Valdez v. Allstate Fire & Cas. Ins. Co.
| Decision Date | 23 September 2021 |
| Docket Number | CIVIL SA-21-CV-00494-XR |
| Parties | SARA ALICIA VALDEZ, Plaintiff, v. ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Texas |
On this date, the Court considered the Motion to Dismiss (ECF No. 2) filed by Defendant Allstate Fire and Casualty Company. After careful consideration, the Court will grant in part and deny in part the motion, and will grant Plaintiff leave to file an amended complaint to clarify the nature of her claims.
Plaintiff Sara Alicia Valdez sued Defendant Allstate Fire and Casualty Insurance Company in state court for uninsured motorist (“UIM”) benefits. Plaintiff alleged that she was injured by an uninsured negligent driver and that she is entitled to recover UIM benefits under her insurance contract with Allstate. ECF No. 1-3. Her petition asserts a cause of action for declaratory relief pursuant to Chapter 37 of the Texas Practice and Remedies Code against Allstate, asserting that Allstate is liable to pay UIM benefits under the insurance contract, and a claim for “bad faith and unfair dealing” based on failure to investigate and failure to attempt in good faith to effectuate a prompt fair, and equitable settlement of the claims once liability was reasonably clear. The petition alleges, “Plaintiff is seeking damages in excess of $250, 000 but no more than $1, 000, 000.” Id. ¶ 4.2. Allstate removed on the basis of diversity, and immediately filed a motion to dismiss all of Plaintiff's claims.
Allstate contends that Plaintiff's claims should be dismissed because she does not allege that she has obtained a prior judgment establishing her legal entitlement to recover from the alleged uninsured motorist tortfeasor. Allstate also contends that the extra-contractual claims must be dismissed because Plaintiff does not allege an independent injury aside from denial of benefits, and that Plaintiff's claims are pled in a conclusory manner.
Plaintiff did not initially respond to the motion, claiming it was not received due to a change in counsel, but sought leave to file a response at the initial status conference. Leave was granted, and Plaintiff has filed a response. In the response Plaintiff primarily contests the existence of diversity jurisdiction and asks for leave to file a motion to remand asserting that the amount in controversy does not exceed $75, 000, despite the fact that the Court expressly found the amount in controversy requirement satisfied at the initial status conference. In the alternative, Plaintiff asks that she be granted leave to file an Amended Complaint asserting a claim under the federal Declaratory Judgment Act.
Plaintiff contends that, although she demanded damages well in excess of $75, 000 in her petition, the amount in controversy is controlled by the liability limits in the insurance policy, which is either $30, 000 or $50, 000.[1] Plaintiff asserts that, when a declaratory judgment action under the insurance policy is brought, and the claim exceeds the applicable policy limits, the policy limits, rather than the larger value of the claim, determine the amount in controversy. ECF No. 18 at 3 (citing Hartford Ins. Grp. v. Lou-Con Inc., 293 F.3d 908, 911 (5th Cir. 2002)). Thus, Plaintiff claims, even if she demanded more than the policy limits, the policy limits control the amount in controversy, and the amount in controversy is below $75, 000. Plaintiff also asserts that the amount in controversy does not include attorneys' fees because § 37.009 does not apply in federal court, and Allstate has argued that the federal Declaratory Judgment Act does not provide for an award of attorneys' fees.
Allstate responds that the face of the petition establishes that the amount-in-controversy requirement is met, given Plaintiff's demand for damages in excess of $250, 000 and her assertion of extra-contractual claims entitling her to potential damages beyond the policy limits. The Court agrees with Allstate that the amount-in-controversy requirement is satisfied.
The removing party has the burden of proving by a preponderance of the evidence that the amount in controversy exceeds $75, 000. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Typically, for purposes of diversity removal, “the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy.” 28 U.S.C. § 1446(c)(2); accord Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 87 (2014) ().
To justify dismissal or remand, it must appear to a legal certainty from the face of the petition or from the evidence that the claim is really for less than the jurisdictional amount. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). If an insurance policy limits the insurer's liability to a sum below the jurisdictional threshold, the fact that a claimant wants more money does not increase the amount in controversy. Hartford Ins. Grp., 293 F.3d at 911 (). However, that rule applies only to claims based on the contract; it does not apply to extra-contractual claims.
Allstate contends it was facially apparent from the petition at the time of removal that the amount in controversy exceeded $75, 000. Plaintiff's petition asserts two claims: (1) a declaratory judgment claim for UIM benefits and (2) a claim for “bad faith and unfair dealing” based on (a) failure to pay when liability has become reasonably clear and (b) failure to investigate. The prayer requests a judgment “for actual damages, consequential damages, incidental damages, compensatory damages, mental anguish damages, costs of court, and expenses of the lawsuit, ” and interest and attorneys' fees.
Although Allstate's liability for UIM benefits under the contract may be capped at the $30, 000 or $50, 000 policy limits, Allstate contends that, including Plaintiff's extra-contractual claims, which carry the potential for treble damages, the amount in controversy exceeds $75, 000.[2] Allstate contends this includes “three times her actual damages per the Texas Insurance Code” and “exemplary damages” despite the fact that Plaintiff has not expressly pled these damages. It is unclear from the petition whether Plaintiff is bringing her bad faith claims as common-law or statutory claims. She does not cite any statutory provisions, but she does use language that tracks sections of § 541.060 governing unfair settlement practices, specifically § 541.060(a)(2)(A) (“failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: (A) a claim with respect to which the insurer's liability has become reasonably clear”) and § 541.060(a)(7) (“refusing to pay a claim without conducting a reasonable investigation with respect to the claim”).
As noted, Plaintiff does not expressly seek treble damages or punitive damages, though these types of damages would be available for the extra-contractual claims. Further, Plaintiff's petition seeks attorneys' fees under the Texas Declaratory Judgment Act, and does not expressly seek them for her bad-faith claims, though attorneys' fees are available under Chapter 541. Lyda Swinerton Builders, Inc. v. Oklahoma Surety Co., 903 F.3d 435, 450 (5th Cir. 2018) (); TEX. INS. CODE § 541.152(a) (). However, Plaintiff's petition expressly seeks damages in excess of $250, 000, which indicates she intends to seek these types of extra-contractual damages despite the failure to expressly plead them.
Thus, even if damages for her contract-based declaratory judgment claim are capped by the policy limits, Plaintiff has not shown as a matter of legal certainty that the amount in controversy is less than $75, 000, given her inclusion of extra-contractual claims that could permit an award of attorney's fees and treble damages, and her express statement that “Plaintiff is seeking damages in excess of $250, 000, ” a statement she has not disavowed.[3] Although Plaintiff's petition is not a model of clarity, the Court finds that the assertion of extra-contractual claims and Plaintiff's affirmative statement that she is seeking damages in excess of $250, 000 provide sufficient evidence that the amount in controversy exceeds $75, 000. Therefore, the Court denies Plaintiff's motion for leave to file a motion to remand. Plaintiff's related request to dismiss her extra-contractual claims and then remand is also denied, as jurisdiction became fixed at the time of removal, and post-removal changes in Plaintiff's claims to reduce the amount in controversy do not divest the Court of jurisdiction.
Since the Texas Supreme Court's decision in Brainard v Trinity Universal Insurance Co., 216 S.W.3d 809, 818 (Tex. 2006), Allstate has flatly refused to pay any UIM benefits until its insured first obtains a court judgment...
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