Lowe's Ok'd Used Cars, Inc. v. Acceptance Ins. Co.

• Decision Date: 03 March 1998
• Docket Number: No. CIV. A. 97-D-1609-N.,CIV. A. 97-D-1609-N.
• Citation: 995 F.Supp. 1388
• Parties: LOWE'S OK'D USED CARS, INC. and Edward Duke Caro, Plaintiffs, v. ACCEPTANCE INSURANCE CO., Defendant.
• Court: U.S. District Court — Middle District of Alabama

Page 1388

995 F.Supp. 1388

LOWE'S OK'D USED CARS, INC. and Edward Duke Caro, Plaintiffs, v. ACCEPTANCE INSURANCE CO., Defendant.

No. CIV. A. 97-D-1609-N.

United States District Court, M.D. Alabama, Northern Division.

March 3, 1998.

George H. Howell, William P. Roberts, II, Prattville, AL, for Plaintiffs.

J. Mark Hart, Birmingham, for Defendant.

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Before the court is Plaintiffs' Motion To Remand ("Pls.' Mot.") filed February 6, 1998. Plaintiffs filed a Brief In Support of their Motion ("Pls.' Br.") on the same date. The Defendant filed its Memorandum Of Law In Opposition To Motion To Remand on February 24, 1998 ("Def.'s Opp'n."). For the reasons set forth below, the court finds that Plaintiffs' Motion To Remand is due to be granted, and that, consequently, this action is due to be remanded to the Circuit Court of Autauga County, Alabama.

I. Legal Standard

Federal courts are courts of limited jurisdiction, and may only hear cases that they have been authorized to hear by the Constitution or by the Congress of the United States. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092 (1994). A federal district court is authorized to assert its jurisdiction, however, when citizens of different states are involved and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Therefore, where the parties are diverse and the amount in controversy prerequisite is sufficient, a defendant has a right, granted by statute, to remove an action from state court and avail itself of the federal court system. 28 U.S.C. § 1441; Burns, 31 F.3d at 1095.

The removing defendant, however, bears the burden of proving the existence of federal jurisdiction, Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356 (11th Cir. 1996), and, because the jurisdiction of federal courts is limited, the Eleventh Circuit Court of Appeals favors remand of cases that have been removed where federal jurisdiction is not absolutely clear. Burns, 31 F.3d at 1095. In fact, removal statutes are to be strictly construed, with all doubts resolved in favor of remand. Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir.1996), cert. denied, ___ U.S. ___, 117 S.Ct. 1349, 137 L.Ed.2d 506 (1997); Burns, 31 F.3d at 1095; see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).

Normally, a plaintiff is "the master of his or her own claim; if the plaintiff chooses to ask for less than the jurisdictional amount, only the sum actually demanded is in controversy." Burns, 31 F.3d at 1095 (citations omitted). Accordingly, where a plaintiff specifically claims less than the federal jurisdictional prerequisite in state court, a defendant may only establish removal jurisdiction by showing to a "legal certainty" that the plaintiff would not recover less than the federal jurisdictional amount if the plaintiff prevailed. Tapscott, 77 F.3d at 1356; Burns, 31 F.3d at 1094.

Where, as here, there is an unspecified claim for damages, however, a removing defendant need not meet the strict "legal certainty" standard articulated above. Instead, a removing defendant need only show "by a preponderance of the evidence that the amount in controversy more likely than not exceeds the [$75,000] jurisdictional requirement." Tapscott, 77 F.3d at 1357; see also 28 U.S.C. § 1332(a). This lower burden of proof "is warranted because there is simply no estimate of damages to which a court may defer." Id. at 1357. When determining whether the jurisdictional amount in controversy prerequisite is met, the court must consider a claim for punitive damages "unless it is apparent to a legal certainty that such cannot be recovered." Holley Equipment Co. v. Credit Alliance Corp., 821 F.2d 1531 (11th Cir.1987).

II. Factual Summary And Procedural History

On October 1, 1997, Plaintiffs filed this action in the Circuit Court of Autauga County, Alabama. Defendant Acceptance Insurance Co. ("Acceptance") filed a Notice Of Removal on November 5, 1997. Plaintiffs contend that Acceptance failed to honor a valid contract of insurance that required Acceptance to defend the Plaintiffs and pay claims in the event of a lawsuit alleging personal injury to a third party. Plaintiffs also contend that the policy required Acceptance to investigate any claim or suit against the Plaintiff to determine if coverage existed. Specifically, Plaintiffs contend that on or about March 1, 1995, they were sued in the Circuit Court of Montgomery County, Alabama, and that Defendants failed to defend them or investigate the claim pursuant to the terms of the insurance contract. Plaintiffs' Complaint alleges breach of contract, bad faith, and fraudulent and negligent representation. Plaintiffs seek "compensatory and punitive damages in excess of the minimum jurisdictional requirements of this Court, in addition to any and all further, other, or different relief to which Plaintiffs are entitled as a matter of law." (Pls.' Compl. at 8.)

Defendant removed, contending that because the ad damnum clause in Plaintiffs' Complaint was "indeterminate" in that it "does not set forth the amount of damages claimed," (Def.'s Notice Of Removal at 2, ¶ 5), "the Court has the `duty to independently determine the propriety of jurisdiction.'" (Id., quoting Robinson v. Quality Ins. Co., 633 F.Supp. 572, 574 (S.D.Ala.1986).) Citing to cases holding that when punitive damages are requested in a complaint, a court may consider the request in determining whether the federal jurisdictional amount in controversy prerequisite has been met, Defendant then cites numerous Alabama state court cases where there were damage awards well over the federal jurisdictional amount in controversy prerequisite, and which Defendant contends are analogous to the case at bar. (Id. at 2-4, ¶ 5.) Defendant also cites to a November 12, 1994 Wall Street Journal article stating that the median damage award in Alabama has recently been as high as $250,000. (Id. at 4 n. 1.)

Plaintiffs filed their Motion To Remand on February 6, 1998, alleging that "the amount in controversy is less than $75,000, the jurisdictional limit of this Court pursuant to 28 U.S.C. § 1332." (Pls.' Mot. at 1, ¶ 2.) Plaintiffs also state that their "special damages are $16,305.50, said amount representing attorney fees and settlement of the claim against Lowe's OK'd Used Cars." (Id., ¶ 3.) Citing to Tapscott v. M.S. Dealer Service Corp., 77 F.3d 1353, 1359-60 (11th Cir.1996), Plaintiffs contend that because "[t]here are no damages specified in the Complaint ... the Defendant must prove `by a preponderance of the evidence that the amount in controversy more likely than not exceeds the $75,000 jurisdictional amount.'" (Id. at 2, ¶ 5.) Plaintiffs then contend that Defendant has failed to meet its burden because Defendant cites the court "to numerous State cases, none of which are from Autauga County, all of which contain an egregious factor apparently not present in the instant action.... In the instant action no such egregious facts appear to exist if Defendant is to be believed, and therefore remand ... is proper."¹ (Id. at 2-3, ¶ 7.)

Plaintiffs then argue that Defendant's due process rights against unreasonable or excessive jury awards are protected by the remittitur process set out in both BMW v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) and Life Insurance Co. of Georgia v. Daisey L. Johnson, 701 So.2d 524, 530 (Ala. 1997).² (Id. at 3, ¶ 8.) Plaintiffs then argue that "none of Defendant cited cases [sic] were subject to the review set out in BMW v. Gore." (Id. at 3-4, ¶ 8.) Finally, Plaintiffs argue that in contrast to Defendant's Wall Street Journal citation, according to the Alabama Administrative Office of Courts (A.O.C.), the median award for 1993 was "$35,000," 1994 "$40,000," 1995 "$50,000." (Id. at 4, ¶ 9.)

In conclusion, Plaintiffs argue that "the Defendant, aware of the `preponderance of the evidence standard' set forth in Tapscott, ... attempts to [support its claim] by reference to six cases in Alabama, all of which are distinguishable from the instant action, by the egregious facts of each case, and reference to a portion of a newspaper article. Plaintiffs contend that Defendants have failed to" meet the preponderance standard. (Id. at 5, ¶¶ 12-13.)

On February 24, 1998, Acceptance filed its Memorandum Of Law In Opposition To Motion To Remand. There, Acceptance notes that on November 19, 1997, it served the Plaintiffs with interrogatories in an attempt to determine the total amount of compensatory and punitive damages claimed by Plaintiffs. Although a first glance at Plaintiffs' Answers To Interrogatories No. 1 appears to show that Plaintiffs only claim a total of $16,305.50 in compensatory and punitive damages, a review of the record, Plaintiffs' Answers Nos. 2 and 3, and Plaintiffs' February 14, 1998 Amended Answers To Interrogatories, reveals that Plaintiffs' position is that they "are without knowledge as to a total claim at this time," and thus are "not in a position to waive damages" in excess of $74,999.99. (See Def.'s Opp'n, Exs. E, F, I (Interrogatories, Answers, Amended Answers).) Acceptance argues that through its Interrogatories and Plaintiffs' Answers, it has met its preponderance burden of showing that the amount in controversy requirement has been met. (Def.'s Opp'n at 5.)

As to Plaintiffs' attempt to distinguish the Alabama state law cases relied upon by Defendant in its Notice Of Removal, Defendant contends that:

The plaintiffs' attempt to distinguish these cases by stating that they all "contain an egregious factor apparently not present in the instant action" is not convincing.... If in fact the plaintiffs do not have reason to believe that the defendants in this case acted egregiously, then their claims for bad faith and punitive damages are...