NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 21 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
STEPHAN JOHNSON, No. 23-35222
Plaintiff-Appellant, D.C. No. 2:22-cv-00053-KLD
v. MEMORANDUM* MID-CENTURY INSURANCE COMPANY; JOHN DOES A-D,
Defendants-Appellees.
Appeal from the United States District Court for the District of Montana Kathleen Louise DeSoto, Magistrate Judge, Presiding
Argued and Submitted February 7, 2024 Portland, Oregon
Before: McKEOWN, BYBEE, and BRESS, Circuit Judges.
Seeking uninsured motorist (UIM) benefits under state law, Stephan Johnson
sued his automobile insurer, Mid-Century Insurance Company (Mid-Century), in
Montana state court. Mid-Century removed the case to federal court based on
diversity jurisdiction. The magistrate judge denied Johnson’s motion to remand and
dismissed his complaint under Rule 12(b)(6). Johnson appeals. “We review de novo
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. a district court’s determination that diversity jurisdiction exists.” Gonzales v.
CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 2016). Because
diversity jurisdiction does not exist here, we vacate the district court’s dismissal
order and remand with instructions to remand this case to state court.
“A defendant generally may remove an action filed in state court if a federal
district court would have had original jurisdiction over the action.” Chavez v.
JPMorgan Chase & Co., 888 F.3d 413, 415 (9th Cir. 2018) (citing 28 U.S.C.
§ 1441(a)). Federal courts have diversity jurisdiction under 28 U.S.C. § 1332 when
there is “complete diversity among the parties and an amount in controversy in
excess of $75,000.” Id. The only question in this case is whether the amount in
controversy requirement is met.
“Where, as here, it is unclear from the face of the complaint whether the
amount in controversy exceeds $75,000, ‘the removing defendant bears the burden
of establishing, by a preponderance of the evidence, that the amount in controversy
exceeds the jurisdictional threshold.’” Id. at 416 (quoting Urbino v. Orkin Servs. of
Cal., Inc., 726 F.3d 1118, 1121–22 (9th Cir. 2013)). “The amount in controversy
may include ‘damages (compensatory, punitive, or otherwise) and the cost of
complying with an injunction, as well as attorneys’ fees awarded under fee shifting
statutes.’” Id. (quoting Gonzales, 840 F.3d at 648–49). “In assessing the amount in
controversy, we may consider allegations in the complaint and in the notice of
2 removal, as well as summary-judgment-type evidence relevant to the amount in
controversy.” Id. But “[c]onclusory allegations as to the amount in controversy are
insufficient.” Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 774 (9th Cir.
2017) (quoting Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090–91
(9th Cir. 2003)).
In the course of this litigation, Mid-Century has offered three theories for how
the amount in controversy exceeds $75,000. These theories fail to establish the
jurisdictional threshold by a preponderance of the evidence.
First, Mid-Century has not shown that Johnson’s anticipated attorney’s fees,
when aggregated with the $35,000 that Johnson seeks in UIM coverage, will more
likely than not exceed $75,000. In the court below, Mid-Century argued that
$50,000 was a reasonable estimate of the attorney’s fees to which Johnson would be
entitled if he prevailed. But as the magistrate judge correctly concluded, Mid-
Century adduced no “summary-judgment-type evidence” to demonstrate the
accuracy of that figure. See Chavez, 888 F.3d at 416. The magistrate judge thus
properly concluded that Johnson’s reasonable attorney’s fees could not be expected
to exceed the $14,000 set forth in Johnson’s contingency fee agreement with his
counsel.
The magistrate judge erred, however, in concluding that Johnson’s common
fund attorney’s fees, when aggregated with the $14,000 in personal attorney’s fees
3 and $35,000 in UIM coverage, meet the jurisdictional threshold. In his complaint,
Johnson requested the creation of a common fund “as to all similarly situated Mid-
Century insureds who were injured within eight years before [his] suit . . . and were
denied stacking UIM coverage pursuant to Endorsement MT028.” The magistrate
judge permissibly assumed that Johnson’s common fund claim was viable, and then
further assumed that (1) at least eight plaintiffs could participate in the fund, (2) each
plaintiff could recover at least $35,000 in unstacked coverage from the fund, and (3)
Johnson’s attorney would be entitled to 10% of the total.
This reasoning is insufficient because Mid-Century did not bring forward
proof of these figures sufficient to meet its “obligation to prove future attorneys’ fees
by a preponderance of the evidence.” Fritsch v. Swift Transp. Co. of Ariz., LLC, 899
F.3d 785, 796 (9th Cir. 2018). Based on a fair reading of Johnson’s complaint,
potential common fund claimants could only benefit from a decision invalidating
Endorsement MT028 insofar as they live in Montana, have multiple Mid-Century
policies, and have suffered sufficient damages to require cross-policy stacking of
coverage. But Mid-Century failed to produce any evidence as to how many of its
insureds meet this description, or the contract damages those insureds could
theoretically be owed. Thus, even assuming 10% is a reasonable estimate of the
attorney’s fees Johnson’s attorney could recover from the fund, Mid-Century did not
show that those fees would exceed the jurisdictional threshold when combined with
4 the previously noted $35,000 in UIM coverage and $14,000 in personal attorney’s
fees. Removal on the basis of common fund attorney’s fees—which Mid-Century
does not defend on appeal—was therefore inappropriate.
Second, and even assuming Mid-Century did not forfeit this argument by
failing to raise it below, Mid-Century did not establish by a preponderance of the
evidence that the cost of a declaratory judgment in this case would exceed $75,000.
“Under the ‘either viewpoint’ rule, the test for determining the amount in
controversy is the pecuniary result to either party which the judgment would directly
produce.” In re Ford Motor Co./Citibank (S. D.), N.A., 264 F.3d 952, 958 (9th Cir.
2001). Mid-Century contends that, because Endorsement MT028 is used in nearly
37,000 policies throughout Montana, Johnson’s request that it be declared “voidable
as illusory coverage against public policy” would, if successful, have a “significant
impact” on Mid-Century that is “well in excess of $75,000.”
Mid-Century’s argument rests on an overbroad reading of Johnson’s
complaint. Fairly considered, Johnson’s complaint does not seek to invalidate
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 21 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
STEPHAN JOHNSON, No. 23-35222
Plaintiff-Appellant, D.C. No. 2:22-cv-00053-KLD
v. MEMORANDUM* MID-CENTURY INSURANCE COMPANY; JOHN DOES A-D,
Defendants-Appellees.
Appeal from the United States District Court for the District of Montana Kathleen Louise DeSoto, Magistrate Judge, Presiding
Argued and Submitted February 7, 2024 Portland, Oregon
Before: McKEOWN, BYBEE, and BRESS, Circuit Judges.
Seeking uninsured motorist (UIM) benefits under state law, Stephan Johnson
sued his automobile insurer, Mid-Century Insurance Company (Mid-Century), in
Montana state court. Mid-Century removed the case to federal court based on
diversity jurisdiction. The magistrate judge denied Johnson’s motion to remand and
dismissed his complaint under Rule 12(b)(6). Johnson appeals. “We review de novo
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. a district court’s determination that diversity jurisdiction exists.” Gonzales v.
CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 2016). Because
diversity jurisdiction does not exist here, we vacate the district court’s dismissal
order and remand with instructions to remand this case to state court.
“A defendant generally may remove an action filed in state court if a federal
district court would have had original jurisdiction over the action.” Chavez v.
JPMorgan Chase & Co., 888 F.3d 413, 415 (9th Cir. 2018) (citing 28 U.S.C.
§ 1441(a)). Federal courts have diversity jurisdiction under 28 U.S.C. § 1332 when
there is “complete diversity among the parties and an amount in controversy in
excess of $75,000.” Id. The only question in this case is whether the amount in
controversy requirement is met.
“Where, as here, it is unclear from the face of the complaint whether the
amount in controversy exceeds $75,000, ‘the removing defendant bears the burden
of establishing, by a preponderance of the evidence, that the amount in controversy
exceeds the jurisdictional threshold.’” Id. at 416 (quoting Urbino v. Orkin Servs. of
Cal., Inc., 726 F.3d 1118, 1121–22 (9th Cir. 2013)). “The amount in controversy
may include ‘damages (compensatory, punitive, or otherwise) and the cost of
complying with an injunction, as well as attorneys’ fees awarded under fee shifting
statutes.’” Id. (quoting Gonzales, 840 F.3d at 648–49). “In assessing the amount in
controversy, we may consider allegations in the complaint and in the notice of
2 removal, as well as summary-judgment-type evidence relevant to the amount in
controversy.” Id. But “[c]onclusory allegations as to the amount in controversy are
insufficient.” Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 774 (9th Cir.
2017) (quoting Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090–91
(9th Cir. 2003)).
In the course of this litigation, Mid-Century has offered three theories for how
the amount in controversy exceeds $75,000. These theories fail to establish the
jurisdictional threshold by a preponderance of the evidence.
First, Mid-Century has not shown that Johnson’s anticipated attorney’s fees,
when aggregated with the $35,000 that Johnson seeks in UIM coverage, will more
likely than not exceed $75,000. In the court below, Mid-Century argued that
$50,000 was a reasonable estimate of the attorney’s fees to which Johnson would be
entitled if he prevailed. But as the magistrate judge correctly concluded, Mid-
Century adduced no “summary-judgment-type evidence” to demonstrate the
accuracy of that figure. See Chavez, 888 F.3d at 416. The magistrate judge thus
properly concluded that Johnson’s reasonable attorney’s fees could not be expected
to exceed the $14,000 set forth in Johnson’s contingency fee agreement with his
counsel.
The magistrate judge erred, however, in concluding that Johnson’s common
fund attorney’s fees, when aggregated with the $14,000 in personal attorney’s fees
3 and $35,000 in UIM coverage, meet the jurisdictional threshold. In his complaint,
Johnson requested the creation of a common fund “as to all similarly situated Mid-
Century insureds who were injured within eight years before [his] suit . . . and were
denied stacking UIM coverage pursuant to Endorsement MT028.” The magistrate
judge permissibly assumed that Johnson’s common fund claim was viable, and then
further assumed that (1) at least eight plaintiffs could participate in the fund, (2) each
plaintiff could recover at least $35,000 in unstacked coverage from the fund, and (3)
Johnson’s attorney would be entitled to 10% of the total.
This reasoning is insufficient because Mid-Century did not bring forward
proof of these figures sufficient to meet its “obligation to prove future attorneys’ fees
by a preponderance of the evidence.” Fritsch v. Swift Transp. Co. of Ariz., LLC, 899
F.3d 785, 796 (9th Cir. 2018). Based on a fair reading of Johnson’s complaint,
potential common fund claimants could only benefit from a decision invalidating
Endorsement MT028 insofar as they live in Montana, have multiple Mid-Century
policies, and have suffered sufficient damages to require cross-policy stacking of
coverage. But Mid-Century failed to produce any evidence as to how many of its
insureds meet this description, or the contract damages those insureds could
theoretically be owed. Thus, even assuming 10% is a reasonable estimate of the
attorney’s fees Johnson’s attorney could recover from the fund, Mid-Century did not
show that those fees would exceed the jurisdictional threshold when combined with
4 the previously noted $35,000 in UIM coverage and $14,000 in personal attorney’s
fees. Removal on the basis of common fund attorney’s fees—which Mid-Century
does not defend on appeal—was therefore inappropriate.
Second, and even assuming Mid-Century did not forfeit this argument by
failing to raise it below, Mid-Century did not establish by a preponderance of the
evidence that the cost of a declaratory judgment in this case would exceed $75,000.
“Under the ‘either viewpoint’ rule, the test for determining the amount in
controversy is the pecuniary result to either party which the judgment would directly
produce.” In re Ford Motor Co./Citibank (S. D.), N.A., 264 F.3d 952, 958 (9th Cir.
2001). Mid-Century contends that, because Endorsement MT028 is used in nearly
37,000 policies throughout Montana, Johnson’s request that it be declared “voidable
as illusory coverage against public policy” would, if successful, have a “significant
impact” on Mid-Century that is “well in excess of $75,000.”
Mid-Century’s argument rests on an overbroad reading of Johnson’s
complaint. Fairly considered, Johnson’s complaint does not seek to invalidate
Endorsement MT028 across the board, but only when it provides allegedly “illusory
coverage” because a claimant holds more than one Mid-Century policy and purports
to have paid premiums under each. For Mid-Century to demonstrate the “pecuniary
result” of such declaratory relief, it would again need to come forward with evidence
about the number of Mid-Century insureds in Montana who are similarly situated to
5 Johnson. Mid-Century has not provided that information. See Hunter v. Philip
Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (“[T]he court resolves all
ambiguity in favor of remand to state court.”).
Third, Mid-Century argues that the amount in controversy is satisfied by
aggregating the potential contract damages claims of all common fund plaintiffs.
Generally, the claims of multiple plaintiffs may not be aggregated for determining
the amount in controversy. Gibson v. Chrysler Corp., 261 F.3d 927, 943 (9th Cir.
2001). There is an exception to this rule for plaintiffs who “unite to enforce a single
title or right in which they have a common and undivided interest.” Snyder v. Harris,
394 U.S. 332, 335 (1969). Here, all relevant insureds potentially affected by
Endorsement MT028 have “suffer[ed] a unique injury” that “can be redressed
without the involvement of other” claimants. Urbino, 726 F.3d at 1122. Their
claims are thus not aggregable for purposes of the amount in controversy.
Because we conclude that the district court lacked subject matter jurisdiction,
we do not reach Johnson’s substantive arguments on Montana insurance law. We
vacate the district court’s order with directions to remand this case to state court.
The parties shall bear their own costs on appeal.1
VACATED AND REMANDED.
1 Johnson’s motion to supplement the record on appeal is denied.