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Lee v. Allstate Insurance Co.

United States District Court, S.D. Mississippi, Northern Division

April 9, 2019

WILLIE HARRELL LEE PLAINTIFF
v.
ALLSTATE INSURANCE COMPANY DEFENDANT

          ORDER

          DANIEL P. JORDAN III CHIEF UNITED STATES DISTRICT JUDGE

         This insurance-coverage dispute is before the Court on Plaintiff Willie Harrell Lee's Motion to Remand [8]. Defendant Allstate Insurance Company (“Allstate”) has responded in opposition. The Court, having fully considered the parties' submissions and the applicable law, finds that Lee's motion should be denied.

         I. Background

         Lee alleges that Allstate wrongfully denied a claim under his homeowner's insurance policy for fire loss that occurred on November 23, 2017. Lee filed his Complaint on July 26, 2018, in the Circuit Court of Hinds County, Mississippi, against Allstate and John Does 1 through 10. In his Complaint, Lee seeks an unspecified amount of damages for, inter alia, breach of contract, tortious breach of contract, violation of good faith and fair dealing, and negligence. Compl. [1-1] at 3-5. In addition to actual damages, Lee requests “punitive, . . . nominal and/or statutory damages[, ] . . . consequential and/or extra contractual damages[, ] . . . attorney's fees and costs, . . . [and] pre-judgment and post-judgment interest.” Id. at 5.

         On October 9, 2018, Allstate removed the case to this Court on diversity grounds, asserting that, “[t]he damages Plaintiff seeks in his complaint are clearly in excess of $75, 000.” Notice of Removal [1] ¶ 4. Lee disputes that assertion in his Motion to Remand.

         II. Standard

         A party may remove a case from state to federal court under 28 U.S.C. § 1441(b) when, on the face of the complaint, it appears the case invokes one or more grounds for federal subject-matter jurisdiction. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995). Where, as here, a party premises subject-matter jurisdiction on diversity of citizenship, 28 U.S.C. § 1332(a) controls. Section 1332(a) provides that “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different states.” “The party seeking to invoke federal diversity jurisdiction bears the burden of establishing both that the parties are diverse and that the amount in controversy exceeds $75, 000.” Garcia v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638 (5th Cir. 2003).

         To determine whether jurisdiction exists, the district court “considers the claims in the state court petition as they existed at the time of removal.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); see also Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 882 (5th Cir. 2000) (“The jurisdictional facts that support removal must be judged at the time of removal.”). “Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand.” Manguno, 276 F.3d at 723.

         III. Analysis

         The parties agree that complete diversity of citizenship exists. But Lee says the Court must remand this case because Allstate has failed to satisfy the amount-in-controversy requirement under 28 U.S.C. § 1332(a). This is the sole issue, and for the following reasons, the Court concludes that jurisdiction exists.

         The test for determining the amount in controversy is well settled. Generally, the amount of damages sought in the petition constitutes the amount in controversy, so long as the pleading was made in good faith. Allen, 63 F.3d at 1335 (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)). When, as here, “the plaintiff's complaint does not allege a specific amount of damages, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds” the jurisdictional amount. De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993).

         The removing party can meet this burden in one of two ways: (1) by showing that it is “facially apparent” the claim exceeds $75, 000 or (2) if the value is not “facially apparent, ” by “setting forth the facts in controversy . . . that support a finding of the requisite amount.” Allen, 63 F.3d at 1335. Under the second approach, the Court may consider summary-judgment-type evidence relevant to the amount in controversy at the time of removal. Id. If Allstate carries its burden under either theory, then jurisdiction exists unless Lee proves to a legal certainty that the amount in controversy is less than $75, 000. De Aguilar, 47 F.3d at 1412; see also Randle v. SmithKline Beecham Corp., 338 F.Supp.2d 704, 711 (S.D.Miss. 2004).

         According to Allstate, “Mr. Lee's demand for punitive damages, alone, is sufficient to meet Allstate's burden of establishing that the minimum amount in controversy has been met.” Def.'s Mem. [13] at 8. As Allstate notes, “federal courts [in Mississippi] have recognized that a claim for [an unspecified amount of] punitive damages, . . . independently establishes that the total amount in controversy has been met.” Sun Life Assur. Co. v. Fairly, 485 F.Supp.2d 731, 735 (S.D.Miss. 2007)).

         But other cases “look more rigorously at the complaint's factual allegations to determine whether the combination of compensatory and punitive damages could truly support a recovery above $75, 000.” Evans v. Red Shield Admin. Inc., No. 3:18-CV-464-CWR-FKB, 2018 WL 4288724, at *1 (S.D.Miss. Aug. 17, 2018) (finding that an unspecified punitive damages demand is itself insufficient to meet the amount in controversy requirement). These cases generally note that due-process concerns limits the extent to which punitive damages can eclipse compensatory damages. See Bridges v. Freese, 122 F.Supp.3d 583, 549 (S.D.Miss. 2015) (finding that plaintiffs with low-dollar compensatory-damage demands could not, “consistent with due process, . . . receive an award of punitive damages that would push the amount in controversy over $75, 000”). As the Supreme Court noted in State Farm Mutual Automobile Insurance Co. v. Campbell, there is no bright-line test, but consistent with due process, punitive damages must be “both reasonable and ...


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