Steele v. Underwriters Adjusting Co., Inc.

• Decision Date: 18 December 1986
• Docket Number: Civ. A. No. 86V-980-E.
• Citation: 649 F. Supp. 1414
• Parties: James STEELE, Jr., Plaintiff, v. UNDERWRITERS ADJUSTING COMPANY, INC., Defendant.
• Court: U.S. District Court — Middle District of Alabama

649 F. Supp. 1414

James STEELE, Jr., Plaintiff, v. UNDERWRITERS ADJUSTING COMPANY, INC., Defendant.

Civ. A. No. 86V-980-E.

United States District Court, M.D. Alabama, E.D.

December 18, 1986.

Jock M. Smith, Tuskegee, Ala., for plaintiff.

James W. Garrett, Jr., Montgomery, Ala., Walter E. McGowan, Tuskegee, Ala., for defendant.

OPINION AND ORDER

VARNER, District Judge.

This cause is now before the Court on Plaintiff's motion to remand filed herein October 24, 1986,¹ and on Defendant's motion to dismiss filed herein October 17, 1986. For the reasons expressed herein, the Court reserves ruling on both motions.

On October 9, 1984, the Circuit Court of Macon County, Alabama, entered an Order awarding the Plaintiff herein $4,208.72 as workmen's compensation for a permanent partial disability. The Circuit Court also ordered the defendant in that case, Tuskegee Institute, to continue to furnish the Plaintiff with medical benefits as provided by the Alabama Workmen's Compensation Act. See Order dated October 9, 1984, entered by the Macon County Circuit Court in the case of Steele v. Tuskegee Institute, CV 84-123.

Tuskegee Institute was to provide the Plaintiff with medical benefits through the Defendant in this cause, Underwriters Adjusting Company, Inc. Underwriters. Underwriters allegedly failed to provide the Plaintiff with medical benefits as required by the Circuit Court Order. As a result, Plaintiff filed suit in the Circuit Court of Macon County, Alabama, claiming compensatory and punitive damages in an unspecified amount against Underwriters for bad faith failure to honor a valid insurance claim. The matter was removed to this Court which may have diversity jurisdiction of the case.

The practice of pleading for monetary relief without being specific as to the amount thereof is apparently authorized under Alabama law provided the damages claimed are general damages. See, e.g., Page v. Camper City & Mobile Home Sales, 292 Ala. 562, 297 So.2d 810 (1974) where complaint alleged that plaintiff's injuries were severe and disabling, without demanding a specific amount of damages, this was sufficient to invoke the jurisdiction of the State Circuit Court; Crommelin v. Montgomery Ind. Telecasters, 280 Ala. 391, 194 So.2d 548 (1967) general damages do not have to be specifically pleaded in order to give defendant notice that they will be proven at trial; general damages are implied by law.²

Shortly after Plaintiff filed his complaint, Defendant Underwriters filed a verified petition for removal, claiming that the amount in controversy exceeded $10,000.00 exclusive of interest and costs. This assertion was based on Underwriters' "reasonable belief" and on the sizeable verdicts that have been returned in bad faith cases by Alabama juries. The Plaintiff has responded by filing a motion to remand, claiming that the requirements for diversity jurisdiction are lacking.³ Underwriters has countered by filing a motion to dismiss for failure to state a claim and for failure to claim a specific amount of damages as required by law.

Included in the Plaintiff's motion to remand is the following statement:

"The amount sued for and involved in this controversy is not in excess of the sum of $10,000.00 exclusive of interest and costs as is evident by Plaintiff's prayer for relief in which he, `demands judgment against the Defendants in the sic amount to be fairly ascertained by the jury'."

The first phrase of this sentence appears to be a judicial admission by the Plaintiff that his claim is not worth in excess of $10,000.00. However, in order for a statement to constitute a judicial admission, it must be "deliberate, clear and unequivocable". See Backar v. Western States Producing Co., 547 F.2d 876, 880, n. 4 (5th Cir.1977). The above statement may be made unclear and equivocal by the second half of the quoted sentence. In that portion of the sentence, the Plaintiff claims it is evident from the language used in his prayer for relief that the requisite amount in controversy is not present, but this is obviously not the case. The only thing that is evident from the prayer for relief is that it is not clear exactly what the amount in controversy is. Apparently, the Plaintiff means to argue that, if the plaintiff in a civil action fails to specifically demand an award in excess of $10,000.00, then the defendant is precluded from removing the case to federal court, regardless of whether the plaintiff might recover well in excess of $10,000.00. This conclusion is supported by the following statement, which is numbered as Paragraph 2 in Plaintiff's motion to remand: "The amount in controversy cannot, by federal law, be based upon the amount the Plaintiff will ultimately recover in the cause of action but simply is contained in Plaintiff's prayer for relief clause." Regardless of what the Plaintiff means by these indefinite, nebulous statements, it does not clearly appear that Plaintiff is making an unequivocable admission that his case is worth less than $10,000.00. Therefore, this Court must arrive at a procedure for determining exactly what the amount in controversy is in this case.

The Plaintiff is correct in his assertion that "the amount claimed by the plaintiff ordinarily controls in determining whether jurisdiction lies in the federal court." See Zunamon v. Brown, 418 F.2d 883, 885 (8th Cir.1969) citing St. Paul Merc. Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). The key word here, however, is "ordinarily".

The rule, that the plaintiff's demand for relief controls for purposes of determining federal jurisdiction, is certain and simplistic, but it should not be applied in a wooden fashion that deprives the defendant of his right to remove to federal court. Indeed, as noted by Professor Moore:

"Certainty and simplicity, while important goals, should not be allowed to blind federal courts to the realities of the magnitude of the controversy. While the plaintiff viewpoint rule has much to recommend it, it should not be applied if to do so destroys jurisdiction when a substantial claim clearly in excess of $10,000.00 is involved." 1 Moore's Federal Practice, ¶ .911.

To allow this sort of practice would violate this Court's notions of procedural fair play. A plaintiff should not be allowed to deprive a defendant of his right to remove through artful pleading practices. Apparently, the United States Supreme Court would agree:

"If the plaintiff could, no matter how bona fide his original claim in state court, reduce the amount of his demand to defeat federal jurisdiction, the defendant's supposed statutory right of removal would be subject to the plaintiff's caprice. The claim, whether well or ill founded in fact, fixes the right of the defendant to remove, and the plaintiff ought not to be able to defeat that right and bring the cause back to the state court at his election. If he does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove." Saint Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 294, 58 S.Ct. 586, 593, 82 L.Ed. 845 (1938) emphasis in original

This same reasoning should apply to the situation in the case sub judice, where the Plaintiff completely failed to demand a specific monetary figure, apparently for the purpose of avoiding federal jurisdiction. The Plaintiff should not be allowed to rob Underwriters of its right to remove by demanding such damages as may be "fairly ascertained by the jury". Permitting such practice allows the Plaintiff to "have his cake and eat it too". In other words, the Plaintiff effectively prevents federal jurisdiction by failing to demand a specific monetary figure, while making it possible for the jury to return a verdict well in excess of $10,000.00. Such an approach is simply unfair and will not be permitted by this Court.

However, what is this Court to use as a guidepost in determining whether the requisite jurisdictional amount is in controversy if it is not to look to the ad damnum clause in the complaint? This question is answered in the case of Family Motor Inn v. L-K Enterprises Div. Consol. Foods Corp., 369 F.Supp. 766 (E.D.Ky.1973). In that case, the Court stated: "Where the complaint is silent regarding monetary damages, the court may turn to the petition for removal" to ascertain the amount in controversy. Id. at 768. In looking to the petition for removal, this Court must find to a legal certainty that Plaintiff could not recover in excess of $10,000.00 exclusive of interest and costs before federal jurisdiction can be denied. See Love v. Budai, 665 F.2d 1060, 1063 (D.C.Cir.1980); Lee v. Kisen, 475 F.2d 1251, 1253 (5th Cir.1973).⁴ Nonetheless, the burden is still on the party asserting federal jurisdiction to prove to the Court that the requisite jurisdictional amount is in controversy. See Fountain v. Metropolitan Atlanta Rapid Transit Authority, 678 F.2d 1038, 1041 (11th Cir. 1982). In order to meet this burden, Underwriters must prove by a preponderance of the evidence that the amount in controversy exceeds the minimum sum necessary to confer federal jurisdiction. See Shaffer v. Coty, 183 F.Supp. 662, 664 (S.D.Ca.1960).

As noted, the Plaintiff has sued Underwriters under the tort of bad faith. The tort of bad faith in Alabama has been judicially legislated and is in the embryonic stage. This tort theory was recognized as a viable claim only as recently as 1981. See Chavers v. National Security Fire & Cas. Co., 405 So.2d 1, 7 (Ala.1981). Since that time, Alabama juries have been quite generous in the amounts they have awarded plaintiffs in bad faith cases, with many of the verdicts exceeding one million dollars. See, e.g., Aetna Life Ins. Co. v. Lavoie, 470 So.2d 1060 (Ala.1985) award of $3,500,000.00 as punitive damages in bad faith case where actual damages...