Welsh v. New Hampshire Insurance
843 F. Supp. 2d 1006
D. Ariz.2012Background
- Plaintiff, a Lowe’s employee, injured his back while fixing a cabinet door at work.
- Defendants denied workers’ compensation, leading to a hearing before the Industrial Commission, which ordered compensation.
- Plaintiff filed suit in Maricopa County Superior Court asserting two state-law claims: breach of the implied covenant of good faith and fair dealing and aiding and abetting.
- Defendants removed the case to federal court under 28 U.S.C. § 1441(a) and § 1332, asserting complete diversity and an amount in controversy over $75,000.
- Plaintiff did not plead a dollar amount; defendants bore the burden to show the amount in controversy exceeded $75,000 by a preponderance of the evidence.
- The court must determine whether removal was proper given the record evidence, including an arbitration certificate, potential punitive damages, and attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amount in controversy exceeds $75,000. | Lowe’s not amount-bound; plaintiff seeks unspecified damages. | Arbitration certificate, anticipated punitive damages, and attorneys’ fees push total above $75,000. | Removal not proven; jurisdictional amount not shown. |
| Whether the arbitration certification of at least $50,000 can establish the amount in controversy. | Certification is only an estimate and does not prove $75,000+. | The certification can be used to establish at least $50,000 in controversy. | Arbitration certificate shows at least $50,000, not $75,000. |
| Whether attorneys’ fees may be included to reach the amount-in-controversy. | Fees are uncertain and speculative; cannot be counted toward $75,000. | Arizona law allows inclusion of attorneys’ fees in some contract-based actions. | Attorneys’ fees cannot be relied on here to meet the $75,000 threshold. |
| Whether punitive damages could push the amount in controversy over $75,000. | Punitive damages are not assured or sufficiently evidenced to exceed $75,000. | Punitive damages could be significant and help satisfy jurisdiction. | No sufficient evidence that punitive damages would exceed $75,000. |
| Whether the parties’ failure to stipulate to a $75,000 cap supports removal. | No tacit admission to damages exceeding $75,000. | Non-agreement to cap can indicate damages exceed $75,000. | Not dispositive; does not prove amount in controversy exceeds $75,000. |
Key Cases Cited
- Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1931) (strictly construes removal statute against removal jurisdiction)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (strong presumption against removal; burden on defendant)
- Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373 (9th Cir. 1997) (plaintiff’s/original complaint controls amount; plaintiff likely not claiming >$75,000)
- Libhart v. Santa Monica Dairy Co., 592 F.2d 1062 (9th Cir. 1979) (strong presumption against removal; plaintiff’s burden if complaint silent)
- Valdez v. Allstate Ins. Co., 372 F.3d 1115 (9th Cir. 2004) (amount in controversy includes consideration beyond face value)
- Burk v. Med. Sav. Ins. Co., 348 F. Supp. 2d 1063 (D. Ariz. 2004) (punitive damages and fees require evidentiary support to meet threshold)
- McCaa v. Mass. Mut. Life Ins. Co., 330 F. Supp. 2d 1143 (D. Nev. 2004) (evidence required to show punitive damages exceed threshold)
- Del Real v. Healthsouth Corp., 171 F. Supp. 2d 1041 (D. Ariz. 2001) (District court consideration of amount in controversy; arbitration as factor)