Van Meter v. State Farm Fire and Cas. Co., 92-2056

• Decision Date: 09 August 1993
• Docket Number: No. 92-2056,92-2056
• Citation: 1 F.3d 445
• Parties: Lawrence VAN METER; Catherine Van Meter, Plaintiffs-Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 445

1 F.3d 445

Lawrence VAN METER; Catherine Van Meter, Plaintiffs-Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellant.

No. 92-2056.

United States Court of Appeals Sixth Circuit.

Argued June 18, 1993.

Decided Aug. 9, 1993.

Thomas Lazar (argued and briefed), Farmington Hills, MI, for plaintiffs-appellees.

Jon D. Vander Ploeg (argued and briefed), Smith, Haughey, Rice & Roegge, Grand Rapids, MI, for defendant-appellant.

Before: KEITH and JONES, Circuit Judges; and PECK, Senior Circuit Judge.

NATHANIEL R. JONES, Circuit Judge.

Defendant-Appellant State Farm Fire and Casualty Company ("State Farm") appeals from the district court's Order of Remand. As a general rule, remand orders are not reviewable. Since, from the record, we are unable to determine if this case should be governed by the general rule, we shall remand for the limited purpose of having the district court clarify its Order of Remand along the lines outlined below.

I

On January 23, 1991, a fire occurred at the residence of Plaintiffs-Appellees Lawrence and Catherine Van Meter. In force at the time was a fire insurance policy the Van Meters had purchased from State Farm. The Van Meters gave notice of destruction caused by the fire to State Farm, and filed a Sworn Statement in Proof of Loss ("Proof of Loss") pursuant to the terms of the insurance policy. In this statement, the Van Meters claimed that they were owed $70,472.56 for fire-related destruction ($46,843.00 [sic] relating to the dwelling itself; $23,628.78 [sic] relating to the contents of the dwelling) under the terms of the insurance policy. State Farm denied liability.

On January 17, 1992, the Van Meters filed a Complaint and Jury Demand ("Complaint") against State Farm in a Michigan state court. In Count I of the Complaint, they noted filing the Proof of Loss and requested damages "in excess of Ten Thousand ($10,000.00) Dollars plus costs, interest and attorney fees" for State Farm's refusal to honor its alleged contractual obligations. J.A. at 11. In Count II, they sought compensation for "great mental and emotional distress, anguish and other damages" due to State Farm's "bad faith, malicious acts, and refusals" in an amount "in excess of Ten Thousand ($10,000.00) Dollars plus costs, interest and attorney fees." Id. at 12. In Count III, they alleged that State Farm's actions constituted a violation of the Michigan Consumer Protection Act, Michigan Compiled Laws Annotated Secs. 445.901-445.922 (West 1989). For that violation, the Van Meters sought, inter alia: "1. To recover damages for the fire, damages to the building, contents and living expenses; 2. [To o]btain[ ] a $250.00 statutory penalty; [and] 3. Reimbursement for attorney fees...." J.A. at 13.

On March 13, 1992, State Farm filed a Notice of Removal in the United States District Court for the Eastern District of Michigan. Removal was based on diversity of citizenship (which is not disputed in this appeal) and the allegation that "[t]he matter in controversy exceeds, exclusive of costs and disbursements, the value of Fifty Thousand Dollars ($50,000)" (which is disputed in this appeal). Id. at 5.

Also on March 13, 1992, State Farm filed its Answer, Affirmative Defense & Reliance on Jury Demand ("Answer") in the federal district court. Of note concerning this appeal, the Answer included the following:

8. Should a judgment be entered that plaintiffs are not entitled to recover under the insurance contract, plaintiffs are obligated to repay to the defendants those benefits paid during the pendency of the investigation of this loss, including but not necessarily limited to:

a. $34,197.85 paid to plaintiffs' mortgagee;

b. $1,417.50 paid to plaintiffs for living expenses for rent;

c. $2,000.00 paid to plaintiffs as an advance on their claim for damages to contents;

d. $777.45 paid on behalf of plaintiffs to protect the residence after the fire, i.e., to board up the property; and

e. $6,034.91 paid on behalf of plaintiffs pursuant to MCL 500.2845.

9. Should a judgment be entered that plaintiffs are entitled to recover under the insurance contract, defendant is entitled to a set-off and plaintiffs are obligated to repay to the defendants those benefits paid during the pendency of the investigation of this loss, including but not necessarily limited to:

a. $34,197.85 paid to plaintiffs' mortgagee;

b. $1,417.50 paid to plaintiffs for living expenses for rent;

c. $2,000.00 paid to plaintiffs as an advance on their claim for damages to contents;

d. $777.45 paid on behalf of plaintiffs to protect the residence after the fire, i.e., to board up the property; and

e. $6,034.91 paid on behalf of plaintiffs pursuant to MCL 500.2845.

Id. at 19-20.

On March 30, 1992, the Van Meters filed an Answer to Affirmative Defenses. With respect to Paragraph 8 and Paragraph 9 of State Farm's Answer, the Van Meters asserted that they "neither admit nor deny the allegation contained therein and leave Defendant to its proof." Id. at 26.

Count III was dismissed on April 7, 1992, upon stipulation of the parties, by Order of the district court.

On April 30, 1992, the Van Meters filed an Offer to Accept Judgment Less Than $50,000.00. The filing specifically stated that the Van Meters "offer to limit the Judgment in the above styled cause to $40,000.00 including all claims, interest, costs and attorney fees." Id. at 43.

On May 14, 1992, the Van Meters moved to remand the case to the state court whence it came, arguing that the amount in controversy did not exceed $50,000, exclusive of interest and costs. Specifically, they argued that, in light of the payments that State Farm indicated in its Answer it had made:

the Plaintiffs cannot receive a judgment in excess of the claimed amounts under the policy of fire insurance. Therefore, the total paid of $44,427.71 deducted from the $70,472.56 total claim leaves a balance of $26,044.85 as an actual loss plus open items that remain at $250.00 per month since the date of loss which at the present time is equal to $4000.00.

Id. at 47-48. They further noted that "the Plaintiffs ... filed an offer to accept a judgment limiting all of Plaintiffs claims including actual amounts owed under the fire insurance policy plus damages for emotional distress for bad faith refusal and including all court costs, interest and attorney fees to $40,000.00." Id. at 48. Along with this motion and apparently in accordance with Rule 81.1(b)(2) of the Local Rules of the United States District Court for the Eastern District of Michigan, the Van Meters itemized the damages they were claiming:

1. Plaintiffs' fire insurance claim Contents and Structure $26,044.85

2. Open items Rent until new home is purchased $ 4,000.00

3. Emotional Distress for bad faith refusal $10,000.00

4. Interest, cost and attorney fees $ 0 J.A. at 49.

On June 1, 1992, State Farm filed Defendant's Statement and Brief in Opposition to Plaintiffs' Motion to Remand. It maintained that:

the amount in controversy for jurisdictional purposes is that sum claimed by the plaintiff in the complaint....

In the present action, plaintiffs' complaint alleges a claim for breach of a fire insurance contract and resulting damages in the amount of $70,472.56 (not including amounts for compensable additional living expenses), and a tort claim for a bad faith refusal to pay fire insurance proceeds for an unspecified amount of damages. Because the sum claimed by the plaintiffs in the complaint controls the determination of the amount in controversy, this Court has jurisdiction to hear the present action.

Id. at 56-57. Arguing that the determination of the amount in controversy for purposes of federal jurisdiction is made from the face of the complaint at the time the action is commenced, State Farm contended that its Answer to the Van Meters' Complaint, which averred that payments were made on the Van Meters' behalf (thus potentially reducing the amount at issue), should not properly be considered by the court in making its jurisdictional determination. As well, State Farm maintained that the Van Meters' Offer to Accept Judgment Less Than $50,000.00 did not serve to diminish the amount in controversy for jurisdictional purposes because it likewise was made after the action was commenced.

On June 8, 1992, the district court made known to the parties its intention to analyze the amount-in-controversy issue in terms of whether the defendant has met its burden of proving, by a preponderance of the evidence, that the amount in controversy exceeded the jurisdictional amount. It set forth its intention in its Order for Additional Information in which it specifically "ORDERED that ... defendant[ ] may file a response statement on or before June 26, 1992 setting forth in detail the facts or other information on which the defendant relies in alleging the amount in controversy." Id. at 69 (emphasis in original).

State Farm responded on June 26, 1992 by filing Defendant's Brief in Response to Order for Additional Information. Therein, it set forth the facts that the Van Meters referred to the Proof of Loss in their Complaint and that this Proof of Loss listed fire damage amounting to $70,452.56 [sic]. It also set forth the fact that the fire insurance policy in force at the time of the fire contained coverage limits of $46,843 for the dwelling; $2,343 for debris removal (dwelling); $2,343 for trees, shrubs and plants; $32,790 for the contents of the dwelling; and $1,640 for debris removal (contents). Noting the additional fact that the Van Meters sought in their Complaint in excess of an additional $10,000 for mental anguish and emotional distress, State Farm concluded that the amount in controversy indeed exceeded the jurisdictional amount.

On July 24, 1992, the district court filed its Order Granting Plaintiff's Motion for Remand. It generally held that State Farm did not meet its burden of proving, by a preponderance of the evidence, that the...