Varboncoeur v. State Farm Fire and Cas. Co., 3:04-CV-70108.

• Decision Date: 14 January 2005
• Docket Number: No. 3:04-CV-70108.,3:04-CV-70108.
• Parties: Jeffrey VARBONCOEUR, an Iowa resident, Lydia Varboncoeur, an Iowa resident, Luis R. Rios, an Iowa resident, and Liovigilda R. Rios, an Iowa resident, on behalf of themselves and all others similarly situated, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Iowa

356 F.Supp.2d 935

Jeffrey VARBONCOEUR, an Iowa resident, Lydia Varboncoeur, an Iowa resident, Luis R. Rios, an Iowa resident, and Liovigilda R. Rios, an Iowa resident, on behalf of themselves and all others similarly situated, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

No. 3:04-CV-70108.

United States District Court, S.D. Iowa, Davenport Division.

January 14, 2005.

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Joseph R. Gunderson, Gunderson, Sharp & Walke, LLP, Des Moines, IA, for Plaintiffs.

J. Michael Weston, James P. Craig, Moyer & Bergman, PLC, Cedar Rapids, IA, James P. Gaughan, Joseph A. Cancila, Jr., Schiff Hardin & Waite, Chicago, IL, for Defendant.

ORDER ON PLAINTIFFS' MOTION TO REMAND

PRATT, District Judge.

Before the Court is Plaintiffs' Motion to Remand, filed October 25, 2004 (Clerk's No. 17). Plaintiffs Jeffrey and Lydia Varboncoeur ("the Varboncoeurs") and Plaintiffs Luis and Liovigilda Rios ("the Rioses") filed a Class Action Petition in the Iowa District Court in and for Scott County on August 27, 2004. In the Petition, Plaintiffs allege that Defendant, State Farm Fire and Casualty Company ("State Farm"), had a practice and policy of treating insured clients materially differently for purposes of loss evaluation, negotiation, and adjustment, if the insureds had a previous history of claims with State Farm. State Farm filed a Notice of Removal on September 23, 2004, claiming that jurisdiction is proper in the Southern District of Iowa pursuant to 28 U.S.C. § 1332(a). Specifically, State Farm claims that federal jurisdiction is proper as the parties are diverse citizens and the amount in controversy exceeds $75,000. On October 25, 2004, Plaintiffs filed a Motion to Remand the action to state court, and a brief in support thereof, arguing that State Farm failed to meet its burden to establish the requisite minimum amount in controversy. Defendant filed a resistance to the motion on November 12, 2004. Plaintiffs filed a reply brief on November 24, 2004, and State Farm filed a sur-reply on November 30, 2004. A hearing was held on December 15, 2004. The matter is fully submitted.

I. THE COMPLAINT AND REMOVAL NOTICE

All named Plaintiffs are citizens of Iowa. The Varboncoeurs reside in Columbus Junction, Iowa, while the Rioses reside in Burlington, Iowa. State Farm is a Nebraska corporation with its principal place of business in Lincoln, Nebraska. State Farm does, however, conduct a substantial amount of business in Iowa. Each of the named Plaintiffs maintained homeowner's insurance underwritten by State Farm.

On approximately August 28, 2003, a hail storm swept through Columbus Junction, Iowa damaging the home of the Varboncoeurs. The Varboncoeurs made a claim for the hail damage with State Farm. On or about September 17, 2003, State Farm inspected the Varboncoeurs' home. At that time, both parties agreed that the hail storm had caused a "covered loss" to the home within the meaning of the insurance policy. On the same date as the inspection, State Farm issued an "Actual Cash Value" and "Replacement Cost Value" damages evaluation to the Varboncoeurs in the amount of $199.83. Thus, after applying the policy's $250.00 deductible, the initial loss payment proposal was $0.00. The Varboncoeurs objected to the evaluation and the loss payment proposal. On approximately October 15, 2003, State Farm issued a second written "Actual Cash Value" and "Replacement Cost Value" damages evaluation of $1,248.84, with a loss payment proposal of $998.84 after accounting for the deductible. On the same date, State Farm issued a check to the Varboncoeurs in the amount of $998.84. On November 10, 2003, State Farm sent the Varboncoeurs a letter detailing their claims history with State Farm over the previous seven years. This letter noted a loss payment of $3,340.15 on August 6, 2001 for Fire/Lightning damage, and a loss payment of $4,904.13 on May 18, 1997 for Wind/Hail damage. At some point, State Farm sent the Varboncoeurs additional loss payment checks for the August 28, 2003 hail damage which, together with the original check for $998.84, totaled over $1900.00. The Varboncoeurs have not cashed any of the loss payment checks from State Farm regarding the August 28, 2003 hail storm.

On approximately May 8, 2003, a hail storm swept through Burlington, Iowa, damaging the home of the Rioses. State Farm inspected the Rioses' home on June 3, 2003, and confirmed that the Rioses had suffered a "covered loss" pursuant to the terms of their homeowner's policy. On or about June 11, 2003, State Farm issued an "Actual Cash Value" and "Replacement Cost Value" damages evaluation of $356.67. After applying the Rioses' $500.00 deductible, the initial loss payment proposal for the "Net Actual Cash Value Payment" was $0.00. The Rioses objected to the proposal and received a second damages evaluation on September 25, 2003, reflecting a "Replacement Cost Value" of $2,649.89, an "Items Payable When Incurred" value of $1,109.36, an "Actual Cash Value" of $1,540.53, and a total "Net Actual Cash Value Payment," accounting for the deductible, of $1,040.53. State Farm issued a loss payment check to the Rioses in the amount of $1,040.53. Prior to the second damages evaluation, State Farm sent the Rioses a letter, dated September 8, 2003, detailing the Rioses' claims history with State Farm which included: $723.79 on May 20, 2002 for Water Damage/Freezing; $350.00 on June 29, 1998 for Wind/Hail damage; $1,167.10 on July 8, 1993 for Wind/Hail damage; $4,730.46 on July 3, 1993 for Theft from an Auto; and $982.00 on January 9, 1993 for Mysterious Disappearance. Mr. Rios cashed the State Farm check for $1,040.53, despite the fact that an independent roofer had provided an estimate of damages to the home in an amount of $3,660.00. Upon receiving the State Farm loss proposals, Mr. Rios polled neighbors who were State Farm homeowner's policy holders, and discovered that only persons with prior claims histories with State Farm received such a low first payment proposal.

The Rioses and the Varboncoeurs allege that the claims adjustors assigned to each of their claims were aware of the number, nature and valuation of prior claims made by each family on their respective policies. Plaintiffs also claim that State Farm headquarters in Lincoln, Nebraska, was aware of, examined or had the opportunity to examine, each loss payment proposal, the applicable deductible, the respective claims histories, and the documentation for each before a loss payment proposal was issued.

Plaintiffs have proposed two prospective "classes" for purposes of a class action lawsuit. Both classes would be comprised of those State Farm insureds who suffered a covered loss to their home on or after August 27, 1994, had prior State Farm claims histories, and who received a low first loss payment proposal followed by a final loss payment proposal at least 200% higher than the first loss payment proposal. The first class of individuals, however, would include those individuals who did not cash any State Farm Check (the "Uncashed Claims Check Class") reflecting the final loss payment proposal, while the second class would include those policyholders who did cash such checks (the "Cashed Claims Check Class"). Plaintiffs raise the following causes of action on behalf of themselves and any putative class members: 1) First party bad faith; 2) Fraud-Failure to Disclose; 3) Unjust Enrichment; 4) Breach of Express Contract; and 5) Fraudulent Concealment and Lack of Discovery. Plaintiffs' Petition requests damages including, but not limited to, "court costs and expenses, compensatory damages, attorney's fees, punitive damages, consequential damages," and interest, each as allowed by law.

State Farm's Removal Notice claims that federal diversity jurisdiction supports removal of this matter because the parties are completely diverse, and because the amount in controversy exceeds $75,000. Plaintiffs do not dispute that diversity of citizenship exists. Plaintiffs, however, do claim that Defendant has failed to establish, to the requisite degree of legal proof, that the amount in controversy exceeds the jurisdictional amount. Thus, the sole matter before the Court is whether Plaintiffs' claimed damages are greater than the $75,000 jurisdictional requirement to maintain the case in federal court.

II. LAW AND ANALYSIS

As a general matter, a civil case brought in state court may be removed by a defendant to federal court if it could have been brought there originally. See 28 U.S.C. § 1441(a); Motion Control Corp. v. SICK, Inc., 354 F.3d 702, 705 (8th Cir.2003). Federal courts are courts of limited jurisdiction and "the requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception." Godfrey v. Pulitzer Pub. Co., 161 F.3d 1137, 1141 (8th Cir.1998). "The district court has subject matter jurisdiction in a diversity case when a fact finder could legally conclude, from the pleadings and proof adduced to the court before trial, that the damages that the plaintiff suffered are greater than $75,000." Kopp v. Kopp, 280 F.3d 883 (8th Cir.2002). A defendant who seeks to remove a case to federal court bears the burden of proving that the requirements for diversity jurisdiction have been met. See McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921); Yeldell v. Tutt, 913 F.2d 533, 537 (8th Cir.1990); Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd. 990C80656 v. Amoco Oil Co., 883 F.Supp. 403, 407 (N.D.Iowa 1995); Adams v. Bank of Am., N.A., 317 F.Supp.2d 935, 940 (S.D.Iowa 2004) (citing Bor-Son Bldg., Corp. v. Heller, 572 F.2d 174, 182 n. 13 (8th Cir.1978)).

When a case is filed in state court, and...