Opinion
CIVIL ACTION No. 01-2268-KHV
August 8, 2001
MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiffs Motion In Opposition To Defendant's Notice of Removal (Doc. #3) filed June 11, 2001, which the Court construes as a motion to remand pursuant to 28 U.S.C. § 1447(c). On May 1, 2001, plaintiff filed a petition in the District Court of Wyandotte County, Kansas seeking declaratory judgment and equitable relief on a contract for disability insurance issued by defendant. See Petition, attached as Exhibit A to Notice Of Removal (Doc. #1) filed June 1, 2001. On June 1, 2001, defendant removed the action to this Court from the District Court of Wyandotte County, Kansas. See Notice Of Removal (Doc. #1). For the reasons set forth below, the Court finds that plaintiff's motion to remand should be sustained.
Defendant treated Plaintiffs Motion In Opposition To The Notice Of Removal as a motion to remand, see Defendant's Memorandum In Support Of Its Notice Of Removal And In Opposition To Plaintiff's Opposition To The Notice Of Removal (Doc. #5) filed June 25, 2001. On June 28, 2001, plaintiff filed a Motion To Remand (Doc. #6) which asked the Court to construe her earlier motion as a motion to remand. In Defendant's Response To Motion To Remand (Doc. #7) filed July 9, 2001, defendant stated that it has no objection to plaintiff's request to treat her first motion as a motion to remand, and the Court will do so.
Standard For Removal
A civil action is removable only if plaintiffs could have originally brought the action in federal court. See 28 U.S.C. § 1441(a). The Court is required to remand "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction. See Frederick Warinner v. Lundgren, 962 F. Supp. 1580, 1582 (D. Kan. 1997) (citing Basso v. Utah Power Light Co., 495 F.2d 906, 909 (10th Cir. 1974)). The rule is inflexible and without exception, and requires a court to deny its jurisdiction in all cases where such jurisdiction does not affirmatively appear in the record. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982). Accordingly, the Court must strictly construe the federal removal statute. See Fajen v. Found. Reserve Ins. Co., Inc., 683 F.2d 331, 333 (10th Cir. 1982). The burden is on the party requesting removal to demonstrate that the Court has jurisdiction. See Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995). The Court must resolve any doubts concerning removability in favor of remand. See J.W. Petroleum, Inc. v. R.W. Lange, 787 F. Supp. 975, 977 (D. Kan. 1992).Facts
Plaintiff is a resident of Kansas City, Kansas. Defendant is a Maine insurance corporation with its principal place of business in Maine. On April 1, 1989, plaintiff, who then practiced law in Kansas, purchased an occupational disability income policy from defendant. The policy included insurance benefits for total disability from sickness that prevented an insured from engaging in her regular occupation.
In June, 1992 plaintiff entered the hospital for clinical depression. She ultimately applied for disability benefits. On January 16, 1992, defendant found her disabled and began to pay disability benefits of $2,000 per month. On May 9, 2000, an independent medical examiner examined plaintiff and reported that plaintiff did not suffer from a psychiatric impairment that substantially limited her ability to practice law. Plaintiff's treating physician disputed this report, and opined that plaintiff continues to be unable to practice law.
On November 30, 2000, defendant ceased paying disability benefits. Plaintiff filed her state court action requesting that the court:
enter declaratory judgment reinstating her disability benefits under the terms of her contract retroactive to the date Defendant ceased paying these benefits; that Defendant be required to pay Plaintiff all unpaid past due disability benefits; that this Court enter judgment assessing costs of this action, including attorneys fees pursuant to K.S.A. [§] 40-256 incurred by Plaintiff against the Defendant and for such other relief as the Court deems just and equitable.Petition, Exhibit A to Notice of Removal (Doc. #1).
Analysis
In the notice of removal, defendant asserts that this Court has original diversity jurisdiction, which requires complete diversity between the parties and an amount in controversy in excess of $75,000.00.See 28 U.S.C. § 1332(a). Plaintiff is a citizen of Kansas, and defendant is a citizen of Maine. See 28 U.S.C. § 1332(c)(1) (corporation is a citizen of state where incorporated and state where principal place of business is located). The Court thus finds that complete diversity exists between the parties.
In order for the Court to have original jurisdiction in a diversity case, the amount in controversy must exceed $75,000. See 28 U.S.C, § 1332(a). The Court ordinarily determines the amount in controversy by the allegations in the complaint, or where the allegations in the complaint are not dispositive, by the allegations in the notice of removal. See Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (citing Lonnquist v. J. C. Penney Co., 421 F.2d 597, 599 (10th Cir. 1970.)) In seeking to remove the case, defendant bears the burden to set forth in the notice of removal the underlying facts which support its assertion that the amount in controversy exceeds $75,000.See Laughlin, 50 F.3d at 873. Moreover, there is a presumption against removal jurisdiction. Id.
The petition does not allege any certain amount in controversy, but merely seeks retroactive reinstatement of disability benefits dating from November 30, 2000, and costs and attorney fees. In its notice of removal, defendant states that under the disability insurance policy, plaintiff's benefits are $2,000 per month payable so long as she remains disabled. Defendant states that benefits which are allegedly past due total $20,000. The removal notice further states that plaintiff's counsel informed defendant's counsel that plaintiff is claiming disability benefits into "the indefinite future." The removal notice asserts that if plaintiff lives only 16 months from the date of service, the past and future benefits that she seeks will total $75,000, in addition to reasonable attorneys fees. Thus, defendant asserts that the amount in controversy exceeds $75,000 and that this Court has diversity jurisdiction.
Plaintiff's petition requests declaratory judgment. In an action for a declaratory judgment or an injunction action, the amount in controversy is the value of the action to the plaintiff or the cost to defendant.See Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 347-48 (1977); Justice v. Atchison, Topeka Santa Fe Ry. Co., 927 F.2d 503, 505 (10th Cir. 1991); Leader Mort. Co. v. Earel, 1998 WL 781225, *1 (D. Kan. 1998). The Court is not certain whether plaintiffs action, which seeks retroactive reinstatement of her disability insurance benefits, is properly termed an action for declaratory judgment. But that point is not crucial to the analysis.
In actions for declaratory relief, the amount in controversy is measured by the value of the object of the litigation, which is the "value of the right to be protected or the extent of the injury to be prevented." Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983); cf. Mutal Life Ins. Co. of N.Y. v. Moyle, 116 F.2d 434, 435 (1940) (where the controversy relates to validity of policy and not merely to liability for benefits accrued, amount involved is necessarily face of policy), In a suit by the insured to recover disability benefits the amount involved for purposes of jurisdiction is the amount of the disability benefits for which suit is brought, even though the effect of the judgment may be to establish the right of the insured to recover sums far in excess of the jurisdictional amount. See White v. North Am. Accident Ins. Co., 316 F.2d 5 (10th Cir. 1963) (future benefits payable under contract of insurance may be used to compute amount in controversy for jurisdictional purposes only when the validity of the insurance policy itself, and not merely the presence or absence of conditions measuring the insurer's liability thereunder is in dispute); Keck v. Fid. Cas. Co., 359 F.2d 840 (7th Cir. 1966); Beaman v. Pac. Mut. Life Ins. Co., 369 F.2d 653, 655 (4th Cir. 1966); Bankers Life Cas. Co. v. Namie, 341 F.2d 187, 189 (5th Cir. 1965); cf. Wilbert v. Unum Life Ins. Co., 981 F. Supp. 61 (D. R.I. 1997) (cancelled insurance policies involved in declaratory action could provide monthly disability payments of over $5,000, for life-time benefits over $1,000,000.00 each — satisfies the $75,000 amount in controversy requirement).
Plaintiff seeks relief based on her claim that defendant has improperly found that she is no longer disabled. Thus, she challenges the presence of a condition measuring defendant's liability. The measure of the jurisdictional amount is the amount of benefits due her at the time of the removal. Even according to defendant's assertions in its removal papers, plaintiff seeks $20,000 in past benefits plus attorneys fees. The removal notice states that attorneys fees could exceed $35,000. The amount of this relief would total only $55,000. The Court therefore finds that defendant has failed to affirmatively show that the requisite amount in controversy is established on the face of either the petition or the removal notice. See Laughlin, 50 F.3d at 873. IT IS THEREFORE ORDERED that Plaintiff's Motion In Opposition To Defendant's Notice of Removal (Doc. #3) filed June 11, 2001, which the Court construes as a motion to remand pursuant to 28 U.S.C. § 1447(c) be and hereby is SUSTAINED. This case is REMANDED to the District Court of Wyandotte County, Kansas.