Perilli v. Nationwide Mutual Insurance Company
Filing
62
MEMORANDUM OPINION AND ORDER GRANTING 40 Plaintiff's Motion to Remand; denying without prejudice to being brought before the state court: 37 Motion to Bifurcate, 28 Motion for Summary Judgment, and 32 Motion in Limine. This case is DISMISSED and STRICKEN from the active docket of this court. Clerk directed to enter judgment. Signed by Senior Judge Frederick P. Stamp, Jr on 6/17/11. (c to Circuit Court of Ohio County) (cc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
SILVIO PERILLI and RHODA PERILLI,
Plaintiffs,
v.
Civil Action No. 5:10CV56
(STAMP)
NATIONWIDE MUTUAL INSURANCE COMPANY,
Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFFS’ MOTION TO REMAND
I.
Procedural History
The plaintiffs commenced this civil action in the Circuit
Court of Ohio County, West Virginia to recover damages as a result
of the defendant’s alleged improper handling of their underlying
uninsured motorist (“UM”) claim.
The accident giving rise to the
plaintiffs’ underlying UM claim occurred on February 4, 2006 in
Wheeling, West Virginia when, allegedly, Leslie M. Chuderwiez
negligently collided with the plaintiffs’ vehicle, causing serious
permanent injuries.
After settling the underlying claim, the
plaintiffs brought this first-party bad faith suit against their
automobile
insurer,
Nationwide
Mutual
Insurance
Company
(“Nationwide”), alleging that Nationwide improperly handled the UM
claim, which forced the plaintiffs to file the underlying suit.
The complaint includes the following causes of action: (1) common
law claim misconduct; (2) violations of the West Virginia Unfair
Trade Practices Act (“WVUTPA”); (3) breach of contract; (4) breach
of the implied covenant of good faith and fair dealing; and (5)
violation of fiduciary duty.
The complaint further alleges that
the plaintiffs are entitled to punitive damages and that they
substantially prevailed in the underlying suit.
On May 21, 2010, the defendant removed the case to this Court
pursuant to 28 U.S.C. § 1332, asserting that complete diversity of
citizenship
exists
and
that
the
potential
judgment,
if
the
plaintiffs were to prevail on the merits of the case, exceeds
$75,000.00, exclusive of interest and costs.
Since the time of
removal, the parties have conducted significant discovery and, more
recently, filed and briefed numerous motions, including a motion
for summary judgment, a motion in limine, and a motion to bifurcate
the punitive damages portion of the trial.
On June 13, 2011, over
a year after this case was removed, fifteen days before trial was
scheduled to begin, and the day of the pretrial conference, the
plaintiffs filed a motion to remand asserting, for the first time,
that the defendants have failed to establish that the amount in
controversy exceeds the jurisdictional amount.
At the pretrial
conference held on June 13, 2011, this Court set a consolidated
briefing schedule for the motion to remand. The plaintiffs’ motion
to remand is now fully briefed and is pending before this Court.
For the reasons set forth below, the plaintiffs’ motion to remand
is granted.
2
II.
Facts
Shortly after the February 4, 2006 accident, Nationwide became
aware
of
the
plaintiffs’
claims
against
Ms.
Chuderwiez
and
inspected and appraised the property damage to the plaintiffs’
vehicle.
After
confirming
the
liability
of
Ms.
Chuderwiez,
Nationwide contacted the purported liability insurer, GEICO.
On
February 23, 2006, Nationwide learned that Ms. Chuderwiez was not
insured
by
GEICO
at
the
time
of
Nationwide opened a UM claim.
Nationwide
sent
multiple
the
accident.
Therefore,
Over the next several months,
requests
for
medical
information
to
plaintiffs’ counsel, but received no response until February 5,
2007. Nationwide and the plaintiffs exchanged settlement offers up
until the time when the plaintiffs filed the underlying suit. When
the parties met for mediation, the plaintiffs provided additional
medical bills and records related to the accident. Based upon this
new information, the parties agree to settle the underlying suit
for $50,000.00.
Prior to the eventual settlement, and despite liability being
clear, the plaintiffs allege that Nationwide wrongfully denied them
their UM vehicle insurance policy benefits.
Specifically, the
plaintiffs contend that Nationwide repeatedly denied their numerous
demands to settle their claim for the UM vehicle insurance policy
benefits.
According to the plaintiffs, because Nationwide refused
to timely settle the UM claim, they were required to hire an
3
attorney to file the underlying lawsuit.
The plaintiffs further
argue that Nationwide was in possession of evidence proving that
the value of the UM claim exceeded its settlement offers, yet
Nationwide failed to negotiate in good faith and delayed in
honoring the claim and settling the case.
III.
Applicable Law
A defendant may remove a case from state court to federal
court in instances where the federal court is able to exercise
original jurisdiction over the matter.
28 U.S.C. § 1441.
Federal
courts have original jurisdiction over primarily two types of
cases: (1) those involving federal questions under 28 U.S.C.
§ 1331, and (2) those involving citizens of different states where
the
amount
in
controversy
exceeds
$75,000.00,
exclusive
interests and costs pursuant to 28 U.S.C. § 1332(a).
of
As has been
often stated, the party seeking removal bears the burden of
establishing
federal
jurisdiction.
See
Mulcahey
v.
Columbia
Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994).
Removal
jurisdiction
is
strictly
construed,
and
if
jurisdiction is doubtful, the federal court must remand.
federal
Id.
Importantly, a motion to remand based upon lack of subject
matter jurisdiction may be raised “at any time before final
judgment.” 28 U.S.C. § 1447(c); Fed. R. Civ. P. 12(h)(3); see State
v. Ivory, 906 F.2d 999, 1000 n.1 (4th Cir. 1990).
Indeed, defects
in subject matter jurisdiction can even be raised for the first
4
time on appeal.
(1951).
See Am. Fire & Cas. Co. v. Finn, 341 U.S. 6, 17-18
However, the court is limited to a consideration of facts
on the record at the time of removal.
See Lowrey v. Alabama Power
Co., 483 F.3d 1184, 1213-15 (11th Cir. 2007) (stating that in
assessing whether removal was proper, the district court has before
it only the limited universe of evidence available when the motion
to remand is filed).
IV.
Discussion
In their motion to remand, the plaintiffs contend that federal
jurisdiction is lacking because the defendants have failed to
establish
that
the
amount
in
controversy
exceeds
$75,000.00,
exclusive of interest and costs. The plaintiffs highlight the fact
that the ad damnum clause of their complaint demanded judgment
against the defendants in excess of the minimum jurisdictional
limit of the Circuit Court of Ohio County, West Virginia, which is
far less than $75,000.00.
The plaintiffs also note that prior to
the filing of the complaint, they did not make a demand for an
amount equal to or in excess of $75,000.00.
Moreover, at the time
of removal, the defendant had made no settlement offers, let alone
an offer in excess of the amount in controversy requirement.
The
plaintiffs contend that the defendant has relied upon speculation
rather than facts, and thus it has not met its burden of proof with
regard to the amount in controversy.
5
In response, the defendant argues that it has met its burden
of
proving
that
the
jurisdictional amount.
amount
in
controversy
exceeds
the
In support of its position, the defendant
states that because the plaintiffs failed to allege a specific
amount of damages, the court
may consider the complaint, as well
as the removal notice and other relevant materials in the file when
conducting its inquiry as to whether the amount in controversy is
satisfied.
If this Court considers the potential recovery of
attorney’s fees and punitive damages in conjunction with the amount
of the underlying settlement, the defendant argues that the amount
in controversy in this action exceeds $75,000.00, exclusive of
interest and costs.1
The burden of establishing that the amount in controversy
exceeds $75,000.00, exclusive of interests and costs, rests with
the party seeking removal.
Mulcahey, 29 F.3d at 151.
This Court
has consistently applied the “preponderance of evidence” standard
to determine whether a defendant has met its burden of proving the
amount in controversy.
When no specific amount of damages is set
forth in the complaint, the defendant bears the burden of proving
that the claim meets the requisite jurisdictional amount.
1
Mullins
The defendant reaches this conclusion by adding the principal
amount of the underlying attorney’s fees claims ($22,500.00), the
litigation costs and interest from the date of the underlying
accident ($12,500.00), and the estimated amount of a jury award for
compensatory damages, which the defendant argues could exceed
$40,000.00.
6
v. Harry’s Mobile Homes, Inc., 861 F. Supp. 22, 23 (S.D. W. Va.
1994).
In such circumstances, the court may consider the entire
record before it and may conduct its own independent inquiry to
determine
whether
the
jurisdictional minimum.
amount
in
controversy
satisfies
the
Id.
After careful consideration of the record in this case, this
Court must find that the defendant has not met its burden of proof
with regard to the amount in controversy. “The defendant’s removal
cannot be based on speculation; rather, it must be based on facts
as they exist at the time of removal.”
Marshall v. Kimble, No.
5:10CV127, 2011 WL 43034, at *3 (N.D. W. Va. Jan. 6, 2011) (citing
Varela v. Wal-Mart Stores, East, Inc., 86 F. Supp. 2d 1109, 1110-11
(D.N.M. 2000)).
In this case, the defendant’s contention that the
plaintiffs could possibly recover an award in excess of $75,000.00
is speculation.
Even if this Court uses the $50,000.00 underlying
settlement as a “guidepost” for bad faith damages, as the defendant
suggests, it does not follow that a damage judgment in this case
will be in excess of $75,000.00.
As this Court has previously
stated in other cases, “the mere likelihood of punitive damages,
without
more,
does
not
give
rise
to
federal
jurisdiction.”
Fahnestock v. Cunningham, No. 5:10CV89, 2011 WL 1831596, at *2
(N.D. W. Va.) (citing Landmark Corp. v. Apogee Coal Co., 945 F.
Supp. 932, 938 (S.D. W. Va. 1996)).
7
Here, the defendant has offered no competent proof or tangible
evidence
that
the
amount
in
controversy
exclusive of interests and costs.
exceeds
$75,000.00,
The notice of removal does not
include any documents, affidavits or evidence in support of the
defendant’s damages calculations. Considering all of the evidence,
this
Court
finds
that
the
defendant
has
not
shown
by
a
preponderance of the evidence that the plaintiffs will recover
damages in excess of the jurisdictional minimum.
Given the thirteen-month delay in moving for remand, it is
perhaps understandable that the defendant characterizes the motion
to remand as “a thinly veiled effort to avoid the June 28 trial
date in this action.”
delay
does
not
waive
(Def.’s Resp. to Mot. to Remand 9.)
the
plaintiffs’
challenge
to
This
federal
jurisdiction, even though it is inconvenient for both the parties
and this Court given the late stage of these proceedings and the
quickly approaching trial date.
This Court agrees with the
sentiments of the Honorable Richard Allen Posner, who discussed a
similar delayed jurisdictional challenge in a Seventh Circuit Court
of Appeals case:
It may have been reprehensible of [the plaintiffs] to
delay as long as they did to raise a jurisdictional
objection, and it may even (though this we need not
decide either) have been a sanctionable tactic, but
assuming federal jurisdiction where none exists is not a
permissible sanction for anything.
Napoleon at his
coronation took the imperial crown out of the hands of
the Pope and crowned himself. Federal judges do not have
a similar prerogative.
A court that does not have
jurisdiction cannot assume it, however worthy the cause.
8
In re Brand Name Prescription Drugs Antitrust Litig., 248 F.3d 668,
670 (7th Cir. 2001).
V.
Conclusion
For the reasons stated above, the plaintiffs’ motion to remand
is GRANTED.
to
the
Accordingly, it is ORDERED that this case be REMANDED
Circuit
Court
of
Ohio
County,
West
Virginia.
The
defendant’s motion for summary judgment (Doc. 28), motion in limine
(Doc. 32), and motion to bifurcate punitive damages portion of
trial (Doc. 37) are DENIED WITHOUT PREJUDICE to being brought
before the state court.
It is further ORDERED that this case be
DISMISSED and STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein and to the Clerk of
the Circuit Court of Ohio County, West Virginia.
Pursuant to
Federal Rule of Civil Procedure 58, the Clerk is DIRECTED to enter
judgment on this matter.
DATED:
June 17, 2011
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
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