Gober v. Allstate Ins. Co.

• Decision Date: 27 June 1994
• Docket Number: Civ. A. No. 1:94-CV-197RR.
• Citation: 855 F. Supp. 158
• Parties: David B. GOBER, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

855 F. Supp. 158

David B. GOBER, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.

Civ. A. No. 1:94-CV-197RR.

United States District Court, S.D. Mississippi, Southern Division.

June 27, 1994.

Donald C. Dornan, Jr., Biloxi, MS, for plaintiff.

William C. Griffin, Steen, Reynolds, Dalehite & Currie, Jackson, MS, for defendant.

MEMORANDUM ORDER

DAN M. RUSSELL, Jr., District Judge.

This matter is before the Court on Plaintiff's Motion to Remand.

Background

On March 18, 1994, David B. Gober filed a Complaint in the County Court of Jackson County against his insurer, Allstate Insurance Company, alleging negligence and badfaith denial of a valid insurance claim. Gober seeks actual damages ($10,000) under the uninsured-motorist ("UM") provision of his insurance policy and punitive damages for the bad-faith denial. The Complaint specifies that, at most, Allstate's potential liability "will not exceed the sum of $50,000" — which satisfies the jurisdictional requirements of county court. See Complaint at 1; see also Miss.Code Ann. sec. 9-9-21 (1972) ("county court ... shall have jurisdiction ... in all matters ... wherein the amount of value of the thing in controversy shall not exceed, exclusive of costs and interest, the sum of Fifty Thousand Dollars ($50,000.00)").

On April 13, 1994, Allstate filed a Notice of Removal — removing the case from the county court to this Court. Allstate contends that the "matter in controversy ... exceeds the sum of $50,000 exclusive of interest and costs, based on Plaintiff's demands for punitive damages and based on the fact that it could thereby be potentially liable in excess of $50,000.00, exclusive of interest and costs." See Defendant's Notice of Removal at 2. Gober countered with a Motion to Remand, through which he contends that removal was improper because the amount in controversy does not exceed $50,000.

In sum, the first prong of 28 U.S.C. sec. 1332 — diversity of citizenship — is not in dispute. The dispute is whether the second prong — amount in controversy — has been met and removal justified.

Discussion

Removal is governed by federal statute:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. sec. 1441(a); Powers v. South Central United Food & Commercial Workers Unions & Employers Health & Welfare Trust, 719 F.2d 760, 763 (5th Cir.1983) ("The `original jurisdiction' to which section 1441 refers can rest with the federal courts because of diversity of citizenship between the parties...."). This statute must be construed narrowly in order to limit federal jurisdiction and avoid undue encroachment on a state's right to adjudicate a case filed in one of its courts. See, e.g., American Fire & Casualty Co. v. Finn, 341 U.S. 6, 10, 71 S.Ct. 534, 538, 95 L.Ed. 702 (1951) ("Congress, in sec. 1441, carried out its purpose to abridge the right of removal"), quoted in Powers, 719 F.2d at 762; see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 871-72, 85 L.Ed. 1214 (1941) (referring to precursor of sec. 1441); La Chemise Lacoste v. Alligator Co., 506 F.2d 339, 344 (3rd Cir.1974), cert. denied, 421 U.S. 937, 95 S.Ct. 1666, 44 L.Ed.2d 94 (1975); Range Oil Supply Co. v. Chicago, Rock Island & P.R. Co., 248 F.2d 477, 479 (8th Cir.1957); Town of Freedom, Okla. v. Muskogee Bridge Co., 466 F.Supp. 75 (W.D.Okla.1978). This principle, calling for strict construction of section 1441, is particularly applicable in cases involving diversity of citizenship. See, e.g., Robinson v. Quality Ins. Co., 633 F.Supp. 572, 574 (S.D.Ala.1986) ("This is especially true in diversity cases.") (citing cases). Thus, and of utmost import, a district court "should resolve doubt in favor of non-removal." Auto Ins. Agency, Inc. v. Interstate Agency, Inc., 525 F.Supp. 1104, 1106 (D.S.C.1981) (citing cases); see also Young Spring & Wire Corp. v. American Guarantee & Liability Ins. Co., 220 F.Supp. 222, 228 (W.D.Mo.1963) ("Statutes providing for removal on the grounds of diversity of citizenship are given strict construction in favor of the jurisdiction of the state court.") (citing Shamrock Oil & Gas Co., 313 U.S. at 100, 61 S.Ct. at 868); Keller v. Carr, 534 F.Supp. 100, 103 (W.D.Ark.1981) (citing numerous cases).

The burden to "affirmatively" establish "by competent proof" federal jurisdiction — including the requisite amount in controversy at the time of removal — lies with the removing party. See Pullman Co. v. Jenkins, 305 U.S. 534, 540, 59 S.Ct. 347, 350, 83 L.Ed. 334 (1939); McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); Jernigan v. Ashland Oil Co., 989 F.2d 812, 815 (5th Cir.1993); Walker v. Federal Deposit Ins. Corp., 970 F.2d 114, 119 (5th Cir.1992); B., Inc., v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981); Gaitor v. Peninsular & Occidental S.S. Co., 287 F.2d 252, 253 & 255 (5th Cir.1961). The specific burden, however, which a defendant must meet to successfully contest a motion to remand "is a question on which courts have disagreed¹ and for which there is no clear answer in this Circuit."²Asociacion Nacional De Pescadores A Pequena Escala O Artesanales De Colombia v. Dow Quimica De Colombia, S.A. ("ANPAC"), 988 F.2d 559, 564 (5th Cir.1993).

In ANPAC, a panel of the Fifth Circuit discussed but did not "resolve the question of the removing party's burden in all situations." Id. at 566. The panel did, however, hold that "where the following circumstances are present, the burden has not been met:"

(1) the complaint did not specify an amount of damages, and it was not otherwise facially apparent that the damages sought or incurred were likely above $50,000; (2) the defendants offered only a conclusory statement in their notice of removal that was not based on direct knowledge about the plaintiffs' claims; and (3) the plaintiffs timely contested removal with a sworn, unrebutted affidavit indicating that the requisite amount in controversy was not present.

Id.

According to the Complaint filed in this case, Gober seeks actual damages in the amount of $10,000 and punitive damages in an unspecified amount. The Complaint, albeit indeterminate,³ does provide some clues as to the aggregate amount which Gober is seeking to recover by noting that Allstate's potential liability "will not exceed the sum of $50,000." Indeed, under state statutory law, the maximum amount allowable in a county court is $50,000 (exclusive of costs and interest).⁴ Allstate counters that Gober's claim for punitive damages renders it "potentially liable in excess of $50,000." Allstate supports its contention by examining recent developments in bad-faith litigation which reveal punitive-damage awards far in excess of $50,000. See Defendant's Memorandum Brief at 4 (citing cases). However, this observation alone cannot be deemed "competent proof" of the requisite jurisdictional amount in controversy. Cf. Coleman v. Southern Norfolk, 734 F.Supp. 719, 721 (E.D.La.1990) (granting plaintiff's motion to remand on the ground that defendant's reliance on damages claims in similar suits did not constitute the type of "affirmative showing" required of parties seeking removal).⁵ At best, Allstate must base removal on nothing more than mere speculation. Indeed, the Complaint and other documentation are devoid of specific information or facts to support Allstate's valuation of Gober's claims. See, e.g., ANPAC, 988 F.2d at 566 (instructing the district court to remand case, in part, because defendant "did not, and probably could not have, offered sic any facts to support its valuation of plaintiffs' claims"); Cole v. Great Atlantic & Pacific Tea Co., 728 F.Supp. 1305, 1309 (E.D.Ky.1990) ("defendant should make an independent inquiry as to the extent of damages or run the risk of remand"). Under such circumstances and keeping in mind the principles that 28 U.S.C. sec. 1441 must be narrowly construed and any doubt should be resolved in favor of nonremovability, this Court shall decline jurisdiction and remand the case to the county court from which it was removed.⁶See, e.g., American Fire & Casualty Co., 341 U.S. at 10, 71 S.Ct. at 538; Great Atlantic & Pacific Tea Co., 728 F.Supp. at 1309; Auto Ins. Agency, Inc., 525 F.Supp. at 1106; Young Spring & Wire Corp., 220 F.Supp. at 228.

Conclusion

This Court concludes that the circumstances present in ANPAC are sufficiently present in this case: (1) The substance of the Complaint does not establish to this Court's satisfaction that the damages sought or incurred will likely exceed $50,000 (in fact, it seems to establish the contrary); (2) Allstate's contention that damages will exceed $50,000 amounts to nothing more than a conclusory statement based on mere speculation; and (3) Gober timely contested removal with an insufficiently rebutted declaration (contained in his Motion to Remand) that the amount in controversy which he seeks to recover does not exceed $50,000. Accordingly, Allstate removed this case improvidently and without subject-matter jurisdiction. This case must be remanded pursuant to 28 U.S.C. sec. 1447(c).⁷ See Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct. 584, 589, 46 L.Ed.2d 542 (1976) ("Section 1447(d) prohibits review of all remand orders issued pursuant to sec. 1447(c) whether erroneous or not and whether review is sought by appeal or by extraordinary writ.... If a trial judge purports to remand a case on the grounds that it was removed `improvidently and without jurisdiction,' his order is `unreviewable.'") (emphasis in original); see also In re Medscope Marine Ltd., 972 F.2d 107, 108-10 (5th Cir.1992); Tillman v. CSX Transp., Inc., 929 F.2d 1023,...