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holding that a plaintiff's refusal to stipulate that damages would not exceed $75,000, when the civil cover sheet listed the amount as $50,000 or less, was insufficient to confer federal jurisdiction.
Summary of this case from Howard v. Allstate Insurance CompanyOpinion
CIVIL ACTION No. 03-3490, CIVIL ACTION No. 03-3654
September 22, 2003
MEMORANDUM
Defendant Allstate Insurance Company ("Allstate") has removed these two similar cases from the Philadelphia County Court of Common Pleas. Currently before this court are plaintiff Natalie Horos's motions to remand the two cases. Because both cases are in the same procedural posture and involve nearly identical claims, I will address them together.
Factual and procedural background in case 03-3490
Claiming that Allstate owed her certain sums for losses sustained to her Allstate-insured house in November and December of 2001, Ms. Horos filed suit in the Court of Common Pleas on November 25, 2002. Service was made on the defendants on December 2, 2003. The defendant answered the complaint on January 24, 2003 and discovery commenced.
The complaint alleges two causes of action against Allstate: (1) breach of the insurance contract; and (2) bad-faith adjustment, based on 42 Pa. C.S.A. § 8371. The civil cover sheet attached to the complaint recites that the amount in controversy is $50,000 or less. An exhibit attached to the complaint contains three documents that appear to be repair estimates — one in the amount of $12,744.20, one in the amount of $10,225.63, and the third in the amount of $1,748.38.
By letter dated May 29, 2003, Allstate's attorney requested that Ms. Horos stipulate that the damages claimed did not exceed $75,000.00, exclusive of interest and costs. Ms. Horos declined to so stipulate, and, on approximately June 5, 2003, Allstate removed the case to this court, alleging that diversity jurisdiction exists. Ms. Horos moved to remand the case on June 11, 2003.
Factual and procedural background in case 03-3654
Ms. Horos filed another suit against Allstate in the Court of Common Pleas on January 10, 2003, this time for damage to her house that allegedly occurred after the damage complained of in the first suit. Service was made to the defendants on January 16, 2003. The defendant answered the complaint on April 4, 2003 and discovery commenced.
The complaint raises the same two causes of action raised in the November 2002 suit, and the civil cover sheet attached to the second complaint also recites that the amount in controversy is $50,000 or less. Also paralleling the first complaint is an attached exhibit of three documents that appear to be repair estimates — one in the amount of $10,534.81, one in the amount of $8,452.87, and the third in the amount of $250.00.
By letter dated May 29, 2003, Allstate's attorney requested that Ms. Horos stipulate that the damages claimed did not exceed $75,000.00, exclusive of interest and costs. Ms. Horos declined to so stipulate, and, on approximately June 16, 2003, Allstate removed the case to this court, alleging that diversity jurisdiction exists. Ms. Horos moved to remand the case on June 23, 2003.
Discussion
Ms. Horos, in her motions to remand, emphasizes that the litigation had developed to a considerable degree in the Pennsylvania court — Allstate answered the complaints, responded to written discovery requests, and deposed Ms. Horos. The 03-3654 case is scheduled for arbitration in the Philadelphia County Court of Common Pleas on September 2, 2003. Ms. Horos's principal contention in favor of remand is that Allstate, by seeking to remove the actions more than thirty days after being served with the plaintiffs initial pleadings, has run afoul of the strictures of 28 U.S.C. § 1446(b), which provides:
The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.
Because, in both cases, approximately five months passed between the service of the complaint upon the defendant and the removal, Ms. Horos argues that Allstate has not complied with the first paragraph of § 1446(b). Allstate responds that removal was proper under the second paragraph of § 1446(b), because the notices of removal were filed within thirty days of Ms. Horos's refusal to stipulate (in either case) to a damage amount lower than the jurisdictional minimum for a federal diversity case.
As a technical matter, Allstate has pointed to no "amended pleading, motion, order or other paper" that forms the basis of its removal notices. The Notice[s] for Removal state only that Plaintiffs counsel informed defense counsel "via conversation" that his client refused to stipulate to damages below $75,000.00. Therefore, from a plain reading of the statute, the "paper" to which § 1446(b) refers appears lacking here. Gottlieb v. Firestone Steel Prods. Co., 524 F. Supp. 1137, 1139 (E.D. Pa. 1981) ("The `plain language' of the statute . . . defies an interpretation that the `other paper' requirement can be met by reference to conversations between counsel. . . . ").
More importantly, Allstate's invocation of federal jurisdiction suffers a substantive flaw. I recently had occasion to address what appears to be an increasingly used arrow in the defense bar's quiver — attempting to limit damages (or, alternatively, demonstrate that the federal diversity jurisdictional minimum is satisfied) by requesting a stipulation that a plaintiffs claim is worth less than $75,000.00. In Lee v. Walmart, Inc., 237 F. Supp.2d 577 (E.D. Pa. 2002), the defendant attempted the exact same maneuver. After discussing relevant case law from within and without the Third Circuit, I explained: "While a plaintiffs failure to stipulate might provide some evidence that a claim is truly for more than the jurisdictional minimum, I do not believe that fact may alone shoulder the burden of § 1332 jurisdiction." Id. at 580. Here, too, the defendant's evidence of a refusal to stipulate, even if it consisted of a "paper" that met § 1446(b)'s requirements, is too slender a reed to support removal jurisdiction. This is particularly true given the relatively small sums that appear on the repair estimates Ms. Horos relies upon for her claims. I am no more inclined to assume § 1332 jurisdiction over a case in which a plaintiff has declined to stipulate to damages lower than $75,000.00 than I would be to remand a diversity case in which the defendant refused to stipulate that a finding of liability would necessarily result in a damage award above $75,000.00.
The party urging jurisdiction on a federal court — here, Allstate — bears the burden of proving that jurisdiction is proper. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990). However, as other district judges within the Third Circuit have observed, "the law on what the defendant actually has to demonstrate to satisfy the amount in controversy requirement is unsettled." Penn v. Wal-Mart Stores, Inc., 116 F. Supp.2d 557, 562 (D. NJ. 2000); see also Irving v. Allstate Indem. Co., 97 F. Supp.2d 653, 654 (E.D. Pa. 2000) ("Courts in the Third Circuit are unencumbered by consistency in their characterization of defendant's burden of proving the amount in controversy on a motion to remand."). Courts from this and other districts have applied numerous standards of proof to the jurisdictional showing, including: (1) legal certainty; (2) reasonable probability; and (3) preponderance of the evidence. Penn, 116 F. Supp.2d at 562-65 (collecting cases); Irving, 97 F. Supp.2d at 654. I find persuasive the analyses and conclusions of Judge Reed in Irving and in Mercante v. Preston Trucking Co., No. CIV. A. 96-5904, 1997 WL 230826, at * 1-3 (E.D. Pa. May 1, 1997), and Judge Cooper in Penn (Judge Cooper engaged in a particularly thorough study of the case law, including decisions that had been rendered since Judge Reed considered Mercante). In Irving, Mercante, and Penn, the courts weighed the various standards, along with the rationales for adopting them, and determined that the preponderance of the evidence standard was appropriate in evaluating the propriety of removing a case to federal court. As noted in Penn, "most courts of appeals that have considered the issue of the proper test have adopted this standard." Penn, 116 F. Supp.2d at 564 (citing cases from the Second, Fifth, Sixth, Seventh, Ninth, and Eleventh Circuits). This court, too, will adhere to the preponderance of the evidence test in determining subject-matter jurisdiction, as I agree that this standard "provides the proper balance between `the defendant's right to remove and the federal interest in limiting diversity jurisdiction.'" Id. at 567 (quoting Mercante, 1997 WL 230826, at *2).
Some courts of this district have adopted other standards, partially relying upon language from the Third Circuit's decision in Meritcare, Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214 (3d Cir. 1999). In Meritcare's unique procedural posture, defendant St. Paul had removed the case from Pennsylvania state court, but later challenged the very jurisdiction it had invoked. The court wrote: "When it appears to a legal certainty that the plaintiff was never entitled to recover the minimum amount set by Section 1332, the removed case must be remanded even if the jurisdictional deficiency becomes evident only after trial." Id. at 217. Meritcare differs substantially from the case at bar and does not persuade in favor of the legal certainty test: in that case, the defendant was seeking a remand, whereas here, Allstate wants to avoid a remand. Meritcare represents the mirror image of the procedural posture in this case, and this court is unwilling to extrapolate from the proposition that a legally certain showing of an amount in controversy less than the jurisdictional minimum calls for remand to a conclusion that a legally certain showing of an amount more than the minimum is required to avoid remand.
In these cases, the defendants have provided no evidence other than the bare assertion that Ms. Horos would not sign a stipulation limiting her damages. Such proof does not show by a preponderance of the evidence that the jurisdictional amount has been satisfied. Nor does it show "that the case is one which is or has become removable," and so the defendant's notices of removal were untimely under § 1446(b) because they were not filed within thirty days of the plaintiffs initial pleadings setting forth her claims. The order accompanying this memorandum will order the two cases remanded to the Pennsylvania court.
ORDER
For the reasons stated in the accompanying memorandum, it is hereby ORDERED that:
(1) In case 03-3490, Plaintiffs Motion for Remand (Docket # 4) is GRANTED. This matter is REMANDED to the Philadelphia County Court of Common Pleas.
(2) In case 03-3654, Plaintiffs Motion for Remand (Docket # 2) is GRANTED. This matter is REMANDED to the Philadelphia County Court of Common Pleas.