Leonard v. Safeco Insurance Company of America

• Court: District Court, D. Arizona
• Decided: February 16, 2024
• Docket: 3:23-cv-08626
• Status: Unknown

Opinion

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

9 Donald Leonard, et al., No. CV-23-08626-PCT-DWL

10 Plaintiffs, ORDER

11 v.

12 Safeco Insurance Company of America, et al., 13 Defendants. 14 15 Pending before the Court is Plaintiffs’ motion to remand. (Doc. 8.) For the 16 following reasons, the motion is denied. 17 BACKGROUND 18 On November 2, 2023, Plaintiffs filed a complaint in Yavapai County Superior 19 Court. (Doc. 1-1 at 8-13.) The only non-Doe defendant is Safeco Insurance Company of 20 America (“Defendant”). (Id.) 21 In broad strokes, the complaint alleges as follows. Plaintiffs own a recreational 22 vehicle (“RV”) that is covered by an “uninsured, underinsured, liability, comprehensive 23 and collision” policy issued by Defendant. (Id. ¶¶ 2, 8.) The RV was involved in a collision 24 in November 2022 that caused “significant damage to the RV.” (Id. ¶¶ 9-10.) The repair 25 facility initially estimated that repairs would cost $40,052.60 and later increased the 26 estimate to $42,354.80. (Id. ¶¶ 13, 15.) Defendant refused to pay those amounts and 27 instead sent three checks totaling $15,741.16. (Id. ¶¶ 14, 18, 22.) Plaintiffs have “not 28 accepted these partial payment checks nor presented these checks for payment to any 1 financial institution.” (Id. ¶ 22.) Plaintiffs assert they have sustained $7,200 in “loss of 2 use” damages in addition to damages arising from the unpaid repairs. (Id. ¶¶ 2, 8-10, 14- 3 16, 26.) Based on these allegations, the complaint asserts two claims against Defendant: 4 (1) breach of contract; and (2) breach of the implied covenant of good faith and fair dealing. 5 (Id. ¶¶ 28-37.) In the prayer for relief, Plaintiffs seek “consequential damages, incidental 6 damages, special damages, and all money damages, including damages for loss of use, in 7 an amount to be determined at [t]rial, but in no event less than $49,554.80, based upon 8 Defendant’s breach of contract, and breach of the covenant of good faith and fair dealing.” 9 (Id. at 12.) In the alternative, Plaintiffs seek “a declaration the RV is a total loss with 10 appropriate compensatory payment . . . [of] approximately $70,000.” (Id.) Plaintiffs also 11 seek attorneys’ fees pursuant to A.R.S. § 12-341.01, costs, and “such other relief as the 12 Court deems just in the circumstances.” (Id.) 13 On November 20, 2023, defense counsel sent an email to Plaintiffs’ counsel to 14 inquire (1) whether Plaintiffs view the case as falling within “tier two or tier three”; and 15 (2) “if you are claiming more than $75,000 in total damages.” (Doc. 12-2 at 2-3.) 16 On November 21, 2023, Plaintiffs’ counsel responded: “I do believe we are in Tier 17 Two regarding both the amount in controversy and the complexity of the case pursuant to 18 Ariz. R. Civ. P. 26.2. I cannot stipulate to the claim being no more than $75,000, noting 19 that if we have to go to trial, attorney fees would obviously be higher than if not, and could 20 be significant. In the claim, I was merely indicating that the property loss could not be less 21 than $50,000, but an award would be determined at trial, if we are required to go to trial.” 22 (Id. at 2.) 23 On December 12, 2023, Defendant removed the action to federal court, based solely 24 on diversity jurisdiction. (Doc. 1.) As for the amount in controversy, the removal notice 25 provides: “Plaintiffs assert claims for breach of contract and insurance bad faith and seeks, 26 among other things, an award of attorneys’ fees. Plaintiffs’ documentation provides 27 information that they seek damages exceeding $75,000.” (Id. ¶ 7.) 28 On January 8, 2024, Plaintiffs’ counsel sent a settlement demand. (Doc. 12-3.) The 1 letter offered to settle this case for $74,999. (Id. at 2.) The letter further stated that the 2 most recent repair estimate was $43,354.80; that Plaintiffs had also “incurred additional 3 damage due to the vehicle being exposed to the elements and rodents, which have damaged 4 the vehicle further” and increased the overall property-damage total to “nearly $55,000”; 5 and that “[i]n addition to the property damage costs incurred . . . [Plaintiffs] have also 6 incurred thousands of dollars in costs such as: loss of use of their vehicle for over a year, 7 costs to continually make the loan payments for a vehicle they cannot use, costs to maintain 8 insurance on a vehicle they cannot use, costs of moving the vehicle back and forth from 9 the [repair facility] as [Defendant] refused to pay for storage, costs in attorneys’ fees in 10 attempts to resolve this matter short of litigation, and they have lost the opportunity to visit 11 friends, grandchildren, and other family members.” (Id.) The letter concluded: “Should 12 your client not accept this offer by the expiration date and time, our firm will file a motion 13 to remand this case back to Yavapai County Superior Court and amend the complaint to 14 add a claim for bad faith.” (Id. at 3.) 15 On January 11, 2024, after the settlement deadline expired, Plaintiffs filed the 16 pending motion to remand. (Doc. 8.) 17 On January 29, 2024, Defendant filed a response. (Doc. 12.) 18 Plaintiffs did not file a reply, and the time to do so has now expired. 19 ANALYSIS 20 I. Legal Standard 21 “A defendant generally may remove any action filed in state court if a federal district 22 court would have had original jurisdiction.” Gonzales v. CarMax Auto Superstores, LLC, 23 840 F.3d 644, 648 (9th Cir. 2016) (citing 28 U.S.C. § 1441(a)). A federal district court has 24 “original jurisdiction of all civil actions where the matter in controversy exceeds the sum 25 or value of $75,000, exclusive of interest and costs” and the parties are diverse. 28 U.S.C. 26 § 1332(a). The amount in controversy is the “amount at stake in the underlying 27 litigation,” which comprises “any result of the litigation, excluding interests and costs, that 28 entails a payment by the defendant,” including “inter alia, damages (compensatory, 1 punitive, or otherwise) and the cost of complying with an injunction, as well as attorneys’ 2 fees awarded under fee shifting statutes.” Gonzales, 840 F.3d at 648-49 (internal quotation 3 marks and citations omitted). 4 “In determining the amount in controversy, courts first look to the complaint.” 5 Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). “Generally, the 6 sum claimed by the plaintiff controls if the claim is apparently made in good faith.” Id. 7 (quotation omitted). If “damages are unstated in a complaint, or, in the defendant’s view 8 are understated, the defendant seeking removal bears the burden to show by a 9 preponderance of the evidence that the aggregate amount in controversy exceeds [the 10 statutory threshold] when federal jurisdiction is challenged.” Id.1 “Under this burden, the 11 defendant must provide evidence establishing that it is ‘more likely than not’ that the 12 amount in controversy exceeds that amount.” Sanchez v. Monumental Life Ins. Co., 102 13 F.3d 398, 404 (9th Cir. 1996). 14 “The parties may submit evidence outside the complaint, including affidavits or 15 declarations, or other ‘summary-judgment-type evidence relevant to the amount in 16 controversy at the time of removal.’” Ibarra, 775 F.3d at 1197 (quoting Singer v. State 17 Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). “Under this system, a 18 defendant cannot establish removal jurisdiction by mere speculation and conjecture, with 19 unreasonable assumptions.” Id. 20 There is a “strong presumption” against removal jurisdiction. Gaus v. Miles, Inc., 21 980 F.2d 564, 566 (9th Cir. 1992).2 “If at any time before final judgment it appears that 22 the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. 23 § 1447(c). See also Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th 24 Cir. 2003) (“Where doubt regarding the right to removal exists, a case should be remanded

25 1 In contrast, a removing “defendant’s amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.” Dart Cherokee 26 Basin Operating Co., LLC v. Owens, 574 U.S. 81, 87 (2014). 27 2 The “strong presumption” against removal in “mine-run diversity cases” was not altered by Dart, which addressed removal of class actions under the Class Action Fairness 28 Act. Dart, 574 U.S. at 89. See generally Johnson v. Twin City Fire Ins. Co., 2015 WL 1442644, *2 n.2 (D. Ariz. 2015). 1 to state court.”). 2 II. The Complaint 3 As noted, the complaint alleges that Plaintiffs seek “consequential damages, 4 incidental damages, special damages, and all money damages, including damages for loss 5 of use, in an amount to be determined at trial, but in no event less than $49,554.80, based 6 upon Defendant’s breach of contract, and breach of the covenant of good faith and fair 7 dealing.” (Doc. 1-1 at 12.) In the alternative, Plaintiffs seek “a declaration the RV is a 8 total loss with appropriate compensatory payment . . . [of] approximately $70,000.” (Id.) 9 Plaintiffs also seek unspecified attorneys’ fees pursuant to A.R.S. 12-341.01, costs, and 10 “such other relief as the Court deems just in the circumstances.” (Id.) 11 Because “it is not facially evident from the complaint that more than $75,000 is in 12 controversy,” and the parties dispute whether it is, Defendant “must prove, by a 13 preponderance of the evidence, that the amount in controversy meets the jurisdictional 14 threshold.” Matheson, 319 F.3d at 1090. 15 III. Defendant’s Arguments And Evidence 16 Defendant identifies five reasons why the amount in controversy should be deemed 17 to exceed $75,000:

18 First, Plaintiffs’ strategic settlement demand for one dollar less than the threshold amount all but confirms the amount in controversy exceeds 19 $75,000. Second, Plaintiffs have represented they seek at least $50,000 of damages (exclusive of attorney fees and costs) by pleading their suit as a 20 “Tier 2” case in her Complaint. Third, Plaintiffs refused to stipulate to capping their damages and attorney’s fees at $75,000. Fourth, . . . the amount 21 in controversy includes the potential punitive damages that Plaintiffs seek, and Arizona cases indicate that plaintiffs in insurance bad faith cases often 22 seek (and are awarded) punitive damages that exceed a 1:1 ratio with compensatory damages. Fifth, . . . the amount in controversy may also 23 include a potential award of attorney’s fees, and Arizona cases indicate that parties in insurance bad faith cases often incur (and seek) “significant” 24 attorney fees. 25 (Doc. 12 at 1-2.) 26 The Court will address each argument in turn. 27 … 28 … 1 A. $74,999 Settlement Offer 2 Defendant’s first argument is that Plaintiffs’ recent settlement offer of $74,999 3 establishes that the amount in controversy exceeds $75,000. At first blush, the settlement 4 offer can be viewed as supporting Defendant’s position. As one court explained:

5 [I]t is not the settlement value of a case that determines whether the jurisdictional amount is in controversy. By definition, offers to settle a claim 6 by plaintiffs involve their willingness to take less than the amount which they would expect to obtain by a jury verdict in order to secure immediate 7 payment and avoid the inconvenience of litigation. If a plaintiff is willing to settle a case for $74,999.00, it follows that said plaintiff would seek 8 considerably more than $74,999.00 at trial. . . . If the settlement offers are probative at all (and particularly the opening settlement offer of $74,999.00), 9 they support Defendant’s assertion that the actual amount in controversy is more than $75,000. 10 11 Weber v. Hamman, 2009 WL 10671566, *2 (W.D. Mo. 2009) (cleaned up). See also See 12 Jackson v. Am. Bankers Ins. Co. of Fla., 976 F. Supp. 1450, 1454 (S.D. Ala. 1997) (“If 13 plaintiffs are willing to settle the case for the sum of $70,000, then it follows a fortiori that 14 plaintiffs would expect to receive considerably more than $70,000 at trial.”).3 15 However, a complicating factor here is that because the settlement offer was made 16 after removal, it may have factored in the value of Plaintiffs’ threatened-but-not-yet- 17 asserted tort claim for insurance bad faith. Because, as discussed in more detail below, that 18 claim does not count toward the jurisdictional threshold, any settlement offer that 19 incorporates its expected value must be discounted accordingly. Given this backdrop, the 20 $74,999 settlement offer is modestly helpful to Defendant’s position but not dispositive. 21 … 22 … 23

24 3 Admittedly, not all courts agree that a settlement offer of just below $75,000 suggests that the amount in controversy exceeds $75,000. See, e.g., Conrad Assocs. v. 25 Hartford Acc. & Indem. Co., 994 F. Supp. 1196, 1199 n.2 (N.D. Cal. 1998) (“[P]laintiff’s offer to settle the action for $74,000 equally suggests that plaintiff values its claim as below 26 the jurisdictional minimum.”); Vasquez v. CSX Transp., Inc., 2009 WL 1953052, *3 (N.D. Ill. 2009) (“[P]laintiffs usually settle for less than what they believe they could get if they 27 prevailed at trial. However, plaintiffs do not necessarily shoot so low with their initial offers. In fact, . . . a plaintiff [may make] an initial offer that far exceed[s] his bottom line 28 . . . [or] attempt[] to anchor the negotiations in his favor by starting the process with a high number.”) (citations omitted). 1 B. “Tier 2” Designation 2 As for Defendant’s second argument, Rule 26.2 of the Arizona Rules of Civil 3 Procedure is entitled “Tiered Limits to Discovery Based on Attributes of Cases.” In 4 general, “[t]his rule explains how much discovery a party may take in their case. The 5 amount of discovery a party may take is limited by the tier to which their case is assigned. 6 . . . [C]ases are assigned to one of three tiers, each of which has different limits.” See Ariz. 7 R. Civ. P. 26(a). “Actions claiming $50,000 or less in damages” fall within Tier 1, 8 “[a]ctions claiming more than $50,000 and less than $300,000 in damages” fall within Tier 9 2, and “[a]ctions claiming $300,000 or more in damages” fall within Tier 3. See Ariz. R. 10 Civ. P. 26(c). 11 Had Plaintiffs characterized this case as falling within Tier 3, that characterization 12 would be evidence that the amount in controversy exceeds the $75,000 threshold for 13 diversity jurisdiction. Haire v. Liberty Mutual Ins. Co., 2020 WL 5088071, *6 (D. Ariz. 14 2020) (“Plaintiff’s decision to check the Tier 3 box is, therefore, at least some evidence 15 that Plaintiff valued his damages at $300,000 or more.”). But Plaintiffs’ characterization 16 of this case as falling within Tier 2 does not raise the same inference. Because the low end 17 of Tier 2 is $50,000, which falls below the $75,000 threshold in § 1332, a Tier 2 designation 18 does not alone serve as evidence of removability. 19 C. Refusal To Stipulate To Recovery Cap Of $75,000 20 The Court reaches the same conclusion regarding Defendant’s third argument, 21 which concerns Plaintiffs’ pre-removal refusal to stipulate to a recovery cap of $75,000. 22 Courts have repeatedly concluded that a “plaintiff’s refusal to stipulate that her damages 23 are below the jurisdictional amount is not dispositive.” Washington v. Am Home Assurance 24 Co., 2005 WL 8174027, *2 (W.D. La. 2005). See also Feliciano v. Target Corp., 2019 25 WL 2210739, *2 (E.D.N.Y. 2019) (“Defendant’s allegation that Plaintiff refused to cap 26 damages at $75,000 is not determinative of the amount in controversy and is insufficient 27 to establish the jurisdictional amount required by 28 U.S.C. § 1332(a).”); Kum v. Walcott, 28 2012 WL 4772072, *1 (E.D.N.Y. 2012) (citing a treatise for the proposition that a “refusal 1 to stipulate . . . should not be accepted by the district court as establishing the jurisdictional 2 amount”). After all, a refusal to stipulate may simply reflect the plaintiff’s belief that there 3 is at least a small chance of recovering more than $75,000. Because a removing defendant 4 must prove it is “more likely than not” that the amount in controversy exceeds the $75,000 5 threshold, Sanchez, 102 F.3d at 404, a plaintiff’s refusal to stipulate to a recovery cap of 6 $75,000 sheds little light on whether that standard has been satisfied—it may indicate 7 nothing more than the plaintiff’s unwillingness to foreclose whatever chance (however 8 slim) of an unexpectedly high recovery. Plaintiffs’ refusal to stipulate is not, to be clear, 9 irrelevant—it is simply insufficient, on its own, to satisfy Defendant’s burden of proof. 10 See, e.g., Murphy Murphy & Murphy, P.C. v. Nationwide Ins. Co., 2019 WL 2389663, *4- 11 5 (E.D. Pa. 2019) (noting that the “Court may, in its discretion, consider evidence of a 12 plaintiff’s refusal to stipulate the damages as one factor in determining whether Plaintiffs’ 13 claims exceed the jurisdictional threshold” but that the “majority of the opinions in the 14 Eastern District of Pennsylvania have found that a plaintiff’s refusal to stipulate to a 15 damages award of less than $75,000 does not, by itself, satisfy defendant’s burden of 16 proof”) (citation omitted). See also id. at *5 (“A party’s failure to sign a stipulation limiting 17 damages—though worthy of some consideration—is not dispositive of the amount-in- 18 controversy issue, given that both defendants and plaintiffs typically seek to use it as a 19 tactical advantage in removing case.”). 20 D. Punitive Damages 21 As for Defendant’s fourth argument, although it is true that insurance bad faith cases 22 may result in punitive damage awards, Defendant cannot take advantage of that principle 23 here for the simple reason that this case is not currently (and, more important, was not at 24 the time of removal) an insurance bad faith case involving a claim for punitive damages. 25 The only claims asserted in the complaint are contract claims, which do not, in general, 26 provide a basis for seeking punitive damages under Arizona law. Richards v. Powercraft 27 Homes, Inc., 678 P.2d 449, 451 (Ariz. Ct. App. 1983) (“Because appellees’ consumer fraud 28 claim is barred, leaving only their claim for breach of implied warranty, the award of 1 punitive damages must be vacated. Punitive damages are generally not available for breach 2 of contract. . . . [P]unitive damages are no more available for a breach of an implied 3 warranty as they are for any other breach of contract.”).4 Nor do Plaintiffs seek punitive 4 damages in the complaint’s prayer for relief. (Doc. 1-1 at 12.) Although the parties’ recent 5 correspondence suggests that Plaintiffs may, in the future, seek to amend their complaint 6 to add a tort claim for insurance bad faith (which would, in turn, provide the foundation for 7 a claim for punitive damage), the damages associated with such hypothetical future claims 8 do not count toward § 1332’s jurisdictional threshold. Chavez v. JPMorgan Chase & Co., 9 888 F.3d 413, 417-18 (9th Cir. 2018) (“When we say that the amount in controversy is 10 assessed at the time of removal, we mean that we consider damages that are claimed at the 11 time the case is removed by the defendant. So, for example, if a plaintiff files a complaint 12 in state court and voluntarily dismisses a claim before removal, any relief that might have 13 been awarded on the dismissed claim will not be included in the amount in controversy. 14 Likewise, when the amount in controversy is satisfied at removal, any subsequent 15 amendment to the complaint or partial dismissal that decreases the amount in controversy 16 below the jurisdictional threshold does not oust the federal court of jurisdiction. . . . In 17 sum, the amount in controversy includes all relief claimed at the time of removal to which 18 the plaintiff would be entitled if she prevails.”). 19 E. Potential Award Of Attorneys’ Fees 20 Defendant’s fifth argument concerns Plaintiffs’ potential entitlement to attorneys’ 21 fees under A.R.S. § 12-341.01 should they prevail on their contract claims. As Defendant 22 correctly notes, such fees count toward the jurisdictional threshold. Guglielmino v. McKee 23 Foods Corp., 506 F.3d 696, 700 (9th Cir. 2007) (“Section 1332(a)’s amount-in-controversy 24 requirement excludes only ‘interest and costs’ and therefore includes attorneys’ fees.”). 25

26 4 Although the Arizona Court of Appeals’ decision in Richards was reversed on other grounds, the Arizona Supreme Court affirmed its ruling as to the unavailability of punitive 27 damages. Richards v. Powercraft Homes, Inc., 678 P.2d 427, 429 (Ariz. 1984) (“While we approve the Court of Appeal’s decision regarding the consumer fraud claim and the 28 punitive damages, we vacate that portion of the Court of Appeal’s decision regarding the verdicts of plaintiffs Richards, Farina, and White.”). 1 Plaintiffs have now clarified that the damage estimate for the RV is even higher than 2 the $42,354.80 figure listed in the complaint—Plaintiffs stated in their January 8, 2024 3 letter that, due to subsequent developments, the “vehicle has [now] incurred nearly $55,000 4 dollars in damage.” (Doc. 12-3 at 2.) It is proper to consider that figure, rather than the 5 lower figure asserted in the complaint, when evaluating the amount in controversy. 6 Chavez, 888 F.3d at 417-18 (“When we say that the amount in controversy is assessed at 7 the time of removal, we mean that we consider damages that are claimed at the time the 8 case is removed by the defendant. . . . That the amount in controversy is assessed at the 9 time of removal does not mean that the mere futurity of certain classes of damages 10 precludes them from being part of the amount in controversy. In sum, the amount in 11 controversy includes all relief claimed at the time of removal to which the plaintiff would 12 be entitled if she prevails.”) (citations omitted); Broglie v. MacKay-Smith, 541 F.2d 453, 13 455 (4th Cir. 1976) (“[A] plaintiff may properly include as part of the amount in 14 controversy costs which will not be incurred until after the suit is ended.”). That figure, 15 however, must be reduced by $1,000 to account for Plaintiffs’ deductible. (Doc. 1-1 at 10 16 ¶ 22.)5 17 In addition to the $54,000 in RV-related damages, Plaintiffs also clarified in their 18 recent letter that they seek certain additional categories of compensatory damages, 19 including “loss of use of their vehicle for over a year, costs to continually make the loan 20 payments for a vehicle they cannot use, costs to maintain insurance on a vehicle they cannot 21 use, costs of moving the vehicle back and forth from the [repair facility] as [Defendant] 22 refused to pay for storage, costs in attorneys’ fees in attempts to resolve this matter short 23 of litigation, and [the lost] opportunity to visit friends, grandchildren, and other family 24 members.” (Doc. 12-3 at 2.) Although Plaintiffs’ letter does not attempt to quantify those 25 5 Plaintiffs’ repair-related damages do not, in contrast, need to be reduced by the value 26 of the checks that Defendant sent to Plaintiffs. This is because Plaintiffs specifically allege that they refused to “accept[] these partial payment checks” and have not “presented these 27 checks for payment to any financial institution.” (Doc. 1-1 at 10 ¶ 22.) Cf. O’Neal v. America’s Best Tire LLC, 2016 WL 3087296, *2-3 (D. Ariz. 2016) (rejecting “the 28 proposition that tender of payment is sufficient to establish payment, whether the checks were cashed or not”) (citation omitted). 1 damages, Plaintiffs alleged in the complaint that their loss-of-use damages alone total 2 $7,200. (Doc. 1-1 at 11 ¶ 26.) Thus, the amount in controversy here, before attorneys’ 3 fees, is at least $61,200. Accordingly, if the probable size of the fee award exceeds 4 $13,800, the $75,000 jurisdictional threshold will be met. 5 In the Court’s experience, it is a virtual certainty that a prevailing plaintiff in a 6 contested contract action will incur more than $13,800 in compensable attorneys’ fees. 7 See, e.g., Gonzalez v. US Human Rights Network, 2024 WL 149979, *13-22 (D. Ariz. 8 2024) (awarding $234,881 in attorneys’ fees under A.R.S. § 12-341.01 in a contested 9 contract action that “culminated in a jury trial in which [the plaintiff] recovered about 10 $33,000 before costs, fees, and interest on her contract claims and defeated all of [the 11 defendant’s] contract-based counterclaims”). Defendant has cited other cases recognizing 12 the likelihood of such an award. Assyia v. State Farm Mut. Auto. Ins. Co., 273 P.3d 668, 13 674 (Ariz. Ct. App. 2012) (affirming $19,000 award of attorneys’ fees arising from 14 insurance coverage dispute). Additionally, Plaintiffs do not appear to dispute that their 15 attorneys’ fees will likely exceed $13,800 when all is said and done—they acknowledge 16 that their fees “could be significant” if this case goes to trial (Doc. 12-2 at 2)6 and only 17 seem to argue that fees incurred after removal don’t count toward the jurisdictional 18 threshold (Doc. 8 at 3). 19 Plaintiffs are incorrect. In Fritsch v. Swift Transportation Co. of Ariz., LLC, 899 20 F.3d 785 (9th Cir. 2018), the Ninth Circuit rejected the notion “that future attorneys’ fees 21 should not be included in the amount in controversy because they are inherently speculative 22 and can be avoided by the defendant’s decision to settle an action quickly,” explaining: 23 “We have held that attorneys’ fees awarded under fee-shifting statutes or contracts are part 24 6 Some courts have used a percentage-based method to estimate, for § 1332 purposes, 25 the probable size of a future award of attorneys’ fees. See, e.g., Guglielmino, 506 F.3d at 698 (noting that the district court “measured [attorneys’ fees] by a ‘conservative’ estimate 26 of 12.5% of economic damages”). However, neither party advocates such an approach here. Additionally, the Ninth Circuit has clarified that although “[w]e do not hold that a 27 percentage-based method is never relevant when estimating the amount of attorneys’ fees included in the amount in controversy, . . . a per se rule is inappropriate.” Fritsch, 899 F.3d 28 at 796 n.6. Given this backdrop, the Court declines to use a percentage-based test to estimate the likely size of the fee award. 1 || of the amount in controversy and that the amount in controversy includes all relief to which 2|| the plaintiff is entitled if the action succeeds. We may not depart from this reasoning to || hold that one category of relief—future attorneys’ fees—are excluded from the amount in 4|| controversy as a matter of law.” Id. at 795 (citations omitted). Thus, although “district 5 || courts are well equipped . . . to determine when a fee estimate is too speculative because 6|| of the likelihood of a prompt settlement,” anticipated post-removal attorneys’ fees are not || categorically excluded from the amount in controversy. Id. at 795-96. Here, the evidence 8 || suggests that a prompt settlement is unlikely—Defendant recently rejected Plaintiffs’ 9|| settlement offer and Plaintiffs have threatened to amend their complaint to add a new, || potentially liability-expanding claim as a consequence of that rejection. 11 Given all of this—where the compensatory damages associated with Plaintiffs’ || contract claims total no less than around $61,200 (which is a conservative estimate and 13 || doesn’t include the possibility of punitive damages), Plaintiffs would more likely than not be in line to recover more than $13,800 in attorneys’ fees on their contract claims, Plaintiffs 15 || refused to stipulate to $75,000 recovery cap before removal, and Plaintiffs made a post- □□ removal settlement offer of $74,999—Defendant has met its burden of establishing, by a 17 || preponderance of the evidence, that § 1332(a)’s jurisdictional threshold is satisfied. 18 Accordingly, 19 IT IS ORDERED that Plaintiff’s motion to remand (Doc. 8) is denied. 20 Dated this 16th day of February, 2024. 21 22 Lom ee” 23 f CC —— Dominic W. Lanza IA United States District Judge 25 26 27 28

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