White v. Nat'l Fire & Marine Ins., Case No. 5:17-cv-01170-HNJ

• Decision Date: 22 May 2019
• Docket Number: Case No. 5:17-cv-01170-HNJ
• Court: U.S. District Court — Northern District of Alabama
• Parties: FRED WHITE, Plaintiff v. NATIONAL FIRE & MARINE INSURANCE, Defendant

FRED WHITE, Plaintiff v. NATIONAL FIRE & MARINE INSURANCE, Defendant

Case No. 5:17-cv-01170-HNJ

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ALABAMA NORTHEASTERN DIVISION

May 22, 2019

MEMORANDUM OPINION AND ORDER TO REMAND

This action for breach of an insurance contract proceeds before the court sua sponte to assess the basis for subject matter jurisdiction. Because the amount in controversy in this case falls far below the threshold to warrant the exercise of diversity subject matter jurisdiction, the court ORDERS the Clerk of Court to REMAND this case to state court.

BACKGROUND

Plaintiff Fred White commenced this action by filing a complaint in the Morgan County Circuit Court. (Doc. 1-1 at 3-5). The complaint alleges a single breach of contract claim, and further declares that White "suffered the loss of his trailer" and "lost the use of his trailer and the income he would have made had he had a trailer." (Doc. 1-1 at 3). Plaintiff demands "compensatory and punitive damages, in a sum the Court and jury deem just . . . ." (Doc. 1-1 at 4). As indicated, White did not request a specific sum of damages in his complaint. Essentially, White sued the Defendant, National Fire & Marine Insurance, for refusing to pay on an insurance policy covering a conversion trailer, which sustained severe damage while deployed on a farm to haul wheat.

While the case was pending in state court, National Fire served requests for admissions pursuant to Alabama Rule of Civil Procedure 36. The requests sought admissions to the following assertions:

1. That the Plaintiff seeks damages in this action in excess of $75,000, exclusive of costs and interest.

2. That the amount in controversy in this action exceeds $75,000, exclusive of costs and interest.

3. That Plaintiff will request and demand damages in excess of $75,000 in this action.

4. That Plaintiff intends to request a fact-finder in this case to return a verdict in excess of $75,000, exclusive of costs and interests.

(Doc. 1-1 at 39). White did not respond to National Fire's requests for admission.

Shortly after White's failure to answer the requests for admission, National Fire removed this action to federal court. In its Notice of Removal, National Fire invokes the diversity subject matter jurisdiction of this court pursuant to 28 U.S.C. § 1332.¹ The Notice asserts White domiciles in Alabama and identifies National Fire's place ofincorporation and principal place of business as Nebraska.² National Fire contended the action satisfied the $75,000 amount-in-controversy requirement because White failed to respond to the requests for admission that his damages exceeded the jurisdictional floor, thus deeming the requests admitted.

After the parties submitted summary judgment briefs and materials - although White only submitted an eight-page response - the court discerned for the first time that White only paid approximately $19,000 for the trailer at issue in the dispute, and he only insured it for $19,000. Therefore, the court issued an Order to Show Cause questioning the exercise of diversity subject matter jurisdiction over this action. National Fire responded with arguments centered on White's failure to respond to the requests for admission, while White did not respond.

ANALYSIS

The foregoing background readily establishes the necessity for remand of this case to state court: the evidence in this case conclusively establishes that the amount in controversy in this action constitutes no more than approximately $19,000, far less than the jurisdiction threshold of $75,000. For this reason, the court will remand this action to state court.

"'Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.'" Dudley v. Eli Lilly & Co., 778 F.3d 909, 911(11^th Cir. 2014) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). As a result, federal courts possess "an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006).

National Fire invokes diversity jurisdiction as the basis for the court's exercise of subject matter jurisdiction. As reflected previously in describing diversity jurisdiction, 28 U.S.C. § 1332 provides that "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States . . . ." 28 U.S.C. § 1332(a)(1). Title 28 U.S.C. § 1441 allows defendants to remove actions from state court that portray a basis for original jurisdiction in federal district courts.

In actions removed by a defendant pursuant to purported diversity jurisdiction, the court shall deem the "sum demanded in good faith in the initial pleading [as] the amount in controversy." 28 U.S.C. § 1446(c)(2). As reflected previously, White did not request a sum certain in his complaint. Where a complaint is silent on the amount of damages sought, a defendant's notice of removal may assert the amount in controversy if the complaint seeks nonmonetary relief; if a state prohibits specific damage requests in initial pleadings; or if a state "permits recovery of damages in excess of the amount demanded." Id. at § 1446(c)(2)(A)(i) & (ii). White's circumstancescorrespond to the latter specification, as he may recover a money judgment on his breach-of-contract claim in excess of the unspecified amount sought in his complaint.

In actions removed from state court, the "defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court." Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 553 (2014). When a plaintiff or a court challenges the defendant's amount-in-controversy allegation, however, proper jurisdiction persists "'if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds' the jurisdictional threshold." Id. at 553-54 (quoting 28 U.S.C. § 1446(c)(2)(B)). "Both sides" may "submit proof" concerning the amount in controversy, and the district court must decide, "by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied." Id. at 554.

In assessing the basis for diversity jurisdiction, "'the district court must make findings of jurisdictional fact to which the preponderance standard applies.'" Id. (quoting H.R. Rep. No. 112-10, p. 16 (2011)). The preponderance of the evidence standard does not require a removing defendant "to prove the amount in controversy beyond all doubt or to banish all uncertainty about it." Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11^th Cir. 2010); see also Dart, 135 S. Ct. at 554 ("'[D]efendants do not need to prove to a legal certainty that the amount in controversy requirement has been met.'") (quoting H.R. Rep. No. 112-10, p. 16 (2011)). "What counts is the amount incontroversy at the time of removal." S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1315 (11^th Cir. 2014).

In conducting its analysis, the district court may make "reasonable deductions, reasonable inferences, or other reasonable extrapolations" and may use "judicial experience and common sense in determining whether the case stated in a complaint meets federal jurisdictional requirements." Pretka, 608 F.3d at 754. "[E]stimating the amount in controversy is not nuclear science," and "the undertaking is not to be defeated by unrealistic assumptions that run counter to common sense." S. Fla. Wellness, 745 F.3d at 1317. In the same vein, gamesmanship in pleading can neither create nor defeat a court's jurisdiction. Goodwin v. Reynolds, 757 F.3d 1216 (11^th Cir. 2014).

As foreshadowed earlier, the action at bar unequivocally does not advance an amount in controversy close to the $75,000 jurisdictional threshold. In the parties' submissions regarding Defendant's summary judgment motion, the court discerned that the trailer at issue cost Plaintiff $19,000, which is far less than the $75,000 jurisdictional floor. Moreover, the policy establishes that White insured the trailer at a value of $19,000. (Doc. 17-3 at 14).

To be sure, White claims lost income due to the loss of his trailer, which conceivably could merit damages greater than $75,000. However, this action involves a single claim - breach of an insurance contract - that does not afford White compensatory and punitive damages. See United Servs. Auto. Ass'n v. Wade, 544 So. 2d906, 913 (Ala. 1989) (The "'law in this state does not permit recovery for personal injury, inconvenience, annoyance, or mental anguish and suffering in an action for breach of a contract of insurance.' . . . In a legitimate contract dispute over insurance coverage where there is no wrongful conduct by the insurer, mental anguish damages would not be recoverable.") (citations omitted); Liberty Nat. Life Ins. Co. v. Stringfellow, 92 So. 2d 924, 926 (Ala. Ct. App. 1956) ("The general rule as to damages for breach of a contract is that only those damages are recoverable which are the natural and probable result of the breach of the contract, and could be reasonably contemplated by the parties as a probable result of the breach. . . . It is further a basic principal of law governing the liability of an insurer that such liability is to be determined by the provisions of the insurance contract.") (citation omitted). Furthermore, "profits are too remote and cannot be recovered when they are not the immediate fruits of the principal contract, but are dependent on collateral engagements not brought to the notice of the contracting parties. In addition, . . . compensatory damages for lost profits are not allowed if they are too speculative." Garrett v. Sun Plaza Dev. Co., 580 So. 2d 1317, 1320 (Ala. 1991) (citations omitted).³

Most importantly, the parties' insurance contract...