Federal Court Pleadings And Remand – The Opposite

Palo Pinto County insurance attorneys know the insurance companies want to litigate their cases in Federal Court.  Insurance attorneys representing individuals and small businesses know they can often times get a better result for their clients in State or County Court.

Another U.S. McAllen Division opinion discusses the same issue as discussed here two days ago, yet with a different result.  The style of the case is, Pablo Martinez v. Allstate Texas Lloyds.

Martinez was insured with Allstate and sued Allstate based on their handling of a claim resulting from a storm.  Martinez alleged that Allstate failed to “fully compensate” them.  Martinez sued in State Court and Allstate removed the case to Federal Court.  Martinez sought a remand of the case.

After removal, a plaintiff may move for remand and, if it appears that the Federal Court lacks subject matter jurisdiction, pursuant to 28 U.S.C. 1447(c), the case shall be remanded.  Removal statutes are construed strictly against removal and for remand.  Once a motion to remand has been filed, the burden is on the removing party to establish that federal jurisdiction exists.  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.  In cases involving the applicability of an insurance policy to a particular occurrence, the amount in controversy is determined by the value of the underlying claim, and not the face amount of the policy.

The sum claimed by plaintiff in his original petition often controls.  The fact of the pleading will not control if made in bad faith.  A pleading is made in bad faith when the state procedural rules prohibit a plaintiff from pleading a specific amount in controversy, but the plaintiff does so anyway, in an amount sure to evade federal jurisdiction.  Texas Procedure Rule 47 currently prohibits plaintiff’s from pleading a specific amount.

Plaintiff’s statement that “plaintiffs seek monetary relief of $75,000 or less ….” is unavailing, and does not control the Court’s analysis.  However, the fact that the amount alleged by Plaintiff is disregarded does not establish that the jurisdictional requirement has been met.  Rather, the Court must look to Defendant to establish the amount.

Despite its efforts, Defendant has failed to prove by a preponderance of the evidence that the amount in controversy exceeds $75,000.  Defendant points out that the insurance policy in question provides more that $200,000 in coverage.  Beyond this, Defendant merely identifies language in Plaintiff’s petition suggesting expansive recovery: “past, present, and future costs of repair,” “investigative and engineering fees,” “mitigation cost,” “reliance,” “restitution,” “costs of alternative housing while repairs are occurring,” “consequential damages,” “attorney fees,” “prejudgment and postjudgment interest,” “plus 18% per annum penalty.”  Plaintiffs’ use of the terms “knowing” and “intentional” also suggests that they are seeking treble damages.

However, the Court does not consider the policy limits for purposes of determining the amount in controversy in this instance.  Moreover, Defendant has failed to submit a single piece of evidence suggesting the actual amount in controversy. (e.g., a demand letter)  Though Plaintiffs’ petition suggests expansive recovery, nothing in the petition gives the Court a basis for estimating actual or other damages.  For example, though it is clear Plaintiff is seeking treble damages, it is not clear what is to be trebled.  In short, Defendant has not carried its heavy burden of establishing this Court’s jurisdiction because it failed to submit any cognizable evidence providing the Court with a baseline for estimating the amount in controversy.

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