Larson v. State Farm Fire and Casualty Company

• Court: District Court, D. Arizona
• Decided: April 13, 2022
• Docket: 2:21-cv-02221
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Eric M Larson, et al., No. CV-21-02221-PHX-JAT

10 Plaintiffs, ORDER

11 v.

12 State Farm Fire and Casualty Company, et al., 13 Defendants. 14 15 Pending before the Court is Plaintiffs Courtney and Eric Larson’s (“Plaintiffs”) 16 Motion to Remand. (Doc. 11). Defendant State Farm Fire and Casualty Company 17 (“Defendant”) filed a Response, (Doc. 12), and Plaintiffs filed a Reply. (Doc. 17). For the 18 reasons that follow, the Court grants Plaintiffs’ Motion to Remand. 19 I. BACKGROUND 20 Plaintiffs are Arizona homeowners insured by Defendant. (Doc. 11 at 3). On 21 December 1, 2019, Plaintiffs noticed water leakage in their kitchen. (Doc. 6 at 2). Plaintiffs 22 reported a claim to Defendant, and Defendant conducted an inspection, found the damage 23 to be of a type excluded from coverage, and denied Plaintiffs’ claim. (Id.) 24 Plaintiffs then appointed an appraiser who estimated $46,866.62 in damage to 25 Plaintiffs’ home. (Doc. 11-1 at 2). The parties dispute whether this appraisal bound 26 Defendant to award Plaintiffs the appraisal value. (Compare Doc. 6 at 2 with Doc. 11 at 3). 27 Notwithstanding this dispute, Defendant covered a portion of the damage to Plaintiffs’ 28 home, but not the full value that the appraiser estimated. (Id.) 1 Plaintiffs filed suit in Maricopa County Superior Court on December 6, 2021, 2 alleging three counts against Defendant. Count One alleges a breach of insurance contract, 3 seeking to recover the remainder of Plaintiffs’ insurance claim and associated costs 4 incurred from the lack of coverage. (Doc. 1 at 15). Count Two alleges a breach of implied 5 covenant of good faith and fair dealing. (Id. at 16). Count Three calls for punitive damages 6 for Defendant’s “outrageous, reprehensible, . . . willful[], malicious[]” conduct. (Id. at 18). 7 Defendant timely removed this action pursuant to 28 U.S.C. § 1441. (Doc. 1). Per 8 the Court’s order, Defendant then filed a supplement to the notice of removal asserting 9 diversity of citizenship as the basis for federal subject matter jurisdiction. (Doc. 5; Doc. 6). 10 Defendant alleges that Plaintiffs are Arizona residents and Defendant is incorporated and 11 has its principal place of business in Illinois, satisfying the diversity of citizenship 12 requirement. (Doc. 6 at 3). Defendant also alleges that the amount in controversy 13 requirement of at least $75,000 is satisfied. 14 Plaintiffs filed a motion to remand on January 28, 2022, arguing that the Court does 15 not have subject matter jurisdiction. (Doc. 11). While they do not contest that the parties 16 are citizens of different states for purposes of diversity jurisdiction, Plaintiffs argue that the 17 amount in controversy does not exceed $75,000. Defendant objects to this motion. (Doc. 18 12). 19 II. MOTION TO REMAND 20 The parties do not contest that they are citizens of different states for purposes of 21 diversity jurisdiction. Thus, the Court only analyzes whether Defendant has failed to show 22 by a preponderance of the evidence that Plaintiffs’ amount in controversy exceeds $75,000. 23 A. Legal Standard 24 Pursuant to 28 U.S.C. § 1332, “district courts shall have original jurisdiction of all 25 civil actions where the matter in controversy exceeds the sum or value of $75,000, 26 exclusive of interests and costs, and is between . . . citizens of different States[.]” 28 U.S.C. 27 § 1332(a)(1). 28 The removal statute, 28 U.S.C. § 1441, provides, in pertinent part: “[A]ny civil 1 action brought in a State court of which the district courts of the United States have original 2 jurisdiction, may be removed by the defendant . . . to the district court of the United States 3 for the district and division embracing the place where such action is pending.” 28 U.S.C. 4 § 1441(a). Courts strictly construe the removal statute against removal jurisdiction. See 5 Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09 (1941); Gaus v. Miles, Inc., 6 980 F.2d 564, 566 (9th Cir. 1992). “The ‘strong presumption’ against removal jurisdiction 7 means that the defendant always has the burden of establishing that removal is proper.” 8 Gaus, 980 F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 9 (9th Cir. 1979)). 10 “In a removed case, . . . the plaintiff chose a state rather than federal forum. Because 11 the plaintiff instituted the case in state court, ‘there is a strong presumption that the plaintiff 12 has not claimed a large amount in order to confer jurisdiction on a federal court[.]’” Singer 13 v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997) (quoting St. Paul 14 Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938)). “Where the complaint 15 does not demand a dollar amount, the removing defendant bears the burden of proving by 16 a preponderance of the evidence that the amount in controversy exceeds [$75,000].” Id. at 17 376. “Under this burden, the defendant must provide evidence establishing that it is ‘more 18 likely than not’ that the amount in controversy exceeds [$75,000].” Sanchez v. Monumental 19 Life Insurance Co., 102 F.3d 398, 404 (9th Cir. 1996). “[R]emoval ‘cannot be based simply 20 upon conclusory allegations’ where the [complaint] is silent” as to the dollar amount of 21 damages the plaintiff seeks. Singer, 116 F.3d at 377 (citing Allen v. R & H Oil & Gas Co., 22 63 F.3d 1326, 1335 (5th Cir. 1995)). Yet the inquiry into the amount in controversy is not 23 confined to the face of the complaint. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th 24 Cir. 2004). 25 B. Analysis 26 The amount in controversy is not facially clear from Plaintiffs’ complaint. 27 Accordingly, it is Defendant’s burden to prove by a preponderance of the evidence that the 28 amount in controversy exceeds $75,000. See Singer, 116 F.3d at 376. Here, the Court finds 1 that Defendant has not met its burden. 2 1. Plaintiffs’ Tier Two Designation 3 Defendant argues that Plaintiffs’ Tier Two discovery designation indicates that the 4 amount in controversy exceeds $75,000. (Doc. 6 at 4). This argument is unavailing. 5 Arizona’s tier system is used for discovery purposes—“to make discovery occur in 6 a manner that is proportional” to the complexity of the case. See Advisory Committee Note, 7 Ariz. R. Civ. P. 26.2. Therefore, “while Plaintiff[s’] tier selection is some evidence of 8 [their] amount in controversy, it is not enough to prove by a preponderance of the evidence 9 that Plaintiff[s’] damages in the action exceed $75,000.” Rieke v. ManhattanLife Assurance 10 Co. of Am., No. CV-20-00724-PHX-GMS, 2020 WL 3056123, at *1 (D. Ariz. June 9, 11 2020). 12 Moreover, Tier Two designations merely contemplate a claim for damages 13 exceeding $50,000 and less than $300,000. Ariz. R. Civ. P. 26(c)(3)(B). Thus, Plaintiffs’ 14 tier designation “‘does nothing more than establish that the amount in controversy is likely 15 more than $50,000.’” Rives v. Mrs. Gooch’s Nat. Food Mkts. Inc., No. CV-21-01186-PHX- 16 DLR, 2021 WL 3847104, at *1 (D. Ariz. Aug. 27, 2021) (quoting Ferguson v. First Am. 17 Specialty Ins. Co., No. CV-09-01581-PHX-JAT, 2009 WL 4154653, at *3 (D. Ariz. Nov. 18 23, 2009)). Accordingly, Plaintiffs’ tier designation alone is insufficient to demonstrate 19 that the amount in controversy exceeds $75,000. 20 2. Plaintiffs’ Settlement Negotiations 21 Defendant next argues that Plaintiffs’ settlement offer proves that the amount in 22 controversy requirement is met. Defendant argues that Plaintiffs previously asserted that 23 Count One alone was worth $72,500, implying that the total amount in controversy on all 24 claims would exceed $75,000. (Doc. 12 at 5–6). 25 The Court may consider this correspondence as some evidence of the amount in 26 controversy. See Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 416 (9th Cir. 2018). 27 But, for reasons stated below, the Court finds this evidence unpersuasive because an 28 estimated value of $72,500 for Count One alone does not reflect a reasonable estimate of 1 Plaintiffs’ Count One claim. Additionally, the Court finds that Plaintiffs’ “opening 2 demands” do not accurately reflect the amount in controversy when Plaintiffs later offered 3 to settle for a lower amount. See Carr v. Esurance Ins. Co., No. 09-0667-PHX-JAT, 2009 4 WL 2132699, at *3 (D. Ariz. July 16, 2009) (“The fact that the amount was an ‘opening 5 demand’ and subject to lower counteroffers further undermines Defendant’s argument [that 6 the initial amount reflects the amount in controversy].”). 7 On the other hand, the Court finds that Plaintiffs’ settlement offer of $66,500 8 ($31,000 in policy benefits and $12,500 in attorneys’ fees for Count One, and $23,000 for 9 extra-contractual claims in Counts Two and Three) is relevant evidence that Plaintiffs 10 believe the amount in controversy is less than $75,000. “A settlement letter is relevant 11 evidence of the amount in controversy if it appears to reflect a reasonable estimate of the 12 plaintiff’s claim.” Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002); see also Rieke, 13 2020 WL 3056123, at *2 (finding plaintiff’s offer of judgment for $65,000 to be relevant 14 evidence of the amount in controversy); Brown v. Bankers Life & Cas. Co., No. CV-09- 15 1459-PHX-GMS, 2009 WL 2914215, at *4 (D. Ariz. Sept. 8, 2009) (finding plaintiff’s 16 offer of judgment for $70,000 to be relevant evidence of the amount in controversy). 17 Plaintiffs’ Count One settlement offer is for $31,000 in policy benefits and $12,500 18 in attorneys’ fees. In Count One, Plaintiffs claim that Defendant “wrongfully deducted a 19 total of $31,695.40 awarded as water damage.” (Doc. 11 at 3). Thus, the Court finds that 20 Plaintiffs’ settlement offer of $43,500 for Count One more closely reflects “a reasonable 21 estimate of plaintiff[s’] claim[s].” Cohn, 281 F.3d at 840. Accordingly, the Court finds that 22 Defendant has not sufficiently demonstrated that Plaintiffs’ assertion that Count One was 23 worth $72,500 is relevant evidence for the total amount in controversy. 24 The Court is similarly unpersuaded that Counts Two and Three show that Defendant 25 has satisfied its burden in meeting the amount in controversy requirement. Defendants 26 argue that Plaintiffs’ Complaint alleges facts analogous to previous cases in which the 27 amount in controversy exceeded $75,000. (Doc. 12 at 7–9). 28 The Ninth Circuit Court of Appeals has found that a removing defendant may point 1 to verdicts and settlements in “similar” cases as evidence that the amount in controversy 2 exceeds $75,000. See Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 2005). What 3 constitutes a sufficiently “similar” case is not clear from precedent, so courts must exercise 4 their discretion. See Haire v. Liberty Ins. Corp., No. CV-20-00686-PHX-DWL, 2020 WL 5 5088071, at *4 (D. Ariz. Aug. 28, 2020). 6 In its response, Defendant focuses much of its analysis on Hawkins v. Allstate Ins. 7 Co., 733 P.2d 1073 (Ariz. 1987), a case in which insureds brought claims of bad faith 8 against their insurer and obtained a $3.5 million jury verdict. (Doc. 12 at 7–9). Defendant 9 points to similarities between the facts that led to the jury verdict in Hawkins and the facts 10 that Plaintiffs allege here. (Id.) But Hawkins differs from the present case in a crucial way: 11 the plaintiffs in Hawkins never offered to settle their bad faith claims for a specified dollar 12 amount. See generally Hawkins, 733 P.2d 1073. Here, Plaintiffs explicitly offered to settle 13 Counts Two and Three for $23,000. (See Doc. 11 at 9). Thus, the Court finds that Hawkins 14 and the other cases cited by Defendant1 are not sufficiently “similar” to the present case to 15 be persuasive to use to find an amount in controversy exceeding $75,000. 16 For the foregoing reasons, Defendant has not met its burden of establishing by a 17 preponderance of the evidence that the amount in controversy exceeds the $75,000 18 jurisdictional requirement. Plaintiffs’ Motion to Remand is granted. 19 III. ATTORNEYS’ FEES 20 Plaintiffs request attorneys’ fees for Defendant’s removal. The Court may award 21 attorneys’ fees “where the removing party lacked an objectively reasonable basis for 22 seeking removal. Conversely, when an objectively reasonable basis exists, fees should be 23 denied. Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). 24 Although the Court grants Plaintiffs’ Motion to Remand, the Court does not find 25 award of attorneys’ fees proper here. Defendant had an objectively reasonable argument 26 1 In its previously filed Supplement to Notice of Removal, Defendant cites several other 27 cases that Defendant argues are similar to the present case. (Doc. 6 at 12–15). While these cases may have some analogous facts to Plaintiffs’ allegations, none of the cases include 28 an explicit offer to settle all claims for less than $75,000. (Id.) Accordingly, the Court finds that none of these other cases are sufficiently similar to be persuasive. for removal. The complaint does not request a specific amount of damages and it is 2|| objectively reasonable to argue that attorneys’ fees and punitive damages from Plaintiffs’ || claims satisfy the jurisdictional requirements. See Welsh v. N.H. Ins. Co., 843 F. Supp. 2d 4}| 1006, 1011 (D. Ariz. 2012) (finding the same). Therefore, Plaintiffs’ request for attorneys’ || fees is denied. IV. CONCLUSION 7 Defendant fails to establish by a preponderance of the evidence that Plaintiffs’ 8 || amount in controversy exceeds $75,000. 9 For the foregoing reasons, 10 IT IS ORDERED that Plaintiffs’ request for attorneys’ fees (Doc. 11) is DENIED. 11 IT IS FURTHER ORDERED that Plaintiffs’ Motion to Remand (Doc. 11) is 12 || GRANTED. The Clerk of Court shall remand this case to the Maricopa County Superior 13} Court, without further order of this Court. 14 Dated this 12th day of April, 2022. 15 16 i C 17 James A. Teilborg 18 Senior United States District Judge 19 20 21 22 23 24 25 26 27 28

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