Noyola v. State Farm Lloyds
Filing
11
ORDER re: 5 Motion to Remand.(Signed by Judge Micaela Alvarez) Parties notified.(bgarces, )
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
CARLOS NOYOLA,
Plaintiff,
VS.
STATE FARM LLOYDS,
Defendant.
O
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§ CIVIL ACTION NO. 7:13-CV-146
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ORDER
Pending before the Court is the self-styled “Opposed Motion to Remand”1 filed by
Plaintiff Carlos Noyola (“Noyola”). Defendant State Farm Lloyds (“State Farm”) 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, Noyola filed suit in state court, asserting that State Farm had
violated the terms of a property insurance policy with regard to a hailstorm claim.3 State Farm
was served with citation on February 28, 2013, and filed its answer in state court on March 14,
2013.4 State Farm thereafter removed the case to this Court on March 28, 2013, asserting subject
matter jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1446.5
On April 29, 2013, Noyola 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. 5 (“Motion to Remand”).
Dkt. No. 9 (“Response”).
3
Dkt. No. 1, Attach. 2 at pp. 3-16 (“Petition”).
4
Dkt. No. 1, Attach. 2 at pp. 17-21.
5
Dkt. No. 1 (“Notice of Removal”).
2
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controversy. In response, State Farm 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, Plaintiff solely challenges
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. Plaintiff’s Statement of Damages
In his original petition, Noyola does not include a specific damages amount and instead
states that “[p]laintiff seeks damages, inclusive of attorney fees, in an amount not exceeding
$75,000.”9 In his motion to remand, Noyola heavily relies 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, and asserted by State Farm in its response, Noyola’s
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
11
28 U.S.C. § 1446(c)(2).
47 F.3d 1404, 1410 (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, after the date that the petition was filed
in this case.
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that, instead of pleading a 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;
(2) discovery documentation attached to the petition; and (3) Plaintiff’s non-responsiveness to
Defendant’s request to stipulate to an amount in controversy below the jurisdictional threshold.
Evidentiary Scope. Noyola challenges the propriety of the Court’s considering evidence
of his non-responsiveness to Defendant’s request to stipulate that the amount in controversy is
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) (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.
1995)) (considering removal under $50,000 jurisdictional threshold).
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less than $75,000.20 Therefore, as an initial matter, the Court addresses the scope of “summaryjudgment-type” evidence which may be considered in the analysis.21 First, it is unclear whether
Noyola’s non-responsiveness is accurately characterized as a post-removal document; Noyola
failed to respond to State Farm’s initial, pre-removal inquiry, and his responsive omission is not
reflected in any post-removal documentation.22
Moreover, because Noyola’s non-responsiveness bears on the value of the claim at the
time of removal, it qualifies as valid evidence even if characterized as a post-removal
submission. Citing to St. Paul Mercury Indemnity Co. v. Red Cab Co.,23 Noyola argues that
when determining the amount in controversy, the Court may only look at the record at the time
of removal, and nothing after the removal.24 While this principle is generally true, it is not
applicable where, as here, the plaintiff has ambiguously alleged the amount of damages. The
Fifth Circuit explained that “[u]nder those circumstances, the court is still examining the
jurisdictional facts as of the time the case is removed, but the court is considering information
submitted after removal.”25 Specifically, when “state court pleadings left jurisdiction ambiguous,
a post-removal affidavit violates no principle of [St. Paul Mercury].”26 Therefore, the Court will
consider this evidence, submitted by State Farm after removal, in order to determine the amount
in controversy as it existed at the time of removal.
20
See Motion to Remand at II(C).
Allen, 63 F.3d at 1336 (5th Cir. 1995).
22
See Response, Exh. A. In his declaration, Mark Lindow, counsel for State Farm, explains, and provides supporting
documentation of, his request on March 15, 2013, for a stipulation that the amount in controversy was not greater
than $74,999.99. However, Mr. Lindow further explained that Orlando Lopez, counsel for Noyola, did not even
respond to the stipulation request.
23
303 U.S. 283 (1938).
24
Motion to Remand at II.
25
Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de
Colombia S.A., 988 F.2d 559, 565 (5th Cir. 1993), abrogated on other grounds by Marathon Oil Co. v. Ruhrgas,
145 F.3d 211 (5th Cir. 1998).
26
H & D Tire & Automotive–Hardware, Inc. v. Pitney Bowes, Inc., 250 F.3d 302, 305 n.7 (5th Cir. 2001).
21
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Policy Limits. In determining the amount in controversy relative to coverage under an
insurance policy, the Fifth Circuit in St. Paul Reinsurance Co. v. Greenberg.,27 defined the
“object of the litigation” as the “value of the right to be protected.”28 State Farm first directs the
Court’s attention to the policy limits of the policy under which Noyola is bringing this action.
Those limits comprise $103,300.00 in dwelling coverage and $77,475.00 for contents coverage,
a combined total of $180,775.00.29 As a result, the insurance policy implicates an amount in
controversy well-above the jurisdictional threshold, and this policy forms the contractual basis
for Noyola’s breach of contract claim.
In Hartford Ins. Group v. Lou-Con Inc., however, the Fifth Circuit later specified that the
amount in controversy is more accurately reflected by the value of the claim.30 On this basis,
Noyola argues that his single, breach-of-contract claim indicates a lower amount in
controversy.31 This argument fails for two reasons. First, absent any limitation by Noyola, his
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
his original petition: (1) his selection of a discovery control plan which indicates both a larger
amount in controversy and a complexity beyond a mere contract dispute, consistent with
Noyola’s representation that “[t]his case involves complex issues and will require extensive
27
134 F.3d 1250 (5th Cir. 1998) (declaratory action).
Greenberg, 134 F.3d at 1253 (internal quotation marks and citation omitted).
29
See Response, Exh. A-2. The Court notes that the original petition requires the Court to aggregate the policy limits
for both dwelling and contents coverage. Paragraph 11 of the original petition provides: “Plaintiff 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].
30
293 F.3d 908, 911(5th Cir. 2002) (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.”) (internal quotation marks and citation omitted).
31
See Motion to Remand at II(B).
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discovery;”32 and (2) his discovery requests, incorporated into his original petition, for extracontractual information about State Farm’s operational policies since 2007.33 As a result, while
the breach-of-contract claim alone implicates an amount above the jurisdictional threshold,
Noyola’s pleading further implicates additional, extra-contractual claims.
At this point, the Court emphasizes the glaring absence of any damages-estimate by
Noyola. In determining where the amount in controversy falls within the policy-limits range, the
Court notes that neither party has submitted a demand letter or an estimate by Noyola. Combined
with Noyola’s vague, jurisdictionally-sensitive pleading of damages in his state-court 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.”34
At the time of removal, Noyola’s sole, legally-permissible indication of the amount in
controversy was his non-responsiveness to Defendant’s request to stipulate to an amount in
controversy below the jurisdictional threshold;35 this informed lack of response stands in contrast
to both the ignorant omissions of other remand-seeking plaintiffs who have appeared before the
Court, as well as prior affirmative refusals to stipulate by Plaintiff’s counsel in similarly-postured
cases before this Court. Under Fifth Circuit precedent, such a stipulation would establish with
legal certainty that the amount in controversy is jurisdictionally insufficient.36 Numerous other
32
See Petition at A. “Level 3”-discovery under Texas Rule of Civil Procedure 190.4, the level selected by Noyola, 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.
33
See, e.g., Petition at L(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 . . . .”).
34
Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985).
35
See fn. 22, supra.
36
De Aguilar II, 47 F.3d at 1412.
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district courts have considered a refusal to stipulate as a factor in determining the amount in
controversy, even when presented with significantly more amount-in-controversy indicia directly
from the plaintiff.37 Within the vacuum of Noyola’s relative silence, his lack of response carries
even greater resonance, and the Court finds it indicative that the amount in controversy likely
exceeds the jurisdictional threshold.
In light of the ambiguous pleading, the policy limits of $180,775.00, the claim directly
asserted in the petition and those implied by both the state-court discovery level and the attached
discovery requests, as well as Noyola’s lack of response to Defendant’s offer to stipulate that the
amount in controversy is below the jurisdictional threshold, the Court finds that State Farm 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 State Farm 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,
Noyola’s motion to remand is DENIED.
IT IS SO ORDERED.
DONE this 3rd day of July, 2013, in McAllen, Texas.
_______________________________
Micaela Alvarez
UNITED STATES DISTRICT JUDGE
37
See, e.g., Johnson v. Dillard Dept. Stores, Inc., 836 F. Supp. 390, 394 (N.D. Tex. 1993) (treating refusal to
stipulate to damages below threshold as a factor in favor of denying remand, but insufficient by itself); Cox v.
Liberty Mut. and Credit Collection Servs., Civ. No. 3:10-CV-1956-M, 2011 WL 98374, at *3 (N.D. Tex. Jan. 12,
2011) (considering refusal to stipulate insufficient basis to deny remand when combined with specific and
undisputed economic damages of $348).
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