Malpass v. State Farm Mutual Automobile Insurance Company

Filing 11

ORDER DENYING MOTION FOR REMAND, denying 5 Motion to Remand. Signed by Judge Stanley A Bastian. (LR, Case Administrator)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF WASHINGTON 8 9 CHRISTOPHER W. MALPASS, an No. 2:17-cv-00279-SAB 10 individual, 11 Plaintiff, ORDER DENYING MOTION 12 v. FOR REMAND 13 STATE FARM MUTUAL AUTOMBILE 14 INSURANCE COMPANY, Defendant. 15 16 Before the Court is Plaintiff’s Motion to Remand, ECF No. 5. A hearing on 17 18 the motion was held on October 12, 2017. Plaintiff was represented by John M. 19 Randolph. Defendant was represented by Laura Hawes Young. 20 BACKGROUND 21 Plaintiff was a passenger in a car accident in which he sustained serious 22 injuries. The driver of the car had an insurance limit of $25,000. Plaintiff settled 23 with the driver’s insurance company. The driver of the car that hit them and was 24 subsequently determined to be the most at fault did not have insurance. Plaintiff 25 sought uninsured motorist benefits from his own insurance company, Defendant 26 State Farm Automobile Insurance Company. It denied the claim, believing that the 27 value of Plaintiff’s claim was covered by the amount of the settlement he received. 28 // ORDER DENYING MOTION FOR REMAND ~ 1 Plaintiff sued Defendant in Spokane County Superior Court, alleging a 1 2 breach of contract claim and a bad faith claim. Defendant removed this action to 3 the Eastern District of Washington, citing diversity jurisdiction. Defendant is 4 incorporated in Illinois and its principal place of business is Illinois. Although the 5 amount of damages is not specified in the Complaint, Plaintiff is alleging general 6 and special damages, treble damages, and attorneys fees. He alleges he has 7 suffered serious injuries including broken bones, permanent scaring and 8 permanent damage to the range of motion in his finger. In March, 2017, Plaintiff’s counsel sent a letter to Defendant indicating his 9 10 willingness to settle with Defendant for $105,000. ECF No. 10, Ex. A. A second 11 letter was sent in May, 2017, reiterating a demand for $105,000. ECF No. 10, Ex. 12 B. In his reply to the Motion to Remand, Plaintiff indicated that he was willing to 13 accept $74,999 to resolve all claims including attorneys’ fees and extra contractual 14 claims. ECF No. 8-3. LEGAL STANDARD 15 16 17 A. Legal Standard 28 U.S.C. § 1441(a) permits a party to a civil action that is brought in state 18 court to remove the action to federal court if the district court would have had 19 original jurisdiction at the time of both commencement of the action and removal. 20 28 U.S.C. § 1332(a) provides that a district court shall have original 21 jurisdiction over all civil actions where: (1) the matter in controversy exceeds the 22 sum or value of $75,000, exclusive of interests and costs, and (2) the matter is 23 between citizens of different states. Where it is not facially evident from the 24 complaint that more than $75,000 is in controversy, the removing party must 25 prove, by a preponderance of the evidence, that the amount in controversy meets 26 the jurisdictional threshold. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 27 1089, 1090 (9th Cir. 2003). Where doubt regarding the right to removal exists, a 28 case should be remanded to state court. Id. The Court can consider facts presented ORDER DENYING MOTION FOR REMAND ~ 2 1 in the removal petitions as well as any “summary-judgment-type evidence relevant 2 to the amount in controversy at the time of removal.” Id. Conclusory allegations as 3 to the amount in controversy are insufficient. Subsection (c) provides that in the case of any direct action against the 4 5 insurer of a policy or contract of liability insurance, whether incorporate or 6 unincorporated, to which action the insured is not joined as a party-defendant, 7 such insurer shall be deemed a citizen of— 8 (A) every State and foreign state of which the insured is a citizen; 9 (B) every State and foreign state by which the insurer has been 10 incorporated; and (C) the State or foreign state where the insurer has its principal place of 11 12 business. 13 28 U.S.C. § 1332(c). ANALYSIS 14 Here, the Court finds that federal diversity jurisdiction exists in this case. 15 16 Defendants have established the amount in controversy by submitting the March, 17 2017 and May, 2017 demand letters, notwithstanding Plaintiff’s recent offer of 18 settlement. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) 19 (district court jurisdiction is not defeated where plaintiff reduces the claim below 20 the requisite amount by stipulation, affidavit, or amendment after removal) Moreover, Plaintiff’s claim is not a direct action against an insurer subject 21 22 to 28 U.S.C. § 1332(c). See Serles v. Cinncinnati Ins. Co., 998 F.2d 728, 729 (9th 23 Cir. 1993) (“[A] “first party” insurance action, or a suit by an insured against an 24 insurer, is not a “direct action.”); Beckham v. Safeco Ins., 691 F.2d 898, 902 25 (1982). Plaintiff is suing his own insurer for damages related to his UIM claim and 26 its alleged bad faith. As such, § 1332(c)(1) does not preclude diversity jurisdiction 27 in this case. 28 // ORDER DENYING MOTION FOR REMAND ~ 3 1 Also, it is well-established that subject matter jurisdiction of the district 2 court is not a waivable matter. Insur. Corp of Ireland, LTD v. Compagnie des 3 Bauxites de Guinee, 456 U.S. 694, 703 (1982) (“For example, no action of the 4 parties can confer subject-matter jurisdiction upon a federal court. Thus, the 5 consent of the parties is irrelevant.”). It follows then that the principles of estoppel 6 do not apply in determining whether federal subject matter jurisdiction exists. Am. 7 Fire & Causaulty Co. v. Finn, 341 U.S. 6, 17 (1951) (“The jurisdiction of the 8 federal courts is carefully guarded against expansion by judicial interpretation or 9 by prior action or consent of the parties.”). 10 Finally, the Court does not interpret Section 1b(1)1 of the Policy as a forum 11 selection clause. Rather, the clause indicates that a lawsuit must be filed, as 12 1 13 Deciding Fault and Amount 1. a. The insured and we must agree to the answers to the following two 14 questions: (1) Is the insured legally entitled to recover compensatory damages 15 from the owner or driver of the underinsured motor vehicle? 16 (2) If the answer to 1.a(a) above I yes, then what is the amount of compensatory damages that the insured is legally entitled to 17 recover from the owner or driver of the underinsured motor 18 vehicle? b. If there is no agreement on the answer to either question in 1.a above, 19 then the insured shall: 20 (1) file a lawsuit, in a state or federal court that has jurisdiction, 21 against: (a) us; and 22 (b) any other person or organization, including the owner or 23 driver of the underinsured motor vehicle, who may still be legally liable to the insured for the insured’s damages. 24 (2) consent to a jury trial if requested by us; 25 (3) agree that we may contest the issues of liability and the amount of damages; and 26 (4) secure a judgment in that action. The judgment must be the final 27 result of an actual trial and any appeal, if any appeals are taken. 28 ORDER DENYING MOTION FOR REMAND ~ 4 1 opposed to arbitration or mediation, but does not designate the specific court 2 where it must be filed. There is no language in the clause that suggests the dispute 3 is to be determined by the court of the insured’s choosing. 4 Because Defendant has met its burden of establishing the amount of 5 controversy by a preponderance of the evidence and the parties are citizens of 6 different states, the Court has subject matter jurisdiction to hear this case. 7 Accordingly, IT IS HEREBY ORDERED that: 8 1. 9 IT IS SO ORDERED. The Clerk of Court is directed to enter this Order Plaintiff’s Motion to Remand, ECF No. 5, is DENIED. 10 and forward copies to counsel. 11 DATED this 30th day of October 2017. 12 13 14 15 16 17 18 Stanley A. Bastian United States District Judge 19 20 21 22 23 24 25 26 27 28 ORDER DENYING MOTION FOR REMAND ~ 5

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