Basham v. American Nat'l Cnty. Mut. Ins. Co.
| Decision Date | 06 September 2012 |
| Docket Number | CASE NO. 4:12-CV-04005 |
| Court | U.S. District Court — Western District of Arkansas |
| Parties | EDDIE BASHAM, as administrator of the estate of James Basham, and FREDA MCCLENDON, individually and as class representatives on behalf of all similarly situated persons PLAINTIFFS v. AMERICAN NATIONAL COUNTY MUTUAL INS. CO., et al. DEFENDANTS |
Pending is Plaintiffs Eddie Basham and Freda McClendon's Motion to Remand. (ECF No. 104). Defendants have responded. (ECF Nos. 1091 ; 1102 ; 1123 ; 1284 ; 1295 ; & 1376 ).
Plaintiffs have replied (ECF No. 142), and various Defendants have sur-replied. (ECF Nos. 1447 ; 1498 ; 1599 ; 16510 ; 16911 ; & 17312 ). The matter is thoroughly briefed and ripe for the Court's consideration. For the following reasons, Plaintiffs' motion will be granted.
This is a class action suit against numerous auto insurers and their affiliates. Plaintiffs accuse Defendants of conspiring to underpay bodily-injury insurance claims through a software program called "Colossus." The current iteration of the case was filed on December 7, 2011 in Miller County, Arkansas Circuit Court. Defendants removed it to this Court on January 17, 2012.
Several of Plaintiffs' counsel in this case filed "Colossus" suits as early as 2005 in Miller County Circuit Court. James Basham was a party to that 2005 case, Hensley et al v. CSC et al, No. cv-2005-59-3. Basham was severed from Hensley and became a named plaintiff in Basham et al., v. CSC et al., No. 2005-59-3A, also in Miller County Circuit Court. James Basham died in January 2010, and his son, Eddie, was substituted for him later that year. Eddie Basham voluntarily dismissed the state case on November 14, 2011. He re-filed it on December 7, 2011, and that is the case before this Court.
Meanwhile, the other named Plaintiff in this case, Freda McClendon, was pursuing her own Colossus class-action case in Sebastian County Circuit Court through some of her current counsel. The defendants in McClendon's Sebastian County case, which overlap substantiallywith the Defendants in this case, removed to federal court in Fort Smith. The federal court there remanded the case to Sebastian County Circuit Court. McClendon v. Chubb Corp., No. 2:11-CV-02034, 2011 WL 3555649 (W.D. Ark. Aug. 11, 2011). Having gotten what she wanted, McClendon found it less to her liking than she expected. When the Sebastian County Circuit Court, unlike the Miller County Circuit Court, declined to postpone a ruling on personal-jurisdiction issues, McClendon voluntarily dismissed her Sebastian County suit. She then joined Eddie Basham in filing the December 7, 2011 Miller County suit that is now before the Court.
Numerous Defendants in this case have filed motions to dismiss, mostly on the basis that personal jurisdiction is lacking. At Plaintiffs' request, however, the Court stayed resolution of the motions to dismiss until it rules on Plaintiffs' remand motion. (ECF No. 126).
Defendants wish to remain in federal court. They claim to have been repeatedly on the losing end of procedural rulings in Miller County Circuit Court; namely, that court's decisions to put off ruling on jurisdictional challenges until the class-certification stage of litigation. Plaintiffs, obtaining the benefit of those rulings, are happy to be in Miller County Circuit Court, and want to return there. This case is in federal court because Defendants contend that the Class Action Fairness Act (CAFA) allows it to be here.
To be in federal court under CAFA, a case must meet several criteria, but only one criterion is at issue in this case: the amount in controversy. According to CAFA, more than $5 million dollars must be in controversy if a case is to remain in federal court. 28 U.S.C. § 1332(d)(2) (2006). Plaintiffs have promised not to seek more than that amount. Defendants find that promise insufficiently reliable. The Court must decide whether Plaintiffs' promise creates a legal certainty that no more than $5 million is in controversy.
A defendant invoking federal-court diversity jurisdiction through removal must prove the required statutory amount in controversy by a preponderance of the evidence. Hargis v. Access Capital Funding, LLC, 674 F.3d 783, 798 (8th Cir. 2012) (quoting Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009)); see also 28 U.S.C. § 1446(c)(2)(B). The defendant does not have to prove by a preponderance that the amount in controversy is more than the statutory amount, but rather that a fact finder might legally conclude that it is. Hartis v. Chicago Title Ins. Co., 656 F.3d 778, 781 (8th Cir. 2009) (quoting Bell, 557 F.3d at 958)). If a defendant meets its burden, then a plaintiff seeking remand must establish to a legal certainty that the amount in controversy is less than the statute requires. Bell, 557 F.3d at 956. The legal-certainty standard is not met if even a possibility exists of recovering more than the statutory minimum. Back Doctors Ltd. v. Metropolitan Property & Casualty Ins. Co., 637 F.3d 827, 831 (7th Cir. 2011).
Here, the Court need not decide whether the Defendants have shown by a preponderance that the amount in controversy might exceed the statutory minimum; the Plaintiffs' stipulations, if they are binding, are enough to establish to a legal certainty that the statutory minimum is not met in this case. Rolwing v. Nestle Holdings, Inc., 666 F.3d 1069, 1074 (8th Cir. 2012).
Removal is defeated by adding to the complaint a binding stipulation promising not to seek greater damages than the jurisdictional minimum. Bell, 557 F.3d at 958. The parties in this case agree on that point. They disagree on whether the Plaintiffs' stipulations are binding. Plaintiffs rely on several parts of their complaint as stipulations, but the most unitary portion states:
Through whatever form of relief may be available, Plaintiffs seek recovery of less than $75,000 for each Plaintiff or Class Member from all Defendants, jointly andseverally, including all interests and costs, including pre-judgment interest, post-judgment interest, court costs, and non-statutory attorneys fees. Therefore, although Plaintiffs contend Defendants are jointly and severally liable for all damages and relief owed to each Plaintiff and Class Member, Plaintiffs expressly seek less than $75,000 total—from whatever source—on behalf of each Plaintiff or Class Member and so stipulate for all purposes. Plaintiffs further stipulate that they seeks[sic] less than $5,000,000 total aggregate award for themselves combined and all Class Members. Plaintiffs further stipulate that they exclude and forego any actual or potential entitlement to statutory fees. Pursuant to Arkansas Rule of Civil Procedure 8(a), each Plaintiff and each Class Member is limited to less than $75,000 recovery individually and less than $5,000,000 total aggregate award for all Class Members and Plaintiffs so stipulate for all purposes.
(ECF No. 5, at 53-54). Defendants essentially find four faults with Plaintiffs' stipulations. The Court will address each in turn.
First, Defendants contend that Plaintiffs seek injunctive relief falling outside the stipulation's coverage. The source of this argument is the Plaintiffs' decision to include in each paragraph of their prayer for relief, save one, a separate promise to seek less than the requisite amount in controversy. Plaintiffs omitted to make such a promise in the paragraph seeking injunctive relief. Defendants argue that the omission in that paragraph is an admission that injunctive relief is uncapped. While the omission is odd, the Court finds that it is saved by the unitary stipulation concluding the prayer for relief. That stipulation caps recovery at $75,000 for each member and at $5 million for the whole class, "[t]hrough whatever form of relief may be available." Injunctive relief is a form of relief. Because they capped "whatever form of relief may be available," Plaintiffs capped injunctive relief.
Moreover, the same stipulation purports to limit the "total aggregate award," which would include the value of injunctive relief. Further still, in the "Jurisdiction and Venue" section of their complaint, Plaintiffs stipulate to a "total amount in controversy" of less than $5 million. (ECF No. 5, at 20). "Amount in controversy" includes injunctive relief. Thomas v. CountrywideHome Loans, No. 3:11-CV-399-WKW, 2012 WL 527482, at *6 (M.D. Ala. Feb. 17, 2012). The court thus finds that Plaintiffs have sufficiently capped injunctive relief.
Second, Defendants argue that Plaintiffs' promise not to seek a certain award does not foreclose Plaintiffs from accepting a higher award. For several reasons, the Court is not persuaded by the distinction.
First, this district does not require magic words to effectuate a stipulation. Smith v. American Bankers Ins. Co., No. 2:11-CV-02113, 2011 WL 6090275, at *5 (W.D. Ark. Dec. 7, 2011) (); Knowles v. Standard Fire Ins. Co., No. 4:11-CV-04044, 2011 WL 6013024, at *4 (W.D. Ark. Dec. 2, 2011). The intent beneath the words is what matters, and a plain reading of Plaintiffs' stipulation reveals a clear intent to be bound by it.
Second, Plaintiffs' stipulation states that "each Plaintiff and each Class Member is limited to less than $75,000 recovery individually and less than $5,000,000 total aggregate award...." (ECF No. 5, at 54) (emphasis added). "Limited" restrains "seeking." By limiting their recovery, Plaintiffs effectively restrict what they will accept.
Third, while Defendants fear that Arkansas Rule of Civil Procedure 54—which states that final judgments shall grant the prevailing party the relief to which it is entitled—entitles Plaintiffs to more relief than they seek, that fear is unfounded. Cases interpreting Federal Rule of Civil Procedure 54(c), which is essentially...
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