Brewer v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 12 June 2000
• Docket Number: No. IP00-0184-C-B/S.,IP00-0184-C-B/S.
• Citation: 101 F.Supp.2d 737
• Parties: Dennis BREWER, Mary Brewer, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

101 F.Supp.2d 737

Dennis BREWER, Mary Brewer, Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. IP00-0184-C-B/S.

United States District Court, S.D. Indiana, Indianapolis Division.

June 12, 2000.

Peter C. King, Cline King & King, Columbus, IN, for plaintiff.

Richard M. Davis, Hoeppner Wagner & Evans Llp, Merrillville, IN, for defendant.

ENTRY GRANTING PLAINTIFFS' MOTION TO REMAND

BARKER, Chief Judge.

Plaintiffs, Dennis and Mary Brewer ("the Brewers"), allege that the defendant, State Farm Mutual Automobile Insurance Company ("State Farm"), failed to pay medical bills arising from an auto accident covered by their automobile insurance policy ("policy"), which failure constitutes a breach of that policy, tortious failure to process medical payments, and negligent infliction of emotional distress. The Brewers originally filed this suit in state court and State Farm removed it to this court, pursuant to 28 U.S.C. § 1441(a), invoking diversity jurisdiction under 28 U.S.C. § 1332(a). The Brewers dispute the existence of subject matter jurisdiction and move to have this action remanded to state court. For the reasons discussed below, Plaintiffs' motion must be GRANTED.

Background

The Brewers possess an insurance policy on their automobile with State Farm, which they contend includes coverage for medical bills arising out of an accident involving the covered automobile. See Compl. Count I ¶¶ 1-3; Defendant's Response to Plaintiffs' Motion to Remand ("Def.'s Resp."), Ex. A ("Policy"). The accident occurred on August 6, 1999.¹ See Compl. Count II ¶ 4. The Brewers allege that they timely sent the necessary medical records to State Farm and that State Farm failed to pay any of the medical bills. See id. Plaintiffs claim to have suffered damages due to this failure, including unpaid medical bills, mental anxiety, humiliation, financial burden, and emotional distress. See id., Count I ¶ 8, Count II ¶ 3, Count III.²

The Brewers filed their complaint in the Bartholomew County, Indiana, Circuit Court on December 30, 1999, asserting three counts: (1) breach of contract, (2) tortious failure to process plaintiffs' medical payments, and (3) negligent infliction of emotional distress. See Compl. Defendant's removal was premised on the Brewers being citizens of Indiana, and State Farm being incorporated with its principal place of business in Illinois, and the amount in controversy exceeding $75,000 for each plaintiff. See Notice of Removal ("Notice") § IV. Plaintiffs have moved to remand to state court, contending that State Farm failed to establish both that the amount in controversy exceeded $75,000 and that diversity of citizenship existed at the time the complaint was filed.

Discussion

A. Standard of Review

A case may be removed from state to federal court if it might have been brought originally in federal court; that is; if federal subject matter jurisdiction existed, based on either diversity of citizenship or federal question jurisdiction, removal is proper. See Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir.1993). A defect in the removal procedure or a lack of subject matter jurisdiction requires remand of the action to state court. See id. at 366. Furthermore, the propriety of removal is to be strictly construed against removal, with all doubts resolved in favor of remand. See People of the State of Illinois v. Kerr-McGee Chem. Corp., 677 F.2d 571, 576 (7th Cir.1982).

B. Removal and Proof of Amount in Controversy

When the court's subject matter jurisdiction is challenged, we first look to the face of the complaint to verify that the elements of diversity jurisdiction are satisfied. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995); Reason v. General Motors Corp., 896 F.Supp. 829, 832 (S.D.Ind.1995); Shaw, 994 F.2d at 366. Inherent difficulties arise, however, when the basis for removal is challenged and the complaint omits the amount in controversy. See Reason, 896 F.Supp. at 832-33. In such cases, we look to evidence outside of the pleadings to establish the amount in controversy. See Chase v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427-28 (7th Cir.1997).

When jurisdiction is challenged, the party seeking federal jurisdiction bears the burden of proving that it exists. See NLFC, 45 F.3d at 237; Reason, 896 F.Supp. at 834. Thus, when the plaintiff challenges jurisdiction in a removed action, the defendant must respond with "competent proof" that subject matter jurisdiction exists. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); NLFC, 45 F.3d at 237; Reason, 896 F.Supp. at 834; Shaw 994 F.2d at 366 n. 2. This burden requires the defendant to provide evidence of a reasonable probability that federal jurisdiction exists. See NLFC, 45 F.3d at 237; Shaw, 994 F.2d at 366 n. 2.³

For example, in Reason, the plaintiff contended that the amount in controversy had not been sufficiently established. Id. at 834. The defendants responded with citations to large verdicts for plaintiffs in cases involving generally the same claims and with plaintiff's settlement with another party. See id. The court said that it could not make useful comparisons on the basis of the cases presented by the defendant because the defendant failed to provide enough factual information to determine whether any similarities existed. See id. at 835. The complaint failed to establish the amount in controversy, providing only a vague description of the damages that the plaintiff claimed: "severe injuries, including ... injuries to her head and mouth, a broken nose, a broken left knee...." Id. The court concluded that while the factual assertions in the complaint established a possibility that the plaintiff's claim could satisfy the amount in controversy requirement, this possibility was too speculative to satisfy the reasonable probability standard. See id. Thus, the court held that the defendant failed to present competent proof of a reasonable probability that the amount in controversy requirement was satisfied. See id. at 834.

Similarly, in King v. Wal-Mart Stores, Inc., 940 F.Supp. 213, 214 (S.D.Ind.1996), the plaintiff challenged the defendant's assertion that the amount in controversy requirement had been met in an action removed from state court. To support its removal position, the defendant relied on the plaintiff's complaint filed in state court, which alleged that plaintiff suffered "pain and injuries, ... incurred medical expenses," and expected to suffer additional pain in the future, although the complaint did not specify the amount in controversy. Id. at 216. The court found that the complaint's "general allegations surely [did] not facially constitute a dollar amount exceeding [the threshold requirement]." Id. The defendant also relied on the plaintiff's report of special damages of over $10,000, plaintiff's $50,000 settlement demand, and the demand for reimbursement of past and future lost wages. See id. at 217. The court remanded the action, holding that this evidence, taken together with the complaint, was still insufficient to provide competent proof of a reasonable probability that the jurisdictional amount in controversy had been met. See id.

In the case at bar, the Brewers' motion to remand, challenging this court's jurisdiction over the matter, triggers State Farm's duty to produce "competent proof of a reasonable probability" that we have subject matter jurisdiction over the Brewers' claims. The Brewers' complaint does not allege a specific amount in controversy; thus, we turn to determine whether State Farm has presented additional, competent proof that the amount in controversy is satisfied. State Farm presented the following evidence to satisfy this burden: (1) plaintiff's insurance policy, (2) other cases and state laws regarding punitive damages, (3) other cases involving awards for emotional distress, and (4) plaintiffs' refusal to sign an agreement not to execute a judgment in excess of $75,000. See Def.'s Resp. As was true in Reason and King, we conclude that the evidence provided by State Farm demonstrates the possibility that the amount in controversy is satisfied, but that possibility is still too speculative to rise to the level of competent proof that jurisdiction is proper here.

The Brewers' insurance policy includes a medical payment provision capping benefits at $25,000 per person. See Policy. Although State Farm contends that this establishes that Count I is worth $25,000 to each plaintiff, see Def.'s Resp. at 2, the policy only shows how much the Brewers could recover under certain circumstances. Absent some indication of the actual value of the plaintiff's medical claims, the policy limits allow no conclusion as to value to be drawn. The Brewers allege that State Farm has the relevant documents in its possession, but State Farm has failed to produce any medical records, claim forms, or other documentation that might have established, to a reasonable probability, the amount actually recoverable in this case. Cf. Harmon v. OKI Systems, 902 F.Supp. 176, 178-79 (S.D.Ind.1995), (holding defendant's proffered evidence sufficiently concrete to establish a reasonable probability that the amount in controversy was satisfied where defendant relied on plaintiff's already incurred medical bills in excess of $55,000, lost wages in excess of $80,000, and a demand for punitive damages).

Similarly, State Farm argues that the Brewers' complaint constructively alleges a claim for State Farm's breach of good faith and fair dealing, which they contend could support an award of punitive damages. See Def.'s Resp. at 4. Relying on Indiana Code § 34-51-3-4, which permits awards of punitive damages equaling the greater of $50,000 or three times the amount of compensatory damages awarded, State Farm triples the $25,000 amount discussed above to reach a potential $75,000 punitive damages award. See id....