Court on March 12, 2013, asserting subject
matter jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1446.5
On April 11, 2013, Plaintiffs filed the instant motion to remand, asserting that the
requirements of diversity jurisdiction were not satisfied due to an insufficient amount in

1

Dkt. No. 7 (“Motion to Remand”).
Dkt. No. 8 (“Response”).
3
Dkt. No. 1, Attach. 3 (“Petition”).
4
Dkt. No. 1, Attach. 5.
5
Dkt. No. 1 (“Notice of Removal”).
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controversy. In response, Geovera expounded upon its removal position, specifically that the
amount in controversy exceeds the jurisdictional threshold.
II. DISCUSSION
Section 1332 of Title 28 of the United States Code provides that the Court has original
jurisdiction of an action where “the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs, and is between (1) citizens of different states . . . .”6 Neither party
disputes that the diversity-of-citizenship requirement is met. Instead, Plaintiffs solely challenge
the sufficiency of the amount in controversy.
Consistent with the sensitivity to the federalism concerns raised by removal,7 the Court
strictly construes the removal statute and “any doubt as to the propriety of removal should be
resolved in favor of remand.”8 Recent revisions to 28 U.S.C. § 1446 now provide the primary
framework for the Court’s analysis, which was previously guided by case law. Nevertheless, the
statutory provisions are largely consistent with pre-revision precedent, and the Court therefore
looks to that precedent where the statute is silent.
A. Plaintiffs’ Statement of Damages
In his original petition, Plaintiffs do not include a specific damages amount and instead
states that “[p]laintiffs seek damages, inclusive of attorney fees, in an amount not exceeding
$75,000.”9 In their motion to remand, Plaintiffs heavily rely upon this representation.10 Under
§ 1446(c)(2), where removal is sought on the basis of diversity under §1332, “the sum demanded

6

28 U.S.C. 1332(a)(1); In re 1994 Exxon Chemical Fire, 558 F.3d 378, 387 (5th Cir. 2009).
Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir. 1995) (citing Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 804, 809 (1986)).
8
Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (quoting In re Hot-Hed, Inc., 477 F.3d 320, 323 (5th Cir.
2007) (internal quotations omitted).
9
Petition at ¶ 23.
10
See Motion to Remand at II(A).
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in good faith in the initial pleading shall be deemed to be the amount in controversy . . . .”11 The
good-faith requirement for a controlling amount in controversy is consistent with Fifth Circuit
precedent in De Aguilar v. Boeing Co. (“De Aguilar II”), which noted that “the [amount-incontroversy] inquiry, however, does not end merely because the plaintiff alleges damages below
the threshold. The face of the plaintiff's pleading will not control if made in bad faith.”

12

In

addition to the good-faith requirement, the statute also provides that the demand in the pleading
will not control if “the State practice . . . does not permit demand for a specific sum . . . .”13
Notably, while § 1446 speaks to the violation of a specific-damages prohibition as an exception,
but is largely silent about the determination of bad faith,14 the De Aguilar II Court recognized the
former as evidencing the latter, writing:
These new [state-law] rules [prohibiting plaintiffs “from pleading for specific
amounts in cases of unliquidated damages”] have created the potential for abusive
manipulation by plaintiffs, who may plead for damages below the jurisdictional
amount in state court with the knowledge that the claim is actually worth more,
but also with the knowledge that they may be able to evade federal jurisdiction by
virtue of the pleading. Such manipulation is surely characterized as bad faith.15
As recognized by the De Aguilar II Court, Plaintiffs’ allegations violated Texas law, which
prohibited plaintiffs from alleging a specific dollar amount of damages at the time the petition
was filed.16 These considerations inform the Court’s opinion that, instead of pleading a

11

28 U.S.C. § 1446(c)(2).
47 F.3d 1404, 1408 (5th Cir. 1995).
13
28 U.S.C. § 1446(c)(2)(A)(ii).
14
The Court recognizes that the statute describes one scenario where an act is deemed bad faith, but the statute
neither describes that scenario as exclusive, nor provides any other rubric for bad-faith determination. See 28
U.S.C. §1446(c)(3)(B) (providing that “[i]f the notice of removal is filed more than 1 year after commencement of
the action and the district court finds that the plaintiff deliberately failed to disclose the actual amount in
controversy to prevent removal, that finding shall be deemed bad faith under paragraph (1).”).
15
De Aguilar II, 47 F.3d at 1410.
16
See TEX. R. CIV. P. 47(b) (“An original pleading which sets forth a claim for relief . . . shall contain . . . in all
claims for unliquidated damages only the statement that the damages sought are within the jurisdictional limits of
the court . . . .”). See also De Aguilar II, 47 F.3d at 1412 (quoting Rule 47(b) and describing violation through
plaintiffs’ allegation of specific damages). Although Rule 47(b) has since been revised to allow greater specificity
of damages pleading, the revisions were only effective on March 1, 2013, well after the date that the petition was
filed in this case.
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legitimate estimation of damages in this case, “[a]s a functional matter, plaintiff[] [is] attempting
to avoid federal jurisdiction.”17 As a result, the allegations fall within the statutory exception and
precedential definition of “bad faith,” and the Court finds that the amount demanded in the
complaint does not control the analysis.
B. Defendant’s Showing of Damages
In the event that the initial pleading does not control, § 1446(c)(2)(B) provides that
removal is proper where a sufficient amount in controversy is supported by a preponderance of
the evidence.18 The statute, however, does not define the preponderance-of-the-evidence
standard in this specific context and, again, the Court turns to pre-codification precedent.
Describing the preponderance-of-the-evidence showing for the amount in controversy, the Fifth
Circuit in St. Paul Reinsurance Co., Ltd. v. Greenberg wrote that “[t]he test is whether it is more
likely than not that the amount of the claim will exceed [the jurisdictional threshold].”19
Accordingly, the Court begins its analysis by considering whether Defendant’s evidence supports
a finding that the amount in controversy will “more likely than not” exceed the jurisdictional
threshold.
As support for removal, Defendant provides the following evidence: (1) policy limits
and (2) discovery documentation attached to the petition.
Policy Limits. In determining the amount in controversy relative to coverage under an
insurance policy, the Fifth Circuit in Harford Ins. Group v. Lou-Con, Inc.,20 defined the “object

17

De Aguilar II, 47 F.3d at 1408.
28 U.S.C. § 1446(c)(2)(B) (providing that “removal of the action is proper on the basis of an amount in
controversy asserted under subparagraph (A) if the district court finds, by the preponderance of the evidence, that
the amount in controversy exceeds the amount specified in section 1332(a).”).
19
134 F.3d 1250, 1254, n.13 (5th Cir. 1998) (considering removal under $50,000 jurisdictional threshold) (citing
Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995)).
20
293 F.3d 908 (5th Cir. 2002) (declaratory action).
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of the litigation” as the “value of the right to be protected.”21 Geovera first directs the Court’s
attention to the monetary limits of the policy under which Plaintiffs are bringing this action.22
Those limits comprise $132,000.00 in dwelling coverage, $13,200.00 in other-structures
coverage, and $66,000.00 in personal-property coverage, and $26,400.00 in loss-of-use
coverage; a combined total of $237,600.00.23 As a result, the insurance policy implicates an
amount in controversy well-above the jurisdictional threshold, and this policy forms the
contractual basis for Plaintiffs’ breach of contract claim.
The Hartford Court went on, however, to specify that the amount in controversy is more
accurately reflected by the value of the claim.24 On this basis, Plaintiffs argue that their single,
breach-of-contract claim indicates a lower amount in controversy.25 This argument fails for two
reasons. First, absent any limitation by Plaintiffs, the breach-of-contract claim facially implicates
the limits of the policy which forms the basis of the claim. Second, this nominal assertion of a
breach-of-contract claim is belied by two aspects of Plaintiffs’ original petition: (1) Plaintiffs’
selection of a discovery control plan which indicates both a larger amount in controversy and a
complexity beyond a mere contract dispute, consistent with Plaintiffs’ representation that “[t]his
case involves complex issues and will involve extensive discovery;”26 and (2) Plaintiffs’
discovery requests, incorporated into the original petition, for extra-contractual information

21

Hartford, 293 F.3d at 911.
See Notice of Removal at ¶ 9; see also Response at ¶ 9.
23
Dkt. No. 1, Attach. 1. The Court notes that the original petition requires the Court to aggregate the policy limits
for all coverage types. Paragraph 11 of the original petition provides: “Plaintiffs asked that Defendant cover the
cost of repairs to the Property pursuant to the Policy and any other available coverages under the Policy.”
[emphasis added].
24
Hartford, 293 F.3d at 911(holding that, where the claim involves the applicability of the insurance policy to a
particular occurrence, “the jurisdictional amount in controversy is measured by the value of the underlying
claim.”).
25
See Motion to Remand at II(C).
26
See Petition at A. “Level 3”-discovery under Texas Rule of Civil Procedure 190.4, the level selected by Plaintiffs,
is designed for complex cases involving greater damages and discovery than could be easily accommodated by the
lower-level discovery control plans. In contrast, “Level 1”-discovery under Rule 190.2 is designed for cases
involving monetary relief of $50,000 or less, and presumptively lower amounts of oral depositions.
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about Geovera’s operational policies since 2007.27 As a result, while the breach-of-contract claim
alone implicates an amount above the jurisdictional threshold, Plaintiffs’ pleading further
implicates additional, extra-contractual claims.
Plaintiffs also attempt to establish a lower amount in controversy by citing to Geovera’s
estimate of damages.28 In the first instance, the estimate is based on an inspection conducted on
December 7, 2012, two months prior to the filing of the original petition;29 this removal in time
diminishes its evidentiary value regarding the amount in controversy “at the time of removal.”30
Moreover, Plaintiffs reinforce the Court’s concern about the estimate’s accuracy, expressly
alleging in the original petition that “Defendant’s adjuster and Defendant failed to properly
adjust the claims and Defendant has denied at least a portion of the claims without an adequate
investigation.”31 Plaintiffs’ disagreement with the estimate further reveals that their argument
misapprehends the concept of “amount in controversy.” While jurisprudence has refined and
qualified its application in different contexts, the idea fundamentally embodies the amount about
which the parties disagree, i.e. the “object of the litigation” or the “value of the right to be
protected.”32 At most, the Defendant’s estimate only sets the lower limit of any potential amount
in controversy because, presumably, no controversy would exist if Plaintiffs agreed with the
Defendant’s estimate. Therefore, the amount in controversy is book-ended by the Defendant’s
estimate of $5,395.57 and the policy limits of $237,600.00, a range of fully $232,204.43.

27

See, e.g., Petition at I(5) (“Your written procedures or policies (including document(s) maintained in electronic
form) that pertain to the handling of windstorm and hail claims in Texas from February 10, 2007 to present . . . .”)
& (6) (“Your written procedures or policies (including document(s) maintained in electronic form) in place from
February 10, 2007 to present that pertain to the handling of complaints made by policyholders in Texas . . . .”).
28
Motion to Remand at II(B) (citing to Exhibit B).
29
See Motion to Remand, Exhibit B.
30
See Lee v. Empire Ins., et al, 2009 WL 2160437 (E.D. La. 2009) (disregarding estimate as not reflective of the
amount in controversy “at the time of removal” since it was made nine months after the original complaint was
filed).
31
Petition at ¶ 14.
32
Hartford, 293 F.3d at 911 (emphasis added).

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At this point, the Court emphasizes the glaring absence of any damages-estimate by
Plaintiffs. In determining where the amount in controversy falls within the above range, the
Court notes that neither party has submitted a demand letter or an estimate by Plaintiffs.
Combined with Plaintiffs’ vague, jurisdictionally-sensitive pleading of damages in their statecourt petition, this apparent avoidance of any affirmative statement of damages reeks of the
“abusive manipulation” rejected by the De Aguilar II Court, a hide-the-ball chicanery that is the
type of “tactical manipulation” which the Fifth Circuit previously cautioned “cannot . . . be
condoned.”33
In light of the ambiguous pleading, the policy limits of $237,600.00, the claim directly
asserted in the petition and those implied by both the state-court discovery level and the attached
discovery requests, the Court finds that Geovera has shown it is more likely than not that the
amount in controversy is in excess of $75,000.
III.

CONCLUSION
For the foregoing reasons, the Court finds that Geovera has established a jurisdictionally-

sufficient amount in controversy by a preponderance of the evidence. The statutory requirements
for the Court’s subject matter jurisdiction are satisfied and, accordingly, Plaintiffs’ motion to
remand is DENIED.
IT IS SO ORDERED.
DONE this 10th day of May, 2013, in McAllen, Texas.

_______________________________
Micaela Alvarez
UNITED STATES DISTRICT JUDGE
33

Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985).

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