Forest v. Penn Treaty American Corp.
| Decision Date | 26 June 2003 |
| Docket Number | No. 5:03-CV45OC10GRJ.,5:03-CV45OC10GRJ. |
| Parties | Elsie M. FOREST, Thomas H. Wiess and Angela H. Wiess, on behalf of themselves and all others similarly situated, Plaintiffs, v. PENN TREATY AMERICAN CORPORATION and Penn Treaty Network America Insurance Company, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Anthony A.B. Dogali, Forizs & Dogali, P.L., Tampa, for Elsie M. Forest, on behalf of themselves and all others similarly situated, Thomas H. Wiess, on behalf of themselves and all others similarly situated, Angela H. Wiess, on behalf of themselves and all others similarly situated, plaintiffs.
Edwin C. Cluster, Ayres, Cluster, Curry, McCall, Collins & Fuller, P.A., Ocala, David L. Yohai, Mindy J. Spector, John Mastando, Weil, Gotshal & Manges, LLP, New York, NY, for Penn Treaty American Corp., Penn Treaty Network America Insurance Co., defendants.
The United States Magistrate Judge has issued a report (Doc. 46) recommending that the Class Plaintiffs' Motion to Remand To State Court (Doc. 21) be granted and that this case be remanded to the Circuit Court for the Fifth Judicial Circuit in and for Marion County, Florida. Neither party has objected to the report and recommendation of the Magistrate Judge and the time for objecting has elapsed.
Accordingly, upon due consideration, and upon an independent examination of the file, it is ordered that:
(1) the report and recommendation of the Magistrate Judge (Doc. 46) is adopted, confirmed, and made a part hereof;
(2) the Class Plaintiffs' Motion To Remand To State Court (Doc. 21) is GRANTED, and this case is remanded to the Circuit Court for the Fifth Judicial Circuit in and for Marion County, Florida; and,
(3) the Clerk is directed, pursuant to 28 U.S.C. § 1447(c), to mail a certified copy of this Order to the Clerk of the Fifth Judicial Circuit Court in and for Marion County, Florida, and to close the file on this matter.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION1
Pending before the Court is the Class Plaintiffs' Motion To Remand To State Court ("Motion to Remand") (Doe. 21). The Defendants have filed a response in opposition to the Plaintiffs' motion (Doc. 29), and the matter is now ripe for review. For the following reasons, the Class Plaintiffs' Motion To Remand To State Court is due to be GRANTED.
On January 10, 2003, in the Circuit Court of the Fifth Judicial Circuit, in and for Marion County, Florida, the Plaintiffs, individually and on behalf of all others similarly situated,2 filed a Complaint against the Defendants alleging claims for breach of fiduciary duty, breach of implied duty of good faith and fair dealing in an insurance contract, negligent misrepresentation, fraudulent misrepresentation, restitution and reformation. (Doc. 2 at 1-2, 41.) The Plaintiffs allege that, from January 1, 1997 through the present, the Defendants induced the named and putative class Plaintiffs to purchase certain types of "long-term care" insurance policies at a below-market rate, only to substantially increase the premiums for these policies after the policies were purchased and the policyholders became otherwise "uninsurable" by other companies. (Doc. 2 at 4.) The Plaintiffs assert that the insurance premiums were increased despite the Defendants' assurances that the policies were "guaranteed renewable" and that the premiums would "not increase with age." (Doc. 2 at 2-3.)
The claims of the three named Plaintiffs in this matter are illustrative. Plaintiff Elsie M. Forest suffers from diabetes, bulging spinal disks, bone spurs, high cholesterol, and colitis. (Doc. 2 at 34.) She has been retired since the late 1980s and cares for her infirmed husband. Although she purchased her insurance policy at a rate of $145.86 per month in 1999, Plaintiff Forest's insurance premiums have allegedly increased by 35% to $196.91 per month. (Doc. 2 at 34.)
Plaintiffs Thomas H. Weiss and Angela H. Weiss are husband and wife. Mr. Weiss is 79 years of age, and Mrs. Weiss is 76 years of age. (Doc. 2 at 35.) They live on a fixed income of $2,000 per month and both have "significant health problems." (Doc. 2 at 35-36.) For example, subsequent to purchasing his insurance policy, Mr. Weiss had open heart surgery and ten angioplasties, and has received treatment for Alzheimer's disease. (Doc. 2 at 36.) Mr. and Mrs. Weiss purchased long-term care policies from the Defendants in 1999. In 2002, Mr. and Mrs. Weiss were notified that their premiums were being raised. All three named Plaintiffs allege that, due to their advancing age and health problems they are now unable to obtain long-term care insurance coverage with an alternate provider, forcing them to retain their policies with the Defendants.
As disclosed in the Complaint, the Plaintiffs primarily are seeking only two forms of relief: (1) the reformation of the insurance contract3 and (2) a money damage award in the amount of the increased premium payments paid to the Defendants less the amount that the Plaintiffs originally agreed to pay.4 Thus, the monetary award sought by the Plaintiffs is the difference between the price of the insurance premiums at the time of purchase and the price of the insurance premiums at the "unreasonable" higher premium rate.
The Defendants removed this matter to federal court on February 6, 2003, on the basis of diversity of citizenship jurisdiction, 28 U.S.C. § 1332. (Doc. 1.) Shortly thereafter, the Plaintiffs filed the current Motion to Remand, alleging that the Plaintiffs' claims are insufficient to meet the amount in controversy threshold. (Doc. 21.) On April 29, 2003, the Court heard oral argument on the Motion to Remand.
It is "by now axiomatic that the inferior federal courts are courts of limited jurisdiction," empowered "to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution and which have been entrusted to them by a jurisdictional grant authorized by Congress."5 A defendant may "remove a case to federal court only if the district court could have had jurisdiction over the case had the case been brought there originally."6 District courts have original jurisdiction over diversity cases, pursuant to 28 U.S.C. § 1332, and matters arising under federal law, pursuant to 28 U.S.C. § 1331.7
Where a plaintiff has objected to a defendant's removal, the burden of proof is on the defendant, as the removing party, to prove by a preponderance of the evidence that the action was properly removed.8 Because removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly and doubts about jurisdiction should be resolved in favor of remand to state court. Indeed, "[a] presumption in favor of remand is necessary because if a federal court reaches the merits of a pending motion in a removed case where subject matter jurisdiction may be lacking it deprives a state court of its right under the Constitution to resolve controversies in its own courts."9
The Defendants allege that this Court has jurisdiction in the instant case pursuant to 28 U.S.C. § 1332, the diversity jurisdiction statute. Under § 1332, a district court has original jurisdiction over "any civil case if (1) the parties are citizens of different States and (2) the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs."10 At issue in the current case is the latter requirement, as the Plaintiffs contend that their claims for damages fall short of the $75,000 jurisdictional threshold. In determining whether the $75,000 jurisdictional threshold is met, the Court must look solely to the amount in controversy at the time of removal.11
It is uncontested that the claims of the named Plaintiffs are insufficient to meet the amount in controversy requirement.12 The Defendants, however, in attempting to establish that the amount in controversy threshold is met in this case, do not rely on the claims of the named Plaintiffs, but rather rely on the claims of one unnamed putative class member whose restitution claim allegedly is sufficient to establish subject matter jurisdiction for all Plaintiffs in this case. (Doc. 29 at 9.)
The Defendants' argument raises several issues, some of which are unsettled under existing caselaw.
The first issue raised by the Defendants' motion is whether the claims of all plaintiffs must exceed the $75,000 threshold or whether the district court has supplemental jurisdiction, pursuant to 28 U.S.C. § 1367, over the remaining plaintiffs in the class action, once at least one of the claims of the named plaintiffs exceeds the jurisdictional amount. As discussed below, in order for Defendants to prevail on this issue the Court must conclude that the Supreme Court's holding in Zahn v. International Paper Company13 was overruled by the 1990 amendments to 28 U.S.C. § 1367.
Secondly, assuming that § 1367 overrules Zahn, the Court must then determine whether the amount of damages claimed by an unnamed plaintiff can be used to satisfy the amount in controversy requirement and, thus, trigger § 1367 supplemental jurisdiction.
Finally, assuming that the amount of damages claimed by an unnamed plaintiff could be used to satisfy the amount in controversy, the Court must determine whether the unnamed Plaintiff in the current case can actually meet the $75,000 threshold.
While the Court determines that ultimately the Defendants have failed to establish that the claim of any plaintiff— even that of an unnamed plaintiff—is in excess of $75,000, the Court will, nonetheless, address each of the issues raised by Defendants.
The Court will first address the issue of whether § 1367 can be used to establish supplemental jurisdiction assuming the Plaintiff could establish that...
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