Agre v. Rain & Hail LLC

• Decision Date: 15 April 2002
• Docket Number: Nos. 01-CV-1629(JMR/FLN), 01-CV-1630(PAM/SRN), 01-CV-1631(DSD/SRN), 01-CV-1632(DSD/SRN), 01-CV-1633(ADM/AJB), 01-CV-1634(DWF/AJB), 01-CV-1635(DSD/JGL), 01-CV-1636(DWF/SRN), 01-CV-1637(PAM/JGL), 01-CV-1688(JRT/FLN).,s. 01-CV-1629(JMR/FLN), 01-CV-1630(PAM/SRN), 01-CV-1631(DSD/SRN), 01-CV-1632(DSD/SRN), 01-CV-1633(ADM/AJB), 01-CV-1634(DWF/AJB), 01-CV-1635(DSD/JGL), 01-CV-1636(DWF/SRN), 01-CV-1637(PAM/JGL), 01-CV-1688(JRT/FLN).
• Parties: AGRE et al. v. RAIN & HAIL LLC et al. ABBAS et al. v. IGF INS. CO. BREITKREUTZ FARMS INC. et al. v. AG FORCE INS. SERVICES, INC. et al. AEIKENS et. al. v. HARTFORD INS. CO. ABBAS et al. v. ACCEPTANCE INS. CO. HOLIEN et al. v. GREAT AMERICAN INS. CO. AHRENHOLZ et al. v. FARM BUREAU MUT. INS. CO. ANDERSON et al. v. FARMERS ALLIANCE MUT. INS. CO. et al. ANDERSON FARMS et al. v. FIREMAN'S FUND INS. CO. BRODERIUS et al. v. RURAL COMMUNITY INS. SERVICES
• Court: U.S. District Court — District of Minnesota

Page 905

196 F.Supp.2d 905

AGRE et al. v. RAIN & HAIL LLC et al.

ABBAS et al. v. IGF INS. CO.

BREITKREUTZ FARMS INC. et al. v. AG FORCE INS. SERVICES, INC. et al.

AEIKENS et. al. v. HARTFORD INS. CO.

ABBAS et al. v. ACCEPTANCE INS. CO.

HOLIEN et al. v. GREAT AMERICAN INS. CO.

AHRENHOLZ et al. v. FARM BUREAU MUT. INS. CO.

ANDERSON et al. v. FARMERS ALLIANCE MUT. INS. CO. et al.

ANDERSON FARMS et al. v. FIREMAN'S FUND INS. CO.

BRODERIUS et al. v. RURAL COMMUNITY INS. SERVICES

Nos. 01-CV-1629(JMR/FLN), 01-CV-1630(PAM/SRN), 01-CV-1631(DSD/SRN), 01-CV-1632(DSD/SRN), 01-CV-1633(ADM/AJB), 01-CV-1634(DWF/AJB), 01-CV-1635(DSD/JGL), 01-CV-1636(DWF/SRN), 01-CV-1637(PAM/JGL), 01-CV-1688(JRT/FLN).

United States District Court, D. Minnesota.

April 15, 2002.

COPYRIGHT MATERIAL OMITTED

ORDER

ROSENBAUM, Chief Judge.

Plaintiffs seek remand of these matters to Minnesota state court. Plaintiffs deny this Court has subject matter jurisdiction over their claims.¹ Defendants oppose, claiming the complaints provide three separate grounds for jurisdiction: diversity jurisdiction, pursuant to 28 U.S.C. § 1332; federal question jurisdiction, pursuant to 28 U.S.C. § 1331; and, federal party removal jurisdiction, pursuant to 28 U.S.C. § 1442(a).

I. Background

For purposes of this opinion, the facts are few, assumed to be true, and easily summarized.

Plaintiffs are Minnesota sugar beet growers. In October, 2000, a hard frost damaged or destroyed their crops, causing significant financial losses. Plaintiffs had purchased multi-peril crop insurance which, according to their complaint, covers this loss. The crop insurance was in the form of a policy issued by the Federal Crop Insurance Corporation ("FCIC"), a government agency created under the Federal Crop Insurance Act ("FCIA").

When plaintiffs discovered the frost damage, they submitted claims for payment under their crop insurance contracts. Defendants neither acted upon nor paid the claims. In August, 2001, plaintiffs filed the above-captioned cases in Minnesota state court, seeking contract damages "in excess of $50,000.00," including direct, consequential, and incidental damages for losses incurred following the freeze. Each plaintiff also requested damages, attorneys fees, and costs under the Minnesota Prevention of Consumer Fraud Act. Defendants, various crop insurance companies, timely removed the action to this Court in September, 2001.

II. Analysis

It is axiomatic that federal courts are courts of limited jurisdiction. As such, the requirement that jurisdiction be established as a threshold matter is inflexible and without exception. Godfrey v. Pulitzer Publ'g Co., 161 F.3d 1137, 1141 (8th Cir.1998). While defects in personal jurisdiction may be waived by the parties, subject matter jurisdiction is primary and acts as an absolute stricture on the Court. See In re: Prairie Island Dakota Sioux, 21 F.3d 302, 304-05 (8th Cir.1994). Congress has established diversity jurisdiction and federal question jurisdiction as the bases for subject matter jurisdiction. The removal statute was drafted to limit removal jurisdiction; therefore, the Court resolves any doubt against removal jurisdiction. See American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951).

A. Diversity Jurisdiction

The first potential jurisdictional basis is diversity. Defendants claim diversity jurisdiction exists in eight of the ten cases.² In order to remove a case to federal court on this basis, defendants must establish that the parties are citizens of different states and that the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. The parties generally agree that the complaints show diversity of citizenship. But the parties vigorously disagree as to whether the complaints demonstrate the amount in controversy exceeds $75,000 for each plaintiff.

When contesting a motion to remand, the non-moving party bears the burden of proving that the complaint establishes the requisite amount in controversy by a preponderance of the evidence. See United States v. Hays, 515 U.S. 737, 743, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995); Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809, 814 (8th Cir.1969). A post-petition affidavit is relevant to clarify ambiguities regarding damages alleged at time of removal. See Dyrda v. Wal-Mart Stores, Inc., 41 F.Supp.2d 943, 949 (D.Minn.1999).

Defendants, in removing these cases to federal court, claim that, notwithstanding the complaints' stated claim of damages in excess of $50,000, in reality, each plaintiff actually seeks a sum in excess of $75,000. Defendants reach this conclusion using a number of formulations. First, they claim that plaintiff Southern Minnesota Beet Sugar Cooperative seeks damages of $77,500,000, and suggest that the Court divide this sum by the number of cooperative-members, thus arriving at an average loss of approximately $140,000. They argue that this sum satisfies the amount in controversy requirement. The Court rejects this theory.

Defendants' average-loss methodology fails to demonstrate that each individual plaintiff has actually pleaded the requisite $75,000 amount in controversy. The argument purposely misconstrues the amount of damages each individual plaintiff pleaded by improperly consolidating all of their claims. Congress's amount in controversy cannot be met by simplistic averaging, but must instead be shown by the amount included in the well-pleaded complaint. See Share v. Air Properties G. Inc., 538 F.2d 279, 282-83 (9th Cir.1976).

Further, the Court considers B- and defendants cannot deny B—that at least some plaintiffs have suffered losses well below the $75,000 threshold. The Court therefore finds that the defendants' aggregated-sum-divided-by-the-number-of-plaintiffs theory does not establish, by a preponderance of the evidence, that each individual plaintiff's insurable contract losses were in excess of $75,000.

Defendants next argue that even if some individual claimants seek less than $75,000, the Court has supplemental jurisdiction over the less-than-$75,000 claims under 28 U.S.C. § 1367(a). This argument also fails. In Zahn v. International Paper Co., 414 U.S. 291, 296, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973), the Supreme Court explicitly held that each member of a diversity-based class action must satisfy the amount in controversy. The Eighth Circuit Court of Appeals, considering the continuing validity of Zahn following congressional codification of supplemental jurisdiction under 28 U.S.C. § 1367(a), found the amount in controversy requirement unchanged. See Trimble v. Asarco Inc., 232 F.3d 946, 960-62 (8th Cir.2000). Applying these principles, it is clear that each individual plaintiff must meet the amount in controversy requirement in order to establish diversity jurisdiction.

As a third fallback position, defendants ask the Court to sever those claims which do not satisfy the amount in controversy, by remanding the less-than-$75,000 claims, and keeping the over$75,000 claims. While charming in its willingness to allow this Court to cherry-pick the "bigger" cases, this argument, too, must fail. It is clear that, in class action cases, a court may sever claims which do not satisfy the amount in controversy requirement, Zahn, 414 U.S. at 295, 94 S.Ct. 505. But a court lacks this power in cases which simply involve a large number of individual— as opposed to class action—joined parties. See Crenshaw v. Great Cent. Ins. Co., 482 F.2d 1255, 1260 (8th Cir.1973) (remanding claims in insurance case because all plaintiffs do not meet amount in controversy requirement).

Defendants' final theory, however, has merit, and compels this Court's decision to maintain a number of the cases in federal court. Here, defendants rely on the complaints' actual claims, rather than on the way they wish plaintiffs had asserted those claims.

Defendants argue that the complaints, fairly read, assert claims in excess of $75,000, rather than the artfully asserted "in excess of $50,000" amount stated on the face thereof. They base this assertion on the fact that each plaintiff seeks over $50,000 in contract damages,³ and makes an additional demand for $50,000 in statutory fraud damages, attorney's fees and costs. Here, defendants prevail, because when determining the amount in controversy in a case brought under diversity jurisdiction, the Court aggregates fraud and contract claims. See McCall v. UNUM Life Ins. Co. of America, 2001 WL 1388013, 2001 U.S. Dist. LEXIS 18132, *9-10 (N.D.Tx. November 6, 2001) (aggregating claims sounding in tort Lamb v. Amalgamated Labor Life Ins. Co., 602 F.2d 155 (8th Cir.1979)) (considering aggregation of tort and contract claims to meet amount in controversy requirement); Lynch v. Porter, 446 F.2d 225, 228 (8th Cir.1971) (allowing plaintiffs to aggregate claims to meet amount in controversy requirement). Plaintiffs have asserted discrete claims sounding in both contract and fraud. While plaintiffs defend against removal by claiming the Minnesota Consumer Fraud Act claim merely adds attorneys fees and costs to what is otherwise an alternative contract remedy,⁴ the Court finds this claim actually sounds in tort.

The Minnesota Supreme Court has carefully considered the nature of the Minnesota Consumer Fraud Act in Group Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2 (2001). See also Minn.Stat. §§ 325F.67-325F.70; Minn.Stat. § 8.31. In Group Health, the Court recognized the Act's broad remedial consumer protection aspect, characterizing the regulated conduct as "a misdemeanor and a public nuisance." See id. at 11-12. The Court described the statute as an alternative to common law fraud, see id. at 13-14; State by Humphrey v. Alpine Air Prods., Inc., 500 N.W.2d 788, 790 (Minn.1993), and as a tort cause of action. See West v, Walker, 181 Minn. 169, 231 N.W. 826 (1930); Opatz v. John G. Kinnard & Co., 454 N.W.2d 471, 473 (Minn.1990).

The Supreme Court also referred to the Consumer Fraud Act...