Insurance And Amount In Controversy

Texas insurance lawyers know insurance companies always want to wage litigation in Federal Court. A recent case illustrates this. The case is from the U.S. District Court, Northern District of Texas, Dallas Division. The style of the case is Clear Vision Windshield Repair, LLC v. Allstate Fire and Casualty Insurance Company.
This lawsuit was originally filed in State District Court wherein Clear Vision alleged violations of the Texas Insurance Code, Chapters 541 and 542. Allstate caused the case to be removed to Federal Court asserting there was diversity of citizenship and the amount in controversy exceeded $75,000. Clear Vision disagreed and contended that Allstate had not shown the amount in controversy exceeded $75,000. Specifically, Clear Vision contended there were nine individuals who had windshield repairs that were not paid or not fully paid and that the individual claims cannot be segregated to meet the jurisdictional threshold for diversity jurisdiction. Allstate countered that the rule against aggregation of claims does not apply because Clear Vision is the only plaintiff and Clear Vision has stated it seeks monetary relief in excess of $100,000.
A federal court has an independent duty, at any level of the proceedings, to determine whether it properly has subject matter jurisdiction over a case. This duty must be policed by the courts on their own initiative even at the highest level.
For diversity purposes, the amount in controversy normally is determined by the amount sought on the face of the plaintiff’s pleadings, as long as the plaintiff’s claim is made in good faith.
The Fifth Circuit has stated that the district court must first examine the complaint to determine whether it is facially apparent that the claims exceed the jurisdictional amount. And the Fifth Circuit has stated that any doubts as to the propriety of removal should be construed strictly in favor of remand.
This Court then examined the case. The total amount owed or outstanding with respect to all of the insured’s is $188. Specifically, 21 dollars are owed for Amos’s repairs; 21 dollars are owed for Costlow’s repairs; sixty dollars are owed for Goine’s repairs; one dollar is owed for Wagner’s repairs; 21 dollars are owed for Moreau’s repairs; 21 dollars for McClure’s repairs; 21 dollars are owed for Koblenz’s repairs; 11 dollars for Ford’s repairs; and 11 dollars are owed for Anthony’s repairs. Thus, the total amount of the claims for which Clear Vision has not been paid by Allstate is $188.
Clear Vision is the only party having an interest here because the insureds assigned their claims to Clear Vision. Thus, there is diversity of citizenship.
The Court then acknowledged that even though Clear Vision stated their claim exceeded $100,000, it does not, stating this claim of damages is not made in good faith. The statement lacks credibility. If Clear Vision prevailed on all claims asserted and the court awarded treble damages on two of the claims and the 18% penalty, this amount would be approximately $2,000, which is woefully short of the $75,000 jurisdictional threshold required for Federal Court. And although a court can consider attorneys fees in determining the amount in controversy, there is nothing that evidences that Clear Vision could reasonably incur attorney’s fees that would come close to reaching $73,000. The facts of the case are straightforward and not complex.
As a result, the case was remanded to the State Court.