Opinion
22-cv-03313-DMR
09-19-2022
LINCOLN FINLEY, Plaintiff, v. NATIONAL GENERAL AUTO HOME AND HEALTH INSURANCE, et al., Defendants.
REQUEST FOR REASSIGNMENT TO DISTRICT JUDGE AND REPORT AND RECOMMENDATION TO DISMISS COMPLAINT WITH LEAVE TO AMEND
Donna M. Ryu United States Magistrate Judge
Plaintiff filed an application for leave to proceed in forma pauperis (“IFP”). [Docket No. 2.] On July 18, 2022, the granted Plaintiff's IFP application and ordered him to file a statement explaining why this case should not be dismissed for lack of subject matter jurisdiction- specifically, for failing to satisfy the amount-in-controversy requirement. [Docket No. 6.] Plaintiff filed a response on August 16. [Docket No. 9.]
Having considered Plaintiff's papers, the court concludes that the complaint fails to state a claim on which relief may be granted pursuant to 28 U.S.C. § 1915(e). Plaintiff filed a declination to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 636(c). [Docket No. 11.] Therefore, the court issues herein a Report and Recommendation and reassigns this case to a district judge for final disposition, with the recommendation that the complaint be dismissed with leave to amend in accordance with the guidance below.
I. BACKGROUND
Plaintiff alleges that on January 21, 2022, he was in an automobile collision with another driver, who was an insured of Defendant Integon National Insurance Company. Compl. ¶ 7. Plaintiff contacted his insurer, Defendant National General Auto and Home Health, which paid him $4,000 on his claim. Id. Plaintiff alleges that the driver who caused the incident and his insurer never responded to him. Id. ¶ 8. As a result, Plaintiff was left with unresolved repairs of the vehicle. Id. ¶ 10. He asserts that Defendants breached his insurance policy by refusing to provide a fair estimate of the repairs and charged him his $1000 deductible. He brings claims for breach of contract and breach of the implied covenant of good faith and fair dealing.
II. LEGAL STANDARD
A court may allow a plaintiff to prosecute an action in federal court without prepayment of fees or security if the plaintiff submits an affidavit showing that he or she is unable to pay such fees or provide such security. See 28 U.S.C. § 1915(a). The court's grant of Plaintiff's application to proceed IFP, however, does not mean that he may continue to prosecute the complaint. A court is under a continuing duty to dismiss a case filed without the payment of the filing fee whenever it determines that the action “(i) is frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B)(i)-(iii). If the court dismisses a case pursuant to Section 1915(e)(2)(B), the plaintiff may still file the same complaint by paying the filing fee. This is because the court's section 1915(e)(2)(B) dismissal is not on the merits, but rather an exercise of the court's discretion under the IFP statute. Denton v. Hernandez, 504 U.S. 25, 32 (1992).
To make the determination under 28 U.S.C. § 1915(e)(2)(B), courts assess whether there is an arguable factual and legal basis for the asserted wrong, “however inartfully pleaded.” Franklin v. Murphy, 745 F.2d 1221, 1227-28 (9th Cir. 1984). Courts have the authority to dismiss complaints founded on “wholly fanciful” factual allegations for lack of subject matter jurisdiction. Id. at 1228. A court can also dismiss a complaint where it is based solely on conclusory statements, naked assertions without any factual basis, or allegations that are not plausible on their face. Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); see also Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam).
Although pro se pleadings are liberally construed and held to a less stringent standard than those drafted by lawyers, see Haines v. Kerner, 404 U.S. 519, 520-21 (1972), a complaint, or portion thereof, should be dismissed for failure to state a claim if it fails to set forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007); see also Fed.R.Civ.P. 12(b)(6). “[A] district court should not dismiss a pro se complaint without leave to amend unless it is absolutely clear that the deficiencies of the complaint could not be cured by amendment.” Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (quotations omitted).
III. DISCUSSION
As the court previously noted, Plaintiff's complaint does not adequately show that this court may exercise subject-matter jurisdiction. Federal courts are courts of limited jurisdiction, and a “federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock W., Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989) (citations omitted). A district court has diversity jurisdiction where the parties are diverse and “the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs.” 28 U.S.C. § 1332(a). Parties are diverse only when the parties are “citizens of different states.” Id.
Plaintiff does not allege any federal law violations that would confer federal question jurisdiction under 28 U.S.C. § 1331.
Plaintiff's complaint alleges complete diversity of parties, as Plaintiff is a resident of California, and Defendants are residents of North Carolina. Compl. ¶¶ 1-3. From the face of the complaint, however, he claims damages totaling $4,000. See id. ¶ 7. Plaintiff also requests special and punitive damages, but it is unclear how the total amount in controversy can exceed $75,000. Accordingly, the court ordered Plaintiff to file a statement showing how the amount in controversy plausibly exceeds $75,000. Plaintiff's response indicates that he requests estimated damages of $25,000 each for “Breach of Contract,” “Deceptive practices,” “Public adjuster misconduct,” and “Unauthorized Insurance companies” in addition to “punitive damages, and any other damages the court determine[s] appropriate.” [Docket No. 9.]
“Where the plaintiff originally files in federal court, the amount in controversy is determined from the face of the pleadings.” Geographic Expeditions, Inc. v. Est. of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010). The amount in controversy alleged by the proponent of federal jurisdiction-typically the plaintiff in the substantive dispute-controls so long as the claim is made in good faith. Id. Courts “use the ‘legal certainty' test to determine whether the complaint meets § 1332(a)'s amount in controversy requirement.” Naffe v. Frey, 789 F.3d 1030, 1039 (9th Cir. 2015). Under that standard, “the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)). The complaint may be dismissed if it is “virtually impossible for a plaintiff to meet the amount-in-controversy requirement.” Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 364 (9th Cir. 1986). “Only three situations clearly meet the legal certainty standard: 1) when the terms of a contract limit the plaintiff's possible recovery; 2) when a specific rule of law or measure of damages limits the amount of damages recoverable; and 3) when independent facts show that the amount of damages was claimed merely to obtain federal court jurisdiction.” Id. (quoting 14A Wright, Miller, and Cooper, Federal Practice and Procedure, Jurisdiction, § 3702 at 48-50 (2d ed. 1985)). If the amount in controversy is subject to dispute, the court may consider evidence beyond the complaint. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004); AO Ventures, LLC v. Gutierrez, No. 1204625 JCS, 2012 WL 6608824, at *2-3 (N.D. Cal. Dec. 18, 2012)
Having considered the complaint and Plaintiff's subsequent filing, the court finds that Plaintiff fails to adequately allege an amount in controversy that satisfies the jurisdictional requirement. However, it is not a legal certainty that Plaintiff could not correct this deficiency by amendment. Plaintiff only pleads $4,000 in compensatory damages for repairs to his car. Compl. ¶ 7. He then asserts without any basis that he is entitled to $25,000 for his breach of contract. Plaintiff does not explain how his damages reach $25,000. His complaint, for example, does not allege that Plaintiff was personally injured in the car accident to incur damages beyond the $4,000. The other claims in his filing are not cognizable or relevant. Plaintiff does not plead any claim related to “Deceptive practices” in his complaint. “Public adjuster misconduct” and “unauthorized insurance companies” are not claims for relief, and Plaintiff has not pled any facts about “adjuster misconduct” or that Defendants are acting as “unauthorized insurance companies.”
The court notes that Plaintiff does not allege a claim for fraudulent or deceptive practices under California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, but even if he did, damages are not available for such a claim, see Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1148 (2003).
Plaintiff also does not explain the basis for any claim for punitive damages. “Punitive damages may be included in the amount-in-controversy calculation ‘if it is reasonably possible that [the defendant] may be liable for the proffered punitive damages amount.'” Aseltine v. Panera, LLC, No. 21-CV-04284-JST, 2021 WL 8267421, at *4 (N.D. Cal. Dec. 13, 2021) (quoting Greene v. Harley-Davidson, Inc., 965 F.3d 767, 772 (9th Cir. 2020)). While punitive damages are available for Plaintiff implied covenant “bad faith” insurance claim, Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1161 (9th Cir. 2002), Plaintiff does not show that he could receive such a significant punitive damages award that would exceed the amount-in-controversy threshold.
However, it is possible that with greater explanation, Plaintiff could show that his claims and requested damages exceed $75,000. There is no obvious rule or damages measure that would limit Plaintiff's total damages to less than $75,000. Accordingly, in the interests of justice, the court recommends that Plaintiff be granted leave to amend his complaint to more clearly explain how his damages meet the amount in controversy requirement to confer diversity jurisdiction.
The court notes that the amount in controversy must exceed $75,000, i.e., be greater than or equal to $75,000.01. 28 U.S.C. § 1332(a). See Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 255 (6th Cir. 2011) (ordering remand to state court because “the amount in controversy in this case is $75,000-exactly one penny short of the jurisdictional minimum of the federal courts).
IV. CONCLUSION
For the reasons above, the court recommends that Plaintiff's complaint be dismissed with leave to amend to remedy the deficiencies noted in this order. The Clerk is directed to reassign this case to a district judge. Any party may file objections to this report and recommendation with the district judge within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(a); N.D. Cal. Civ. L.R. 72-2.
The court refers Plaintiff to the section “Representing Yourself” on the Court's website, located at https://cand.uscourts.gov/pro-se-litigants/, as well as the Court's Legal Help Centers for unrepresented parties. Parties may schedule an appointment by calling 415-782-8982 or emailing fedpro@sfbar.org.
IT IS SO ORDERED.