Orndorff v. Allstate Ins. Co.

• Decision Date: 23 August 1995
• Docket Number: Civ. A. No. 1:CV-95-722.
• Citation: 896 F. Supp. 173
• Parties: Mark A. ORNDORFF, Annette Orndorff, Plaintiffs v. ALLSTATE INSURANCE COMPANY, Connecticut Indemnity Company, United States Fire Insurance Company, Santa Rosa Group, Inc., d/b/a Buffalo Fuel Corporation, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

896 F. Supp. 173

Mark A. ORNDORFF, Annette Orndorff, Plaintiffs v. ALLSTATE INSURANCE COMPANY, Connecticut Indemnity Company, United States Fire Insurance Company, Santa Rosa Group, Inc., d/b/a Buffalo Fuel Corporation, Defendants.

Civ. A. No. 1:CV-95-722.

United States District Court, M.D. Pennsylvania.

August 23, 1995.

Douglas Ray Bare, York, PA, for plaintiffs.

James G. Nealon, III, Caldwell & Kearns, Harrisburg, PA, George B. Faller, Jr., Carlisle, PA, and Richard B. Druby, Harrisburg, PA, for defendants.

MEMORANDUM

CALDWELL, District Judge.

I. BACKGROUND

This action arises from an automobile accident involving Plaintiff Mark A. Orndorff. On April 10, 1995, Plaintiffs filed a complaint in the Court of Common Pleas of Adams County, Pennsylvania, under the Pennsylvania Declaratory Judgments Act, 42 Pa.C.S.A. § 7531 et seq. The Defendants are Connecticut Indemnity Company ("Connecticut"); United States Fire Insurance Company and Santa Rosa Group, d/b/a Buffalo Fuel Corporation ("Removing Defendants"); and Allstate Insurance Company ("Allstate"). On May 8, 1995, the case was removed here pursuant to 28 U.S.C. § 1441. On July 17, 1995, Connecticut filed the present motion to remand pursuant to 28 U.S.C. § 1447(c), arguing that this court lacks subject matter jurisdiction.¹

II. LAW AND DISCUSSION

A. Motion to Remand

A defendant may remove a case to federal court only when that court could have entertained original jurisdiction over the action. 28 U.S.C. § 1441(a). The Removing Defendants removed this action on the premise that we possess jurisdiction pursuant to 28 U.S.C. § 1332. For a court to exercise jurisdiction under section 1332, there must be both diversity of citizenship and an amount in controversy in excess of $50,000. In this case, there is no question that complete diversity of citizenship is present. The dispute, however, concerns the amount in controversy. Connecticut contends that the amount is less than $50,000, and that we lack subject matter jurisdiction. See 28 U.S.C. § 1447(c).

Once challenged, the party invoking federal jurisdiction, bears the burden of proving that jurisdiction is proper. Corwin Jeep Sales v. American Motors Sales, 670 F.Supp. 591, 595 (M.D.Pa.1986) (Rambo, J.). Thus, when a plaintiff institutes an action in federal court, and the defendant challenges jurisdiction, the plaintiff must prove that jurisdiction is proper. De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir.1995), petition for cert. filed, 64 U.S.L.W. 3069 (U.S. June 5, 1995) (No. 95-102). Similarly, when a defendant removes an action to federal court, the defendant must prove that jurisdiction is proper. Id.

The Removing Defendants contend that the appropriate test to determine whether jurisdiction is proper here is the "legal certainty test" espoused in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845, 848 (1938).² We agree that the legal certainty test is appropriate but the Removing Defendants have misconstrued its application here.

In St. Paul Mercury the plaintiff instituted an action in state court, alleging entitlement to an amount greater than the jurisdictional requirement. The defendant removed the case to federal court, asserting that diversity jurisdiction was proper. The plaintiff then amended its complaint to request less than the jurisdictional amount, and sought remand because jurisdiction was lacking. The Court held that the amount in controversy is measured at the time the complaint is filed and that the amount claimed by the plaintiff, if made in good faith, will be accepted unless it appears "to a legal certainty that the claim is really for less than the jurisdictional amount." St. Paul Mercury, 303 U.S. at 288-89, 58 S.Ct. at 590, 82 L.Ed. at 848. Thus, because the plaintiff's complaint contained a claim for damages in excess of the jurisdictional amount, the Court held that removal was proper.

Here, however, we are faced with a different situation: the Plaintiffs instituted the action in state court without alleging the specific amount they seek, and it was removed here pursuant to 28 U.S.C. § 1441.³ Neither the Supreme Court nor the Third Circuit have addressed the application of the legal certainty test in such a case. However, we find numerous other decisions instructive.

In De Aguilar, supra, the plaintiffs instituted an action in state court, but did not plead a specific amount of damages. The defendants removed the case to federal court on the basis of diversity jurisdiction. The plaintiffs sought remand, arguing that the amount in controversy did not exceed $50,000. The court held that a removing defendant (as the party claiming jurisdiction) must "show by a preponderance of the evidence that the amount in controversy is greater than the jurisdictional amount." De Aguilar, 47 F.3d at 1412; see also Omega Sports, Inc. v. Sunkyong America, Inc., 872 F.Supp. 201, 202 (E.D.Pa.1995); Bergstrom v. Burlington Northern R.R. Co., 895 F.Supp. 257, 258 (D.N.D.1995); Nickel v. Jackson, 380 F.Supp. 1389, 1391 (W.D.Okla.1974).

We agree with the court's analysis in De Aguilar, and adopt the standard set forth there as our own. Thus, when a plaintiff institutes an action in state court and the defendant removes it on grounds of diversity jurisdiction, the defendant must first establish that the amount in controversy exceeds $50,000. De Aguilar, 47 F.3d at 1412. If the defendant carries its burden, removal is proper unless the plaintiff establishes "to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal." Id. (citing St. Paul Mercury, 303 U.S. at 289, 58 S.Ct. at 590, 82 L.Ed. at 848).

The Third Circuit's recent decision in Jumara v. State Farm Insurance Co., 55 F.3d 873 (3d Cir.1995) is not to the contrary, and in fact supports the test we adopt today. In Jumara, the plaintiffs initiated an action in federal court under 28 U.S.C. § 1332, and the defendants sought to have it remanded because the amount in controversy was insufficient to confer jurisdiction on the district court. Although the plaintiffs did not set forth the amount of damages they were seeking, the court found that the complaint sufficiently indicated that the value of the claim exceeded $50,000, and that the plaintiffs had carried their burden. The court declined to remand the action because the parties challenging jurisdiction (the defendants) had not established, to a legal certainty, that the value of plaintiffs' claims was less than $50,000.

In the present case, although the procedural posture of the parties is different, the result is the same: if the parties claiming jurisdiction is proper (the Removing Defendants) carry their burden in the first instance, remand is not appropriate unless the party challenging jurisdiction (Connecticut) establishes, to a legal certainty, that the value of Plaintiffs' claim is not in excess of $50,000. See De Aguilar, 47 F.3d at 1412.

In applying this standard to the case at bar, we need look no further than the complaint to conclude that Plaintiffs' claim will likely exceed $50,000. Plaintiffs allege that Mark Orndorff has incurred at least $20,000⁴ in unpaid medical expenses through April, 1995. In addition he sustained severe fractures of his right leg requiring the use of metal implants, rods, plates and screws, and received other internal injuries. Pls.' Compl. ¶ 10. From these allegations, we conclude that there is a substantial probability that the value of Plaintiffs' claim exceeds $50,000, and that the Removing Defendants have...