Insurance – Amount In Controversy

Insurance companies prefer to litigate cases in Federal Court.  Insurance lawyers representing insureds prefer to litigate their cases in State Court.  In the appropriate situation, here is a way to stay in State Court.

This is from the Southern District of Texas, Houston Division, and the case is styled, WEN WIRELESS, INC. d/b/a Cell Spot, Kick Back Wireless v. Amguard Insurance Company.

Wen sued Amguard in County Court and Amguard timely removed the case to Federal Court based on diversity jurisdiction.  Wen filed a Motion for Remand under 28 U.S.C., Section 1441(a) asserting that the Court did not have federal jurisdiction.

Wen’s assertion is  based on the amount in controversy not exceeding $75,000 as required by 28 U.S.C., Section 1332(a).  Case law holds that a plaintiff like Wen may avoid federal jurisdiction by filing a binding stipulation with the original complaint that limits recovery to an amount below the jurisdictional threshold.

Amguard asserts that the true amount in controversy exceeds $75,000.  Wen seeks remand based on a stipulation attached as Exhibit E to the State Court petition.  Exhibit E states “the total sum or value in controversy in this cause of action does not exceed $75,000 exclusive of interest and costs” and that “neither Plaintiff not his/her attorney will accept an amount that exceeds $75,000 exclusive of interest and costs.”

Amguard argues that remand is improper because Wen refused to sign an additional stipulation stating that Exhibit E is irrevocable.  Amguard also argues that the Exhibit E stipulation adds the words “at this time” to the stipulation.

Federal Courts have consistently held that stipulations like Exhibit E are capable of defeating federal jurisdiction.

Wen is bound by the exhibit.  There is no authority for requiring such stipulations to explicitly state they are irrevocable.  The “at this time” language in the petition is irrelevant because Exhibit E prevents Wen from seeking damages in excess of the federal jurisdictional limit.