Federal Court Pleadings And Remand

Parker County insurance attorneys know that it is best for their clients to try and keep their case in State or County Court.  The insurance lawyers know it is best to get their case in Federal Court.  The U.S. McAllen Division had a case where the argument on this issue was a little different from what is usually seen.  The case is styled, Ida Rodriguez v. Allstate Texas Lloyds.

Rodriguez sued Allstate for a property damage claim that allegedly was not properly paid.  Rodriguez sued Allstate in State Court and Allstate removed the case to Federal Court.  Rodriguez filed a Motion to Remand the case back to the State Court.

One argument in this case was that the amount in controversy did not exceed $75,000.

After removal, a plaintiff may move for remand and, if it appears that pursuant to 28 U.S.C. 1447(c), the district court lacks subject matter jurisdiction, the case shall be remanded.  Removal statutes are construed strictly against removal and for remand.  In cases where remand is requested on the ground that less than the jurisdiction amount is controverted, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000.

The sum claimed by plaintiff in his original petition will often control.  However, the face of the plaintiff’s pleading will not control if made in bad faith.  A pleading is made in bad faith when the state procedural rules prohibit plaintiffs from pleading a specific amount in controversy, but the plaintiff does so anyway, in an amount sure to evade federal jurisdiction.  Texas Rule of Civil Procedure 47 currently prohibits plaintiffs from pleading a specific amount.  When a court finds that the plaintiff acted in bad faith to avoid federal jurisdiction, the plaintiff must be able to show that, as a matter of law, it is certain that he will not be able to recover more than the damages for which he has prayed in the state court complaint.  This safeguard is necessary to overcome a plaintiff’s tactical manipulation.

Lastly, a plaintiff may avoid removal in the first place by filing a binding stipulation or affidavit as to damages concurrently with their initial state court petition.  However, any such filings given after removal are ignored.  This is because facts pertaining to jurisdiction are judged at the time of removal, not later.

First, the amount in controversy suggested by Plaintiffs in their original state court petition is not controlling because it was made in bad faith — simply to avoid federal jurisdiction.  Since Texas Rule 47 prohibits a plaintiff from declaring a specific amount in controversy, Plaintiffs’ statement that “plaintiff seek monetary relief of $75,000.00 or less” is unavailing, and does not control the Court’s analysis.

Second, Allstate has proved by a preponderance of the evidence that the amount in controversy exceeds $75,000.  Allstate points out that the insurance policy in question provides $150,000 in coverage.  Moreover, the extent of damages sought and the application of treble damages likely raises the amount in controversy above $75,000.  Allstate has shown that Plaintiff is seeking expansive recover, including: “wind, hail, and water damages …’the cost of destruction and restoration of the property necessary to access and fix the damages areas’ and ‘injuries sustained as a result of having to live in a damages home ….'”  Indeed, Plaintiffs’ petition makes clear that they are seeking “past, present, and future costs of repair,” “investigation and engineering fees,” “mitigation costs,” “reliance,” “restitution,” “costs of alternative housing while repairs are occurring,” “consequential damages,” “attorney’s fees,” “pre-judgment and post-judgment interest,” “plus 18% per annum penalty.”

Moreover, Allstate claims that Plaintiffs’ pre-suit demand letter estimated damages to be $37,479.16.  Plaintiffs’ use of the terms “knowing” and “intentional” also makes clear that they are seeking treble damages.  In all, Plaintiffs are at least requesting relief in the amount of $112,437.48.  Thus, Allstate has proved by a preponderance of the evidence that the amount in controversy exceeds $75,000.

Third, Plaintiffs have not proved by a legal certainty that they are unable to recover more than $75,000.  The sum total of Plaintiffs’ argument is as follows: “the amount in controversy is less than $75,000.00.  This is an insufficient showing.

Fourth, the Court ignores Plaintiffs’ attached “stipulation” to damages of $75,000 or less because it was not filed concurrently with the original state court petition.  It was only filed after removal had already taken place.  Only Plaintiff’s counsel has signed it – not Allstate’s counsel – and Plaintiffs have not otherwise shown why the stipulation is binding.