One Way To Stay Out Of Federal Court

Like it or not, an insured suing his insurance company has a much better chance of getting a favorable or more favorable result in State Court versus Federal Court.  And, the insurance companies know this.  As a result, an insurance company is always seeking to have a case heard / litigated in the Federal Court.

Here is a case wherein the insured was able to defeat the efforts of the insurance company to have the case heard in Federal Court.  We don’t know whether this was the best way of doing it without knowing more about the Facts in the case but at the least the insured was successful in being able to litigate his case in State Court.

The case is from the Southern District of Texas, Galveston Division, and is styled, Ronald Mason v. Evanston Insurance Company.

The law regarding removal is supported by Fifth Circuit opinions and 28 U.S.C., Section 1441(a).  That law says a defendant may remove an action from the state court if the action is one over which the federal court possesses subject matter jurisdiction.  It is important to know that the defendant bears the burden of establishing facts necessary to show that subject matter jurisdiction exists.  When the defendant asserts removal on diversity grounds specifically, the district court will refuse jurisdiction unless the defendant can prove all necessary jurisdictional facts by a “preponderance of the evidence.”  In doing so, all ambiguities and doubts regarding whether removal jurisdiction is proper will be resolved against federal jurisdiction.

In this case, both parties concede that complete diversity exists, leaving the Court to decide whether the $75,000 requirement is met in order to determine if it has subject matter jurisdiction over the case.  Evanston takes the position that removal is proper because the parties are completely diverse and the amount in controversy exceeds $75,000.  Mason seeks remand based on the fact that he attached a stipulation to his state court lawsuit which states that the amount in controversy does not exceed $75,000, and that neither the plaintiff nor his attorney will accept an amount that exceeds $75,000 exclusive of interest and costs.

Here is the law – “It is well settled that a binding stipulation that a plaintiff will not accept damages in excess of the $75,000 defeats diversity jurisdiction.”  Mason provided that exact type of stipulation.  As a result, the amount in controversy requirement is not met in this case and the Court does not have subject matter jurisdiction over the dispute.

Mason’s Motion to Remand to state court was granted.