Case Information
*1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION
ROBERT C. MEDINA AND
JOANNE MEDINA,
Plaintiffs, v. Case No. SA-19-CV-1482-JKP ALLSTATE VEHICLE AND PROPERTY
INSURANCE COMPANY,
Defendant.
MEMORANDUM OPINION AND ORDER
The Court has under consideration Defendant Allstate Vehicle and Property Insurance Company’s Motion for Partial Dismissal (ECF No. 2) and Plaintiffs’ Motion to Remand on the Basis of Lack of Subject Matter Jurisdiction (ECF No. 4). Plaintiffs have not filed a response to the motion for partial dismissal, but Defendant has filed a response (ECF No. 5) to the motion to remand to which Plaintiffs have not replied. For the reasons that follow, the Court grants the mo- tion to remand and denies the other motion as moot.
I. BACKGROUND
This case concerns an insurance claim arising from wind and water damage. Pls.’ Orig. Pet. (ECF No. 1-3). Plaintiffs allege that their home “sustained severe damage to the roof due to the direct force of wind” and water damaged the inside of the property. Id . ¶ 10. After an investi- gation, Defendant acknowledged coverage “but grossly underpaid the loss.” Id . ¶ 13.
In October 2019, Plaintiffs filed suit against their insurer in state court. Id . at 1. They assert claims of (1) breach of contract, (2) unfair settlement practices, (3) misrepresentation of insurance policy violations, (4) violation of prompt payment provisions; and (5) breach of good faith and fair dealing. . ¶¶ 19-37. They seek unspecified compensatory damages for loss sustained, mental *2 anguish, emotional distress; court costs, attorney’s fees, and 18% interest. Id . ¶¶ 41-48. They spe- cifically seek treble damages under Tex. Ins. Code § 541.152 and exemplary damages. Id . ¶¶ 43, 45-46. They also make the following damages-limiting statement: “Pursuant to Rule 47 of the Texas Rules of Civil Procedure, Plaintiffs are seeking only monetary relief of $75,000.00 or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and attorney fees.” Id . ¶ 48.
Defendant removed this action on the basis of diversity jurisdiction and alleged that the amount in controversy exceeds $75,000. Notice of Removal (ECF No. 1). It contends that it is facially apparent from Plaintiffs’ original petition that the claims likely exceed that jurisdictional amount. . ¶¶ 10-11. It thereafter moved for dismissal of Plaintiffs’ statutory misrepresentation and fraud claims because the complaint lacks factual assertions sufficient to meet the pleading requirements of Fed. R. Civ. P. 9(b) and are thus subject to dismissal under Fed. R. Civ. P. 12(b)(6). Plaintiffs have not responded to the motion to dismiss. But they have moved to remand this case due to a lack of subject matter jurisdiction. Defendant opposes remand. The motions are ripe for ruling. Given the jurisdictional concerns presented, the Court first addresses the motion to remand.
II. MOTION TO REMAND
Defendant removed this case on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a). While not contesting that the parties are diverse, Plaintiffs move to remand the case be- cause the amount in controversy is $75,000 or less. Plaintiffs have attached to their motion a stip- ulation limiting damages to $75,000.
A. General Principles
In general, “any civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant or the defendants, to
the district court of the United States for the district and division embracing the place where such
*3
action is pending.” 28 U.S.C. § 1441(a). A “defendant seeking to remove a case to a federal court
must file in the federal forum a notice of removal ‘containing a short and plain statement of the
grounds for removal.’”
Dart Cherokee Basin Operating Co., LLC v. Owens
,
A party may move to remand a previously removed case.
See
28 U.S.C. § 1447(c). “Be-
cause removal raises significant federalism concerns, the removal statute is strictly construed ‘and
any doubt as to the propriety of removal should be resolved in favor of remand.’”
Gutierrez v.
Flores
,
B. Amount in Controversy
Diversity of citizenship between the parties is not at issue here. The parties disagree only
as to the amount in controversy. Normally, for purposes of removal, “the sum demanded in good
faith in the initial pleading shall be deemed to be the amount in controversy.” 28 U.S.C. §
1446(c)(2). This is consistent with non-removed diversity cases.
Dart Cherokee Basin Oper-
ating Co., LLC
,
Here, Plaintiffs do not appear to demand a specific amount of damages. They instead rely on a range of damages – $75,000 or less. Consequently, strictly speaking, there is no specific sum demanded that is dispositive of the jurisdictional question. But the Fifth Circuit has treated a sim- ilar range – maxing out just below the jurisdictional limit – as a claim “for a specific amount of damages.” De Aguilar v. Boeing Co. , 47 F.3d 1404, 1408 (5th Cir. 1995). It regarded “such a complaint as more like a claim for one sum rather than a claim for an unlimited or an unspecified amount of damages; to reason otherwise would put form over substance.” Id . And it did so despite a specific state rule, Tex. R. Civ. P. 47(b), that prohibited plaintiffs from asserting a specific amount of damages. See id. at 1412.
C. Good/Bad Faith
While recognizing that “a plaintiff who does not ‘desire to try his case in federal court . . .
may resort to the expedient of suing for less than the jurisdictional amount, and though he would
be justly entitled to more, the defendant cannot remove,’” the Fifth Circuit further recognized that
“[t]he face of the plaintiff’s pleading will not control if made in bad faith.” . at 1410 (quoting
St.
Paul Mercury Indem. Co. v. Red Cab Co.
,
Defendant suggests that noncompliance with Tex. R. Civ. P. 47 necessarily means that Plaintiffs did not make their damages-limiting statement in good faith. It also states that a “demand is made in bad faith if its purpose is to defeat federal jurisdiction.” The Court, however, does not view De Aguilar as dictating either of those conclusions. To the extent other district court cases may support Defendant’s positions, the Court respectfully disagrees. The primary focus of De Aguilar was on the ability to manipulate state rules to evade federal jurisdiction while maintaining the ability to obtain a money judgment exceeding the jurisdictional amount. De Aguilar was un- concerned with plaintiffs properly evading federal jurisdiction as permitted by St. Paul , but it saw a distinct need to close a manipulative loophole caused by some state rules.
D. Relevant Amendments
Although Congress amended § 1446 in 2011 and relevant Texas rules were amended in
2013, neither of these amendments alter the basic principles espoused in
De Aguilar
.
Ford
,
As amended in 2013, “Texas Rule of Civil Procedure 47 requires a pleading to contain a
statement that the damages sought are within the jurisdictional limits of the court, and a statement
that the party seeks a pre-defined range of damages.”
Cavazos v. Allstate Vehicle & Prop. Ins. Co.
,
7:17-CV-368,
Nothing indicates that Texas has any rule that limits a plaintiff’s recovery to an amount asserted in the original petition or complaint. Notably, Texas law provides for an “expedited ac- tions process [that] applies to a suit in which all claimants . . . affirmatively plead that they seek only monetary relief aggregating $100,000 or less, including damages of any kind, penalties, costs, *7 expenses, pre-judgment interest, and attorney fees.” Tex. R. Civ. P. 169(a)(1). Subparagraph (b) of that rule limits recovery to $100,000. See Tex. R. Civ. P. 169(b) (“In no event may a party who prosecutes a suit under this rule recover a judgment in excess of $100,000, excluding post-judg- ment interest.”). Even though that subparagraph purports to limit recovery, the limitation itself permits recovery in excess of the current federal jurisdictional threshold of $75,000. Moreover, suits may be removed from such expedited process, and the recovery limitation, on motion or the filing of certain amended or supplemental pleadings. Tex. R. Civ. P. 169(c).
E. Conclusion Regarding Good/Bad Faith
Given the ability of Texas plaintiffs to obtain money judgments in excess of the amount
asserted in their pleading, the Court finds, consistent with
De Aguilar
, that Plaintiffs’ damages-
limiting statement that they seek “only monetary relief of $75,000.00 or less” was not made in
good faith. Of itself, that statement does not bind the plaintiffs. Nor does it control the Court’s
analysis or provide a basis for remand. Such conclusions are consistent with other federal decisions
even though courts might approach the issues slightly differently. ,
e.g.
,
Armendariz v. Allstate
Texas Lloyd’s
, No. EP-16-CV-00334-DCG,
As
Wilson
recognizes, “if a plaintiff desires to limit recovery and keep an action in state
court, there is a simple and straightforward way to accomplish this objective, and a federal court
is obligated to honor it.”
Indeed, if Plaintiff[s] in good faith wanted to properly bind [themselves] to less than $75,000 in damages, [they] could have included in [their] state court petition one of the pre-defined damage ranges listed in Rule 47 that is appropriate for the “expedited actions process” under Rule 169 and attach thereto a separate stipulation or affidavit binding herself to seeking and accepting an amount “less than $75,000.00.”
Armendariz
,
F. Parties’ Burdens
When the Court finds that an operative pleading lacks a good faith monetary demand, 28
U.S.C. § 1446(c)(2) no longer deems the demand as the amount in controversy. At this point,
consistent with
De Aguilar
, the “defendant can show that the amount in controversy actually ex-
ceeds the jurisdictional amount.” 47 F.3d at 1411. And
De Aguilar
established the evidentiary
burden for such showing as a preponderance of the evidence – the same evidentiary burden it had
established for cases involving an indeterminate claim for damages.
Id
. (agreeing “that the pre-
ponderance of the evidence standard announced” in
De Aguilar v. Boeing Co.
,
Under § 1446(c)(2)(A)(ii), a removing party may assert the amount in controversy in the notice of removal in some circumstances, including when the plaintiffs seek “a money judgment, *9 but the State practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded.” Because plaintiffs in Texas are not limited to the amount demanded in their complaint, § 1446(c)(2)(A)(ii) permits a removing defendant to assert the amount in controversy in the notice of removal even if the 2013 amendments to the Texas rules changed the historical state prohibition on stating a specific sum demanded.
If “not contested by the plaintiff or questioned by the court,” courts should accept “the
defendant’s amount-in-controversy allegation” set out in the notice of removal seeking federal-
court adjudication of the claims.
Dart Cherokee Basin Operating Co., LLC
, 574 U.S. at 87. A
plaintiff’s contesting the amount in controversy or the court questioning that amount, invokes con-
sideration of 28 U.S.C. § 1446(c)(2)(B).
See id.
at 88. Section 1446(c)(2)(B) provides that “re-
moval of the action is proper on the basis of an amount in controversy asserted under subparagraph
(A) if the district court finds, by the preponderance of the evidence, that the amount in controversy
exceeds the amount specified in section 1332(a).” “This provision, added to § 1446 as part of the
Federal Courts Jurisdiction and Venue Clarification Act of 2011 (JVCA), clarifies the procedure
in order when a defendant’s assertion of the amount in controversy is challenged. In such a case,
both sides submit proof and the court decides, by a preponderance of the evidence, whether the
amount-in-controversy requirement has been satisfied.”
Dart Cherokee Basin Operating Co., LLC
,
Based upon well-settled circuit precedent, defendants can carry their burden “if (1) it is
apparent from the face of the petition that the claims are likely to exceed $75,000, or, alternatively,
(2) the defendant sets forth ‘summary judgment type evidence’ of facts in controversy that support
a finding of the requisite amount.”
Manguno v. Prudential Prop. & Cas. Ins. Co.
,
Furthermore, “to avoid the sort of manipulation” at issue in De Aguilar , the Fifth Circuit created the following rule:
if a defendant can show that the amount in controversy actually exceeds the juris- dictional amount, the plaintiff must be able to show that, as a matter of law, it is certain that he will not be able to recover more than the damages for which he has prayed in the state court complaint.
But “this is not a burden-shifting exercise,” because the “plaintiff must make all infor-
mation known at the time he files the complaint.”
De Aguilar
, 47 F.3d at 1412. Nevertheless,
plaintiffs can meet their “legal certainty” obligation in various ways, including citing in the state
complaint “to a state law that prohibits recovery of damages that exceed those requested in the
ad
damnum
clause and that prohibits the initial
ad damnum
to be increased by amendment,” but absent
citation to “such a statute, “[l]itigants who want to prevent removal must file a binding stipulation
or affidavit with their complaints.” . (quoting
In re Shell Oil Co.
,
In this case, Defendant asserts that it is facially apparent from the types of claims and *11 damages asserted in the complaint that damages are likely above the jurisdictional amount. It makes no attempt to carry its burden by providing any evidence. Plaintiffs contest Defendant’s asserted amount in controversy and provide a post-removal stipulation that damages do not exceed the jurisdictional threshold and they agree “to neither seek nor accept any amount in excess of $75,000.00, for all damages and attorneys’ fees.”
G. Potential Implications of Dart Cherokee
Because Plaintiffs have contested Defendant’s amount-in-controversy statement, one could argue that Dart Cherokee requires evidence and has changed circuit precedent regarding a defend- ant’s ability to rely solely on allegations in the state court complaint or petition to establish the amount in controversy. As already mentioned, however, De Aguilar itself held that defendants must produce evidence, but still permitted reliance on the face of the complaint itself to satisfy the burden to show satisfaction of the jurisdictional amount. 47 F.3d at 1412. Nevertheless, it appears prudent to further consider whether Dart Cherokee changed circuit precedent.
When presented with the argument, one court specifically declined to “disrupt well-settled
circuit precedent based on dicta in
Dart Cherokee
.”
In re Whole Foods Mkt., Inc., Greek Yogurt
Mktg. & Sales Practices Litig.
, No. 1:14-CV-1135-SS,
About six months prior to
In re Whole Foods
, another judge in the same court, also relied
on the same sole question at issue in
Dart Cherokee
to decline to extend
Dart Cherokee
to “how
to value the amount in controversy when a party is suing to enforce a civil right protected by a
statute.”
McPhail v. Lyft, Inc.
, No. A-14-CA-829-LY,
In December 2015 and immediately after citing
Dart Cherokee
, the Fifth Circuit reiterated
its commitment to the facially apparent means for defendants to carry their burden.
Robertson
v. Exxon Mobil Corp.
,
The next year, the Fifth Circuit recognized
Dart Cherokee
as “outlin[ing] the procedures
and standards for asserting, challenging, and evaluating allegations concerning the amount in con-
troversy.”
Carter v. Westlex Corp.
,
Earlier this year, the Northern District of Texas accepted the clarifying language of §
1446(c)(2)(B), as set out in
Dart Cherokee
, while also recognizing that the defendant can still
satisfy its burden when the jurisdictional amount is facially apparent from the state complaint.
McCauley v. Kroger Co.
, No. 3:19-CV-2673-D,
Based on the two cited Fifth Circuit opinions and the above sampling of district court opin-
ions decided after
Dart Cherokee
, this Court is confident that defendants may still carry their bur-
den to show the amount in controversy exceeds the jurisdictional amount required by 28 U.S.C. §
1332(a) by relying on the face of the operative pleading. By recognizing that
Dart Cherokee
was
applying 2011 statutory amendments there is no need to distinguish or characterize portions of
Dart Cherokee
as dicta to maintain the viability of that avenue for carrying a defendant’s burden.
The statute as currently written applies until Congress further amends it. But what neither the
*14
statute nor
Dart Cherokee
addresses is whether the state petition/complaint, of itself, can constitute
evidence within the meaning of 28 U.S.C. § 1446(c)(2)(B).
De Aguilar
appears to accept the com-
plaint as sufficient evidence at least in some circumstances.
H. Whether Jurisdictional Amount is Facially Apparent
That defendants may rely on the facial appearance of the state pleading as a means to carry
their burden may not make it the best method, or even a desirable method, in all circumstances.
One reason to not rely solely on the face of the complaint is uncertainty due to differing opinions
as to when the jurisdictional amount is facially apparent from a pleading. “District courts in this
circuit differ as to when it is facially apparent that the amount in controversy is satisfied, particu-
larly in insurance disputes.”
Chapman v. Essex Ins. Co.
, No. 1:12-CV-520,
More lenient courts “have found facially apparent amounts in controversy of more than
$75,000.00 based on the variety of damages sought, especially where a plaintiff seeks exemplary
damages or statutory penalties.” . This Court, moreover, is aware of the common-sense approach
*15
to deciding whether a defendant has carried its burden. ,
e.g.
,
Robertson
,
Using this case as an example, no one has presented any dollar estimate for the damage done to Plaintiffs’ home. No one has stated how much Defendant has already paid or how much it allegedly underpaid. No one has stated the value of Plaintiffs’ home or whether a policy limit would reduce the value of the claims. It is clear that Plaintiffs seek treble damages, but without some idea of the amount to be tripled, the Court would need to speculate to conclude that the treble damages would put Plaintiffs over the jurisdictional threshold. Similarly, without “evidence of potential actual damages in the case, the Court has no way to estimate the potential for an award of exemplary damages.” Educ. Mgmt. Servs., LLC v. Yackey , No. CV SA-15-CA-0044-XR, 2015 WL 13047863, at *2 (W.D. Tex. Mar. 25, 2015). Because the amount of punitive damages should be proportional to the amount of actual damages, see id. , the Court does not find that a claim for exemplary damages necessarily makes it facially apparent that an action satisfies the amount in controversy required for jurisdiction under 28 U.S.C. § 1332(a). Without more information regard- ing damages to Plaintiffs’ property, Defendant must do more than point to the categories of dam- ages in the state court petition to carry its burden under De Aguilar and 28 U.S.C. § 1446(c)(2)(B).
Finding that Defendant carried its burden in this case would devalue the preponderance of
the evidence standard to such an extent that it would render it meaningless. For good reason,
De
Aguilar
specifically rejected, as too permissive, evidentiary burdens that would permit a defendant
to merely show that a plaintiff could recover damages that exceed the jurisdictional amount.
See
While the common-sense approach may work in some situations, the approach does not simply supplant the defendant’s burden altogether. For all of these reasons, the Court finds that Defendant has not carried its burden to show that the amount in controversy exceeds the amount required for diversity jurisdiction. “Without more information, the court cannot estimate the extent of damage to [Plaintiffs’] property nor ascertain the other damage amounts in [their] petition.” Chapman , 2013 WL 12137884, at *5. Accordingly, the Court is unable to “conclude that it is facially apparent that the amount in controversy has been satisfied.” .
I. Ambiguity
At most, Defendant has shown that the state court petition was ambiguous at the time of
removal. But such ambiguity is construed against removal and in favor of remand. Further, such
*17
ambiguity would permit the Court to consider the post-removal stipulation to the extent it relates
to the jurisdictional facts at the time of removal.
Gebbia v. Wal-Mart Stores, Inc.
,
J. Other Matters
Because Defendant has not shown by a preponderance of the evidence that the amount in controversy likely exceeds the jurisdictional amount, the Court has no need to consider whether Plaintiffs can show to a legal certainty that they will not be able to recover in excess of that amount. The relevant facts and controlling law confirm that this Court does not have subject matter juris- diction over this action. Therefore, this case was improperly removed, and remand is warranted. In addition, the motion to dismiss is now moot.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion to Remand on the Basis of Lack of Subject Matter Jurisdiction (ECF No. 4) and ORDERS that this case be remanded to the 25th Judicial District Court of Guadalupe County, Texas, Cause Number 19-2497-CV-A. Be- cause it has found that it lacks jurisdiction over this case, the Court DENIES AS MOOT Defend- ant Allstate Vehicle and Property Insurance Company’s Motion for Partial Dismissal (ECF No. *18 2). By separate document, the Court will issue a Final Judgment for this case.
SIGNED this 1st day of May 2020.
JASON PULLIAM UNITED STATES DISTRICT JUDGE