Jackson v. Markel American Insurance Co., NO. 2:98CV20-B-B (N.D. Miss. 7/__/1998)

• Decision Date: 01 July 1998
• Docket Number: NO. 2:98CV20-B-B.,2:98CV20-B-B.
• Parties: ERNEST D. JACKSON, PLAINTIFF, v. MARKEL AMERICAN INSURANCE CO. AND AMERICAN UNDERWRITERS MANAGERS, DEFENDANTS.
• Court: U.S. District Court — Northern District of Mississippi

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ERNEST D. JACKSON, PLAINTIFF, v. MARKEL AMERICAN INSURANCE CO. AND AMERICAN UNDERWRITERS MANAGERS, DEFENDANTS.

NO. 2:98CV20-B-B.

United States District Court, N.D. Mississippi, Delta Division.

July __, 1998.

MEMORANDUM OPINION

NEAL B. BIGGERS, JR., District Judge.

This cause comes before the court on the plaintiff's motion for remand and amended motion for remand. The court has duly considered the parties' memoranda and exhibits and is ready to rule.

This cause involves a bad faith cause of action arising out of denial of an insurance claim for a motorcycle accident and was removed on the ground of diversity jurisdiction. It is undisputed that complete diversity of citizenship exists between the plaintiff and the defendants. The actual amount in controversy is in dispute.

"[T]he federal courts have limited subject matter jurisdiction and cannot entertain cases unless authorized by the Constitution and legislation." Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996) (citation omitted). See Cross v. Bell Helmets, USA, 927 F. Supp. 209, 211 (E.D. Tex. 1996). It is well-settled that removal statutes must be strictly construed, resolving all doubts regarding removability in favor of remand to state court. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 85 L. Ed. 1214 (1941), cited in York v. Horizon Federal Sav. & Loan Ass'n, 712 F. Supp. 85, 87 (E.D. La. 1989). "Accordingly, there is a presumption against subject matter jurisdiction that must be rebutted by the party bringing an action to federal court." Coury, 85 F.3d at 248 (citations omitted). Under 28 U.S.C. § 1441(a), "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed." See Cervantez v. Bexar County Civil Service Com'n, 99 F.3d 730, 732, 733 (5th Cir. 1996) (generally, "cases [filed in state court] that could have originally been filed in federal court" are removable) (citations omitted).¹ Section 1441(a) "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," particularly in diversity cases. Gober v. Allstate Ins. Co., 855 F. Supp. 158, 159-60 (S.D. Miss. 1994) (citing Powers v. South Central United Food & Commercial Workers Unions & Employers Health & Welfare Trust, 719 F.2d 760, 762 (5th Cir. 1983) ("In construing the removal statutes, the Supreme Court has mandated a `strict construction' approach, in recognition of the congressional intent to restrict the jurisdiction of federal courts on removal.")) (other citations omitted).

The complaint in the instant cause does not plead a specific amount of damages. The notice of removal alleges that "the matter in controversy may exceed the sum of $75,000.00, exclusive of interest and costs." (Emphasis added.) The plaintiff asserts that the allegation in the notice of removal is speculative and conclusory. "Removal...cannot be based simply upon conclusory allegations." Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995) ("it is well settled that the removing party bears the burden of establishing the facts necessary to show that federal jurisdiction exists").² The plaintiff denies that the amount in controversy exceeds the jurisdictional minimum. The plaintiff's reply³ to the defendants' response to the instant motions states in part:

Plaintiff further affirmatively states that he has not ever, nor does he now, seek an amount in excess of $75,000.00, exclusive of costs and interest.

The affidavit of the plaintiff's attorney states that "said lawsuit does not seek aggregate damages in excess of $75,000 exclusive of cost and interest." The plaintiff's affidavit states that "the damages I suffered cannot reasonably and honestly be claimed to be above $75,000.00, exclusive of interest and costs."

Removal jurisdiction is generally determined on the basis of the state court complaint at the time of removal. Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 265 (5th Cir. 1995).⁴ "[A] plaintiff may not defeat removal by subsequently changing his damage request, because post-removal events cannot deprive a court of jurisdiction once it has attached." Asociacion Nacional De Pescadores a Pequena Escala o Artesanales De Colombia S.A. v. Dow Quimica De Colombia S.A. [hereinafter ANPAC], 988 F.2d 559, 565 (5th Cir. 1993)⁵ (citing St Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292, 82 L. Ed. 845 (1938)), cert. denied, 510 U.S. 1041, 126 L. Ed. 2d 653 (1994).⁶ In ANPAC the complaint plead an unspecified amount of damages and the Fifth Circuit allowed a post-removal affidavit limiting the amount of damages sought:

Under those circumstances, the court is still examining the jurisdictional facts as of the time the case is removed, but the court is considering information submitted after removal.

988 F.2d at 565, cited in Allen, 63 F.3d at 1335 ("under any manner of proof, the jurisdictional facts that support removal must be judged at the time of the removal, and any post-petition affidavits are allowable only if relevant to that period of time). See Cross, 927 F. Supp. at 214 ("Damage stipulations filed before a federal district court has passed upon its determination of jurisdiction are permissible if they clarify as opposed to amend an original petition").

The complaint seeks actual damages for property damage and personal injury and punitive damages. Since the amount of damages is not specified and the amount in controversy is not readily apparent from the face of the complaint,⁷ the defendants have the burden to establish by a preponderance of the evidence that the actual amount in controversy exceeds the jurisdictional threshold. Allen, 63 F.3d at 1335; De Aguilar v. Boeing Co. [De Aguilar I], 11 F.3d 55, 58 (5th Cir. 1993); Prouty v. Home Buyers Warranty Corp, 930 F. Supp. 265, 266 (S.D. Miss. 1996). When the facially apparent test is not met, the district court may consider summary-judgment type of evidence to determine the amount in controversy at the time of removal. S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 492 (5th Cir. 1996); Allen, 63 F.3d at 1336. It is undisputed that the plaintiff's medical costs total approximately $128,⁸ storage and estimate fees total $6099⁹ and maximum contractual liability for property damage to the insured motorcycle is $5,000. The plaintiff estimates loss of use of the motorcycle in the sum of $1000. The defendant relies on the allegation of punitive damages liability. The court finds that it is doubtful whether any recovery for punitive damages in this cause, in conjunction with the actual damages, would exceed $75,000. In light of the relatively low amount of recoverable actual damages and the uncertainty as to the amount of any punitive damages award, the court, resolving any doubt in the plaintiff's favor, finds it appropriate to consider the plaintiff's statement of intent¹⁰ and affidavits. See De Aguilar v. Boeing Co. [De Auilar II], 47 F.3d 1404, 1406 (5th Cir.) ("Post-removal affidavits sometimes can be relevant where the jurisdictional amount question is unresolved") (citing ANPAC, 988 F.2d at 565), cert. denied, 516 U.S. 865, 133 L. Ed. 2d 119 (1995).

The court finds that the above-quoted statement of intent manifests the plaintiff's "commitment to recovery below the federal threshold." De Aguilar II, 47 F.3d at 1412 n. 10. Mississippi law does not prohibit amendment of the ad damnum clause. However, the court finds that the affidavits submitted by the plaintiff have the effect of stipulations limiting any recovery to $75,000 and precluding the plaintiff from amending the ad damnum clause in state court to plead damages in excess of $75,000. Accordingly, the plaintiff is "legally bound to accept less" than the federal jurisdictional amount, as was intended upon commencement of this cause. Allen, 63 F.3d at 1335 n. 14.

The plaintiff seeks an award of costs and expenses, including attorney fees incurred as a result of the removal. See 28 U.S.C. § 1447(c) ("An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal"). The decision whether to award costs and expenses is discretionary. Teer v. Upjohn Co., 741 F. Supp. 1242, 1244 (M.D. La. 1990) ("when removal was obviously legally defective, an award of costs is within the court's discretion"). The court is not required to find that the removing party acted in bad faith or in a "vexatious, wanton, or oppressive" manner. Penrod Drilling Corp. v. Granite State Ins. Co., 764 F. Supp. 1146, 1147 (S.D. Tex. 1990). In its discretion, the court declines to award costs and expenses to the plaintiff since the complaint plead an unspecified amount of damages, including punitive damages for bad faith. See C. Wright, A. Miller, & E. Cooper, 14A Federal Practice and Procedure §3739 (2d ed. 1985) (courts "will be [more] inclined to [award costs and expenses] when the nonremovability of the action is obvious").

CONCLUSION

For the foregoing reasons, the court finds that the plaintiff's motion and amended motion for remand should be granted and the plaintiff's request for costs and expenses should be denied. An order will issue accordingly.

1. But see 28 U.S.C. § 1441(...