Lindsay v. American General Life & Acc. Ins.

• Decision Date: 23 February 2001
• Docket Number: No. CV 01-BU-0477-E.,CV 01-BU-0477-E.
• Citation: 133 F.Supp.2d 1271
• Parties: James LINDSAY, Plaintiff, v. AMERICAN GENERAL LIFE & ACCIDENT INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

133 F.Supp.2d 1271

James LINDSAY, Plaintiff, v. AMERICAN GENERAL LIFE & ACCIDENT INSURANCE COMPANY, et al., Defendants.

No. CV 01-BU-0477-E.

United States District Court, N.D. Alabama, Eastern Division.

February 23, 2001.

W. Lewis Garrison, Jr., F. Page Gamble, Garrison, Scott, Gamble & Rosenthal, P.C., Birmingham, AL, for Plaintiff.

Lee E. Bains, Jr., Michael D. Mulvaney, David P. Donahue, Maynard, Cooper & Gale, Birmingham, AL, for Defendants.

Memorandum Opinion

BUTTRAM, District Judge.

Plaintiff James Lindsay originally filed this action in the Circuit Court of Clay County, Alabama, on January 9, 2001, naming as defendants American General Life & Accident Insurance Company, Independent Life & Accident Insurance Company (hereinafter referred to collectively as "American General"¹), and fictitious parties. American General claims it was served on January 23, 2001. On February 22, 2001, American General filed a notice of removal in this Court (Doc. No. 1). In removing, American General invokes this Court's diversity jurisdiction under 28 U.S.C. § 1332, asserting that the parties are completely diverse and that the amount in controversy requirement is satisfied. American General has simultaneously filed motions to dismiss, or, in the alternative, for a more definite statement (Doc. No. 2); to allow it to conduct limited discovery into the issue of the jurisdictional amount in controversy (Doc. No. 3); and for a stay in the case pending a decision on the motion to reassign the case or, in the alternative, to allow it 30 days to submit further evidence relevant to the amount in controversy requirement (Doc. No. 5). On February 26, 2001, Plaintiff filed a motion to remand the case to state court, arguing that American General has not satisfied its burden to show that the amount in controversy is met. (Doc. No. 6).

Based on the submissions of the parties, the Court concludes as follows: American General's motion to allow it to conduct limited discovery into the amount in controversy is due to be DENIED; its order for a stay pending a decision on the motion to reassign the case or to allow it 30 days to submit further evidence on the amount in controversy is due to be DENIED; Plaintiff's motion to remand is due to be GRANTED as the Court concludes that it lacks subject matter jurisdiction because American General has failed to show that the amount in controversy is met; and the Court will not rule on American General's motion to dismiss or, in the alternative, for a more definite statement, which shall be terminated by the Clerk of this Court.

I. BACKGROUND

Plaintiff brings numerous claims, all based upon Alabama state law, against American General premised upon its alleged "decades-old practice of race-based underwriting, where African-American citizens were charged higher premiums than whites for similar life and burial insurance policies." Complaint ¶ 4. Plaintiff's complaint lists ten specific policy numbers, and the years of alleged purchase, for which Plaintiff claims he was charged racially discriminatory premiums. Id. ¶ 9. Among the causes of action listed in Plaintiff's 13-count complaint are claims alleging unjust enrichment; money paid by mistake breach of contract; conversion; breach of fiduciary duty; improper hiring, supervision, and retention; negligent and/or fraudulent misrepresentation; fraudulent suppression; and a claim for "unfair discrimination in rates" in violation of § 27-12-11, Ala.Code (2000). On these claims, Plaintiff asserts that he suffered economic harm and is entitled to recover the value of the premiums he paid on his policies that were allegedly in excess of what similarly situated white individuals paid for the same coverage, see Complaint ¶¶ 24, 27, 31, 34, 50, 60, 68, 75, 89. He also asserts that he is entitled to recover compensatory damages for mental anguish, id. ¶¶ 80, 84; punitive damages, id. ¶¶ 34, 46, 50, 60, 68, 76, 80, 84, 89; as well as interest, costs, and attorneys' fees. However, Plaintiff's complaint further expressly limits his recovery demand thus: "Plaintiff makes no claim for compensatory or punitive damages in this lawsuit which exceed $74,000, exclusive of interests and costs. For all claims included herein, Plaintiff claims an amount not to exceed $74,000, exclusive of interest and costs ...." Complaint ¶ 8.

II. DISCUSSION

The defendant in an action brought in state court generally may remove an action to federal court if the case originally could have been brought in federal court. 28 U.S.C. § 1441(a). However, because removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly, with all doubts about jurisdiction resolved in favor of remand to state court. University of South Alabama v. American Tobacco Co., 168 F.3d 405, 411 (11th Cir.1999). Federal courts are courts of limited jurisdiction, as they may hear only cases that the Constitution or Congress has authorized. See, e.g., Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citing cases). A federal court has jurisdiction over cases involving parties who are citizens of different states when the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). But 28 U.S.C. § 1447(c) provides that where a case is removed, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded."

"While a defendant does have a right, given by statute, to remove in certain situations, plaintiff is still master of his own claim." Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994). Thus, where a plaintiff's complaint specifically requests an amount of damages that is less than the diversity jurisdictional pre-requisite, that claimed amount is entitled to deference, and the removing party bears the "heavy" burden to prove "to a legal certainty that plaintiff's claim must exceed [$75,000]²." Id. This standard is essentially the converse of the test set forth in St. Paul Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938), see Burns, 31 F.3d at 1094-95, wherein the Supreme Court held that a plaintiff who files his complaint in federal court demanding a sum in excess of the required amount in controversy is entitled to remain in federal court where the amount is pled in "good faith," which the Court clarified meant that "[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." See also Jones v. Landry, 387 F.2d 102, 104 (5th Cir.1967)³ ("The test of the plaintiff's `good faith' is not his subjective state of mind but a very strict objective standard.... [T]here is but one test; good faith and legal certainty are equivalents rather than two separate tests.")

While the "legal certainty" test articulated in Burns is a "strict" one, 31 F.3d at 1095, it does not mean that a removing defendant cannot ever remain in federal court where a plaintiff's complaint demands less than $75,000. Id. at 1095-96. Because the amount claimed in a plaintiff's complaint is entitled to deference, a removing defendant is required to prove that, "if plaintiff prevails on liability, an award below the jurisdictional amount would be outside the range of permissible awards because the case is clearly worth more than [$75,000]." Id. at 1096. (Footnote added). This "standard is an objective one; plaintiff's or plaintiff's counsel's subjective intent in drafting the prayer is not the true issue." Id. at 1095-96. (footnote omitted). See also Landry, supra.

In the instant case, Plaintiff contends that this case is due to be remanded to state court because American General has failed to show that the amount in controversy requirement is met. The complaint demands an amount of damages from the Defendants not to exceed $74,000, which is below the amount in controversy required by 28 U.S.C. § 1332. Thus, under Burns American General must prove "to a legal certainty" that Plaintiff's claims must be worth more than $75,000. In other words, American General must show that if Plaintiff prevails on liability, an award of $75,000 or less would be "outside the range of permissible awards."

In its notice of removal, American General argues that it has shown that the amount in controversy is satisfied because Plaintiff's ultimate recovery is not limited under Alabama law to the amount demanded in the complaint, see Ala. R. Civ. P. 54(c), and Plaintiff has further refused to stipulate that he would not ever seek or accept more than $75,000 in damages. However, those very arguments were raised in Burns and rejected as insufficient to show to a legal certainty that the amount in controversy was met. See 31 F.3d at 1094, 1097 & n. 13. See also Emma Reynolds v. American Gen. Life & Accident Ins. Co., CV 01-BU-0382 (N.D.Ala. Feb. 14, 2001) (unpublished memorandum opinion & order, Doc. No. 6). Thus, it is clear that American General has not at this time met its burden to show to a legal certainty that an award below the jurisdictional amount would be outside the range of legally permissible awards.

That does not wholly dispose of the issue, however. American General has suggested that it should be given time to perform limited discovery before this Court makes a decision on the remand question. In particular, American General has sought leave to perform limited discovery into whether the amount in controversy is met and for 30 days in which it would presumably submit such evidence after it was gathered. In its motion for leave to perform discovery, American General states that it will first request admissions from Plaintiff as to the following:

1. Admit that your total damages in this case, including all compensatory and punitive damages, against all defendants do not exceed $75,000, exclusive of interest and costs.

2. Admit that you will not accept...