Lapree v. Prudential Financial

• Citation: 385 F.Supp.2d 839
• Decision Date: 17 August 2005
• Docket Number: No. 4:05 CV 00094.,4:05 CV 00094.
• Parties: Rene LAPREE, Plaintiff, v. PRUDENTIAL FINANCIAL and the Prudential Insurance Company of America, Defendants.
• Court: U.S. District Court — Southern District of Iowa

385 F.Supp.2d 839 Rene LAPREE, Plaintiff,
v.
PRUDENTIAL FINANCIAL and the Prudential Insurance Company of America, Defendants. No. 4:05 CV 00094. United States District Court, S.D. Iowa, Central Division. August 17, 2005.

Gordon R. Fischer, Bradshaw Fowler Proctor & Fairgrove, Des Moines, IA, for Plaintiff.

Daniel J. McMahon, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Edna S.

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Bailey, Jason M. Kuzniar, Chicago, IL, Ross W. Johnson, Faegre & Benson, Des Moines, IA, for Defendant.

ORDER

GRITZNER, District Judge.

This matter comes before the Court on Plaintiff's Motion to Remand.¹ Plaintiff Rene LaPree is represented by Gordon Fischer; Edna Bailey represents Defendants Prudential Financial and The Prudential Insurance Company of America (jointly referred to as "Prudential"). The parties have not requested a hearing, and the Court finds no need for oral argument. The matter is fully submitted and ready for disposition.

I. FACTS

Plaintiff LaPree was employed by the State of Iowa until June 17, 2003, when she stopped working due to symptoms related to thoracic outlet syndrome. LaPree was insured under a disability plan ("the Policy") sponsored by her employer and under-written by Defendant Prudential. LaPree filed a claim for short-and long-term disability benefits through her policy. Prudential denied her claim for long-term disability. LaPree's appeal of the decision was denied. Her second appeal was also denied. In lieu of a third appeal, LaPree exercised the option to file a lawsuit under the Employee Retirement Income Security Act "ERISA."²

On May 26, 2004, LaPree filed a one count Petition in the Iowa District Court for Polk County alleging Prudential breached the terms of her disability policy. On September 8, 2004, LaPree moved to amend her petition to include a claim for breach of written contract and a bad faith claim. The motion was granted, and the petition stood amended as of November 2, 2004. In her prayer for relief, pursuant to Iowa Rule of Civil Procedure 1.403(1), LaPree requested "judgment against defendants in an amount to be determined at trial."³

During the state court litigation, LaPree attempted to settle her claim against Prudential by sending demand letters. On July 23, 2004, LaPree sent Prudential a demand letter asserting that she was entitled to benefits under her policy amounting to $528,000. She stated she was willing to settle the entire claim for $400,000. On August 4, 2004, LaPree sent another demand letter stating her benefits under the policy, minus Social Security disability benefits amounted to $254,916.40. Accounting for emotional distress and bad faith denial of benefits, LaPree indicated she was willing to settle the entire claim for $350,000. On September 15, 2004, a third letter was sent calculating benefits

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minus $871.00 per month for Social Security disability benefits and her workers' compensation settlement of $125,000, leaving the total claim against the policy at a minimum of $149,969.90, not including bad faith damages which she estimated at $50,000. LaPree indicated she was willing to settle the entire claim for $201,969.90.

On November 22, 2004, Prudential filed a motion to dismiss Counts II and III of LaPree's Amended Petition. Discovery proceeded while the motion was pending, and on January 25, 2005, LaPree sent Prudential another demand letter. Therein, LaPree again calculated her actual damages at $149,969.90 (her total benefits under the policy minus offset from Social Security disability benefits and her workers' compensation settlement), and the bad faith claim at $50,000. LaPree stated she would settle the entire claim for $175,000. On January 27, 2005,⁴ Prudential served LaPree with interrogatories. Pertinent to this motion was Interrogatory No. 17, which stated,

Identify the damage amount Plaintiff seeks to recover and provide an itemization of the damages sought.

On February 11, 2005, Prudential received LaPree's responses; her answer to Interrogatory 17 was,

See General Objections. Without waiving the foregoing objections, Plaintiff directs you to see Plaintiff's Demand Letter of January 25, 2005.

On February 23, 2005, Prudential removed this action pursuant to 28 U.S.C. § 1446, alleging original jurisdiction based on diversity of citizenship. LaPree is an Iowa citizen, and Prudential is a New Jersey corporation whose principal place of business is also in New Jersey. Prudential alleges this case did not become removable until February 11, 2005, when it received LaPree's answers to interrogatories revealing the amount in controversy.

On March 21, 2005, LaPree filed the present Motion arguing Prudential's removal was untimely and the action must be remanded. LaPree argues Prudential knew the amount sought in damages long before it received the answers to interrogatories. Prudential resists arguing the time for removal is not triggered by the filing of the petition when the petition is silent on the amount of damages; rather, removal is triggered under 28 U.S.C. § 1446(b) (" § 1446") by the filing of "other paper" that reveals the amount in controversy. Prudential contends that the answer to Interrogatory No. 17 revealed for the first time the amount in controversy; therefore, removal was not triggered until that time.

II. DISCUSSION

There is no dispute in the present case that the requirements for diversity jurisdiction under 28 U.S.C. § 1332 are met: the parties are from different states and the amount in controversy exceeds the jurisdictional minimum. However, the parties dispute whether this case was timely removed under the thirty-day requirement of 28 U.S.C. § 1446(b).

Prudential argues the amount in controversy was not known until it received LaPree's answer to Interrogatory No. 17 on February 11, 2005. LaPree counters that the answer to Interrogatory No. 17 and the January 25, 2005, demand letter were based on the same facts alleged in the Petition as well as in her previous demand letters. Accordingly, LaPree's position is that when Prudential received the Petition, or at the very latest the July 23, 2004, demand letter, Prudential knew the amount in controversy was in excess of

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$75,000; therefore, removal on February 11, 2005, was untimely by more than six months. LaPree asserts removal at this point in the litigation is forum shopping to avoid adverse rulings in state court and not because Prudential lacked knowledge of the amount in controversy.⁵

Title 28 U.S.C. § 1446(b) provides in pertinent part,

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b).

"Generally, a complaint that alleges the jurisdictional amount in good faith will suffice to confer jurisdiction, but the complaint will be dismissed if it `appear[s] to a legal certainty that the claim is really for less than the jurisdictional amount.'" Larkin v. Brown, 41 F.3d 387, 389 (8th Cir.1994) (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)). If the allegations as to the amount in controversy are challenged by the defendant, "then the plaintiff must establish jurisdiction by a preponderance of the evidence." Kopp v. Kopp, 280 F.3d 883, 884-85 (8th Cir.2002) (citing McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)).

Similarly, in a removal case based on diversity, the proponent of federal jurisdiction bears the burden of proving by a preponderance of the evidence that the amount in controversy satisfies the jurisdictional minimum. Trimble v. Asarco, Inc., 232 F.3d 946, 959 (8th Cir.2000), abrogated on other grounds by, Exxon Mobil Corp. v. Allapattah Servs., Inc., ___ U.S. ___, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) ("`[T]he party invoking federal jurisdiction must prove the requisite amount by a preponderance of the evidence.'") (quoting Missouri v. W. Sur. Co., 51 F.3d 170, 173 (8th Cir.1995)); see In re Minn. Mut. Life Ins. Co. Sales Practices Litig., 346 F.3d 830, 834-35 (8th Cir.2003) ("Where, as here, the complaint alleges no specific amount of damages or an amount under the jurisdictional minimum, the removing party, Minnesota Mutual, must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000.").⁶

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LaPree contends that based on the allegations in her Petition, the amount of damages was determinable; therefore, Prudential knew when it received the original notice that the amount in controversy met the jurisdictional minimum. Alternatively, LaPree asserts the demand letters of July 23, 2004, and August 4, 2004, unambiguously established that the claims met the jurisdictional minimum of $75,000.

A. Allegations in the Petition

Prudential argues that the removing party bears the burden of proving the amount in controversy exceeds the jurisdictional minimum by a preponderance of the evidence. Citing Larkin v. Brown, Prudential asserts that the Eighth Circuit found the burden is satisfied in cases where defendant's removal is based on the...