Young Electric Sign Company v. Hartford Casualty Insurance
Filing
17
MEMORANDUM DECISION granting 6 Motion to Remand to State Court. Case Closed. Signed by Judge David Nuffer on 05/23/2013. (asp)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
YOUNG ELECTRIC SIGN COMPANY,
INC.,
MEMORANDUM DECISION
AND ORDER TO REMAND
Plaintiff,
v.
Case No. 2:13-CV-120 DN
HARTFORD CASUALTY INSURANCE
COMPANY,
District Judge David Nuffer
Defendant.
Plaintiff has filed a Motion to Remand 1 seeking an order remanding this proceeding to
state court. Having considered the submissions of both parties, the court concludes that the
motion should be granted and the case should be remanded because this court lacks subject
matter jurisdiction.
BACKGROUND
Plaintiff Young Electric Sign Company, Inc. (YESCO) filed suit in the Third Judicial
District Court for Salt Lake County in the State of Utah against Defendant Hartford Casualty
Insurance Company (Hartford) on January 10, 2103. YESCO alleged a failure to defend and
indemnify YESCO under a commercial general liability insurance policy in a suit filed in
Maricopa County, Arizona by Liberty Mutual Insurance Company, a subrogee insurer, for wind
damage to a McDonald’s sign maintained by YESCO. 2 On February 15, 2013, Hartford filed a
Notice of Removal based on diversity of citizenship pursuant to 28 U.S.C. § 1441.
1
YESCO’s Motion to Remand, docket no. 6, filed Mar. 19, 2013.
2
Notice of Removal to U.S. District Court, docket no. 2, filed Feb. 15, 2013.
At issue is whether there exists an amount in controversy exceeding the $75,000
minimum required by 28 U.S.C. § 1332(a). In its Notice of Removal, Hartford claims that the
amount in controversy is over $300,000 because YESCO stated in its Complaint that “[t]his is a
‘Tier 3’ case for purposes of discovery pursuant to Utah Rule of Civil Procedure 26(c)(3).” 3
Under the Utah discovery rules, “[a]ctions claiming $300,000 or more in damages” qualify for
Tier 3 discovery. 4 YESCO’s complaint asks for “damages in the amount of $33,659.08,
representing the attorney fees and settlement cost of the Liberty Mutual Lawsuit.” 5 YESCO
also seeks attorneys’ fees and costs incurred in this litigation as well as punitive damages and
interest. 6
ANALYSIS
In this case, the question is whether YESCO’s plead damages constitute the amount in
controversy, or if its discovery-tier designation can be read in place of its listed damages as
asserted by Hartford in its Notice of Removal. 7 Generally, “the sum demanded in good faith in
the initial pleading shall be deemed to be the amount in controversy.” 8 However, “the notice of
removal may assert the amount in controversy if the initial pleading seeks— (i) nonmonetary
relief; or (ii) a money judgment, but the State practice either does not permit demand for a
specific sum or permits recovery of damages in excess of the amount demanded.” 9
YESCO’s complaint clearly does not seek nonmonetary relief, and there is no evidence of
a practice of the State of Utah that does not permit demand for a specific sum or would grant
3
Complaint, ¶ 4, docket no. 2-1, filed Feb. 15, 2013, see Notice of Removal ¶ 8.
4
Utah R. Civ. P. 26(c)(3).
5
Complaint ¶ A.
6
Id. at 10.
7
Notice of Removal.
8
28 U.S.C. § 1446(c)(2).
9
28 U.S.C. § 1446(c)(2)(A)–(A)(ii).
2
YESCO damages in excess of what it has requested. YESCO’s complaint does leave several
demands for relief open for necessary future determination including attorneys’ fees, interest,
and punitive damages. 10 This does not evidence a state practice that would grant YESCO
damages in excess of these requests; it simply leaves the exact amounts of these requests to be
determined at trial and after judgment.
Given that YESCO’s complaint requests both specific and unspecific money damages,
Hartford bears the burden to demonstrate the jurisdictional prerequisite of the amount in
controversy is satisfied by “‘affirmatively establish[ing]’ in the petition that the amount in
controversy exceeds the statutory requirement.” 11 Hartford must affirmatively establish
jurisdiction by proving judicial facts beyond a preponderance of the evidence that made it
possible that $75,000 was in play. 12 “[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.” 13
It is clear that YESCO’s pleadings reflect an amount in controversy of $33,659.08, plus
additional fees, costs, and punitive damages to be determined in the future. Hartford relies on
YESCO’s discovery tier designation which requires that $300,000 be at controversy among all
the parties to assert that the amount in controversy therefore must be greater than $75,000.
Furthermore, YESCO argues that the discovery-tier designation is not reflective of their
own claim for relief, but a guess at all of the potential damages that may be claimed by all of the
10
Complaint at 10.
11
McPhail v. Deere & Co., 529 F.3d 947, 955 (10th Cir. 2008) (citing Laughlin v. Kmart Corp., 50 F.3d 871, 873
(10th Cir. 1995)).
12
See Id.
13
Id. (citing Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 541–42; Manguno v. Prudential Prop. & Cas. Ins.
Co., 276 F.3d 720, 723 (5th Cir. 2002)).
3
parties that may be included in the action, including adverse parties. 14 The plaintiff is forced to
guess at the amount of damages that all involved parties will claim because “the total amount of
damages that all parties, including adverse parties, will claim in their original pleadings is
unknown when the plaintiff files the complaint.” 15 Damages in Utah’s tiered discovery
designations are defined as follows: “For purposes of determining standard discovery, the
amount of damages includes the total of all monetary damages sought (without duplication for
alternative theories) by all parties in all claims for relief in the original pleadings.” 16
Hartford not only seeks to replace YESCO’s claim for relief with a claim for a discovery
system, it seeks to replace the damages claim with a discovery system built upon total damages
to be sought by all parties, not just the plaintiff. Regardless of YESCO’s claim to a state
discovery system or whether that classification is properly claimed under the rules of the State of
Utah, YESCO has plead damages that fall short of the amount in controversy required by 28
U.S.C. § 1332(a).
Because federal jurisdiction is improper, this court does not address the issues of state
issues of first impression, nor the admissibility or value of Hartford’s evidence of settlement
negotiations.
14
YESCO’s Memorandum in Support of Motion to Remand at 7, filed Mar. 19, 2013.
15
Id.
16
Utah R. Civ. P. 26(c)(4).
4
ORDER
IT IS HEREBY ORDERED that YESCO’s Motion to Remand 17 is GRANTED.
Signed May 23, 2013.
BY THE COURT
________________________________________
District Judge David Nuffer
17
YESCO’s Motion to Remand, docket no. 6, filed Mar. 19, 2013.
5
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