Insurance lawyers try to evaluate the value of a claim when talking with a prospective new client. Guess what? Federal Judges do the same with cases removed to their Court from the State and County Courts. This is seen in a 2021 opinion from the Southern District of Texas, McAllen Division. The opinion is styled, Macario Saenz v. State Farm Lloyds.
This is a dispute over the amount of damage resulting from a hurricane claim between Saenz and State Farm.
A lawsuit was filed in State Court and State Farm removed the case to Federal Court pursuant to 28 U.S.C., Section 1332, based on the amount in controversy exceeding $75,000. Saenz filed a motion to remand.
When the amount in controversy is at issue, the Court makes an arithmetical assessment of the claims and values at issue as of the moment of removal; subsequent events which purport to change the amount in controversy do not oust the Court’s jurisdiction. The party invoking federal diversity jurisdiction bears the burden of establishing the amount in controversy by a preponderance of the evidence. The removing defendant can meet its burden if it shows by a preponderance of the evidence that: (1) it is apparent from the face of the petition that the claims are likely to exceed $75,000, or, alternatively, (2) the removing party sets forth summary judgment type evidence of facts in controversy that support a finding of the requisite amount such as affidavits and deposition
testimony. If the plaintiff claims a specific amount in the complaint, the amount stated is itself dispositive of jurisdiction if the claim is apparently made in good faith. In other words, where the district court is making the facially apparent determination, the proper procedure is to look only at the face of the complaint and ask whether the amount in controversy was likely to exceed the requisite $75,000. However, a plaintiff’s bare allegations do not invest a federal court with
jurisdiction. The Fifth Circuit explained,
while a federal court must of course give due credit to the good faith claims of the
plaintiff, a court would be remiss in its obligations if it accepted every claim of
damages at face value, no matter how trivial the underlying injury. This is
especially so when, after jurisdiction has been challenged, a party has failed to
specify the factual basis of his claims. Jurisdiction is not conferred by the stroke of a lawyer’s pen. When challenged, it must be adequately founded in fact.
Therefore, when a plaintiff challenges a defendant’s assertion that the amount in controversy exceeds $75,000, the defendant must set forth evidence of the amount in controversy. If the removing party carries its burden, the party opposing removal may avoid removal by showing, to a legal certainty, that recovery will not exceed the jurisdictional threshold.
Generally, attorneys’ fees are not includible in determining the amount in controversy, but the exceptions are when attorneys’ fees are provided for by contract and when a statute mandates or allows the payment of such fees. For example, when ascertaining the amount in controversy under an insurance policy, the amount may include the policy limits, potential attorneys’ fees, penalties, statutory damages, and punitive damages, but not interest or costs.
The preceding is how the Court looks at the amount in controversy. In this case, the Base amount of damages was $46,690.82. The next amount to look at was the amount for potential attorney fees. A reading of the case shows the specifics of the case and are good for an attorney handling these matters to review.