Bolling v. Union Nat. Life Ins. Co.

• Citation: 900 F. Supp. 400
• Decision Date: 02 October 1995
• Docket Number: No. CV-5-A-719-N.,CV-5-A-719-N.
• Parties: Charlie Mae BOLLING, Plaintiff, v. UNION NATIONAL LIFE INSURANCE COMPANY, et al., Defendants.
• Court: United States District Courts. 11th Circuit. Middle District of Alabama

900 F. Supp. 400

Charlie Mae BOLLING, Plaintiff, v. UNION NATIONAL LIFE INSURANCE COMPANY, et al., Defendants.

No. CV-5-A-719-N.

United States District Court, M.D. Alabama, Northern Division.

October 2, 1995.

Jock M. Smith, Tuskegee, AL, Thomas R. Fields, Hayneville, AL, for plaintiff.

William H. Brooks, M. Christian King, Birmingham, AL, for defendants.

MEMORANDUM OPINION AND ORDER

ALBRITTON, District Judge.

INTRODUCTION

This cause is before the court on the Plaintiff's Motion to Remand, filed on June 9, 1995.

Plaintiff filed this suit in the Circuit Court of Lowndes County, on or about April 21, 1995. Plaintiff alleged various causes of action including fraud, fraudulent suppression, and breach of contract against Union National Life Insurance Company ("Union National") and Sexton. The defendant Union National removed the case to federal court on May 26, 1995, pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332, the diversity statute.

The first issue presented in this case involves the amount in controversy requirement under § 1332. The plaintiff's complaint did not include a claim for a specific amount in an ad damnum clause, and therefore the claim seeks recovery of an unspecified amount, including punitive damages. According to the defendant, to justify remand to state court, the amount in controversy at the time of removal must appear to a legal certainty to be less than the jurisdictional amount. Plaintiff contends that where there is no specified amount in the complaint, the defendant bears the responsibility of proving to a legal certainty that the amount in controversy is more than $50,000.

A second issue requires the court to examine whether there exists complete diversity in this action. Plaintiff alleges that she is a citizen of Alabama. The defendant Union National is apparently a corporation organized under the laws of Louisiana with its principal place of business in Louisiana. Defendant Sexton is allegedly a citizen of Alabama. Thus, there is no question that, under the facts alleged, one of the named defendants (Sexton) is a non-diverse party, and federal jurisdiction would ordinarily be lacking. However, the defendant Union National contends that Sexton was fraudulently joined solely to destroy diversity and that therefore his citizenship should be disregarded by the court in its jurisdictional analysis.

For the reasons set forth below, the court finds that the defendant has sufficiently established that the amount in controversy exceeds the requisite $50,000, exclusive of costs and interest. However, because the court finds that defendant Sexton was not fraudulently joined, Plaintiff's Motion to Remand is due to be GRANTED.

FACTS

Because this motion to remand attacks only the jurisdiction of the court, most of the facts in the underlying complaint are not relevant at this time and will not be set forth herein.

There is no dispute as to two facts in this matter. First, at some point in the past, the plaintiff purchased one or more insurance policies on her son's life through the defendant Union National.¹ Second, this or these policies have since lapsed.

The plaintiff originally sued Union National and Sexton in state court under several state law theories including fraud, fraudulent suppression, and breach of contract. In each count of her complaint, the plaintiff concluded by stating "Wherefore, premises considered, Plaintiff prays for judgment for compensatory and punitive damages as a jury may award, interests and costs above the jurisdictional minimum of the Court."²

The plaintiff alleges that she purchased an insurance policy on her son's life from the defendant Union National in May 1988. She alleges that she fully complied with the terms of the policy and paid her premiums. It is somewhat unclear whether plaintiff contends that the company canceled her first policy without reason and issued a second policy, with an increase in the premium, or whether she contends that the company modified her policy and raised her premiums for no reason. It is clear that part of plaintiff's claim is that her policy was canceled.

The defendant contends that the plaintiff allowed the first policy to lapse in August 1988. Defendant also asserts that the plaintiff purchased a second policy, issued in January 1991, but that this second policy lapsed in March 1993.

According to the complaint, the cause of action against Sexton is based on the following:

6. ... Defendant, Eddie Sexton, ... represented to Plaintiff over a period of years, as an agent on the route, that her policy was in good standing with Defendants and that said policy had not been switched, changed, cancelled, or altered in anyway sic. Defendant Sexton continued to make these representations in spite of the Plaintiff's inquiry repeatedly as to why her premiums on said policy had increased from $8.04 per month to approximately $9.84 per month.

7. In reliance on said representations, Plaintiff signed the said application of insurance, secured the referenced policy, and subsequently throughout the years paid $8.04 per month and thereafter $9.84 per month ... Plaintiff was never given a copy of the said insurance policy by Defendant Eddie Sexton though she repeatedly asked him on a regular basis for a copy ... On each occasion, Defendant Sexton, represented to Plaintiff ... that said copy of the insurance policy would be delivered next month and that the policy was in good standing and current.

These are the only paragraphs in the complaint that detail any action taken specifically by the defendant Sexton³; however, in her complaint, the plaintiff repeatedly refers to actions taken by "Defendants." In some instances, these allegations could refer to Sexton.

Union National has submitted two affidavits in support of its Motion to Remand. According to these documents, Sexton was employed at United (not Union National) from April 6, 1992, through February 1, 1993, less than one full year. Based on the dates provided by the insurance company as to plaintiff's coverage, it appears that neither of the policies that form the basis of the complaint was issued while Sexton was an employee of either United or Union National. Additionally, Sexton was not employed by either company when the policies allegedly lapsed. It appears from the complaint that Sexton simply collected premiums from the plaintiff, assured her that her coverage had not been altered, and failed to deliver to her a copy of the policy. According to the evidence before the court, the second policy was in full effect throughout Sexton's employment with United.

REMAND

Federal courts are courts of limited jurisdiction. See, Kokkonen v. Guardian Life Ins. Co. of America, ___ U.S. ___, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994); Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (11th Cir.1994); Wymbs v. Republican State Executive Committee, 719 F.2d 1072, 1076 (11th Cir.1983), cert. denied, 465 U.S. 1103, 104 S.Ct. 1600, 80 L.Ed.2d 131 (1984). As such, they have the power to hear only those cases that they have been authorized to hear by Congress or by the Constitution. Kokkonen, ___ U.S. at ___, 114 S.Ct. at 1675. Because of this, the law in the Eleventh Circuit favors remand where federal jurisdiction is not absolutely clear. As stated by the Eleventh Circuit, "in deciding a motion to remand where the plaintiff and defendant disagree on issues of jurisdiction, questions or doubts are to be resolved in favor of returning the matter to state court." Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994).

A. Amount in Controversy

In order for a federal court to have jurisdiction over a case pursuant to the diversity statute, the amount in controversy must exceed $50,000, exclusive of costs and interest. 28 U.S.C. § 1332. It is the removing party who bears the burden of establishing the jurisdictional requirements, including the amount in controversy. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); Burns, 31 F.3d at 1094.

In the ordinary case, the plaintiff states the amount requested in her complaint, and the court may look to that amount in determining jurisdiction. Burns, 31 F.3d at 1094. As noted by the plaintiff, the Eleventh Circuit recently held that where a plaintiff specifically requests an amount under the jurisdictional level, the case should be remanded unless the defendant "can prove to a legal certainty that plaintiff's claim must exceed $50,000." Burns, 31 F.3d at 1095. However, in Burns the plaintiff specifically stated in her complaint that she sought actual and punitive damages "in such sum as the jury determines to be just, lawful, and fair, but not more than $45,000 plus costs." Id. at 1094 (emphasis added). The decision in Burns turned on the fact that the plaintiff's attorney, as an officer of the court who was bound by the ethical rules and the requirements of Rule 11, had claimed less than $50,000 in the complaint, and that the claim under these circumstances deserved deference and a presumption of truth. Therefore, the court required proof to a legal certainty that the claim must exceed $50,000 in order to overcome the lawyer's specific claim. Plaintiff's attorney in the instant case, however, has not included such a limitation in his client's complaint and, in fact, has specifically argued that he need not do so in order to be entitled to a remand. Because the complaint has failed to specify the damages sought, the attorney's integrity and duty of candor with the court arising from signing the complaint are not implicated and Burns does not apply.

The question, then, is what ought be the burden on a defendant trying to defeat a motion to remand under those circumstances and what should the court look to in order to determine whether or not the jurisdictional amount in controversy is met when the complaint contains no specific ad damnum.

In deciding these issues, the court...