Summary
rejecting application of Snyder's common fund exception because plaintiffs sought individual reimbursement rather than disgorgement to a common fund
Summary of this case from Alinsub v. T-MobileOpinion
Civil Action No. 3:01-CV-626-S.
July 23, 2002
MEMORANDUM OPINION
This matter is before the court on plaintiff's Motion to Remand. For the reasons stated below, plaintiff's motion is GRANTED.
BACKGROUND
This action arises from a Child Term Rider ("Rider") defendant issued to plaintiff in conjunction with his life insurance in 1988. The Rider was to pay a $10,000.00 benefit in the event of his daughter's death. In applying for the Rider, plaintiff listed his daughter's birth date and age, which was fifteen at the time. Plaintiff continued to pay premiums of $60.00 per year until his daughter died on February 22, 2000. Upon notifying defendant of his daughter's death, plaintiff`s claim was denied because his daughter was over twenty-six years old when she died and the Rider expired "when the child reaches twenty-five or the insured reaches the age of sixty-five, whichever occurs sooner." (Pltf. Mot. Remand Exh. C). Plaintiff claims he was unaware the Rider was contingent on his daughter's age as his statements reflected an expiration date of February 2, 2009, which is his sixty-fifth birthday, and he continued to be billed for and pay premiums past his daughter's twenty-fifth birthday.
Plaintiff consequently filed a class action suit in Jefferson Circuit Court, Division Twelve (12), Jefferson County Kentucky on October 2, 2001. The Complaint alleged breach of contract, fraud/misrepresentation, violation of the Kentucky Consumer Protection Act, and unjust enrichment. Plaintiff specifically stipulated that no federal causes of action were asserted and defined the proposed class as persons who paid no more than $74,500 in premiums. (Pltf. Compl. ¶¶ 7, 18). On November 1, 2001, defendant removed the action to this court based on diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendant asserted that "[t]he jurisdiction requirement is met because . . . the Plaintiff claims damages for unjust enrichment and claims punitive damages . . ., which damages are to be aggregated under the law." (Def. Notice of Removal ¶ 6) (citations omitted).
Shortly thereafter it was learned that another class action against defendant in which plaintiff was a class member had been settled on August 3, 1999 in the U.S. District Court for the District of New Jersey and a permanent injunction issued by that court in connection therewith. The New Jersey court subsequently determined that some of plaintiff's claims in this action were encompassed by its injunction and were thus barred. (Pltf. Mot. Remand Exh. D). It thereafter allowed plaintiff to pursue here the claims stated in the First Amended Complaint. Plaintiff now only claims breach of contract and unjust enrichment and only seeks recovery of Rider premiums paid after the children were no longer eligible for coverage. (First Am. Compl. ¶ 22). The First Amended Complaint also described the proposed class as persons who paid less than $74,000 in premiums for children not meeting the definition of "insured child." Id. at ¶ 11. Plaintiff now seeks to remand the action to Jefferson Circuit Court.
DISCUSSION
Plaintiff argues this court lacks subject matter jurisdiction because at the time of removal 28 U.S.C. § 1332's amount in controversy requirement was not met. We agree. Defendant contends the requirement was met by virtue of the punitive damages and attorneys' fees sought in connection with plaintiff's fraud/misrepresentation and Kentucky Consumer Protection Act claims. However, at the time of removal these claims were not legally viable as they were barred by the New Jersey injunction. Therefore, they may not be considered in determining whether the controversy requirement was met. See Sellers v. O'Connell, 701 F.2d 575, 579 (6th Cir. 1983) (finding remand proper when plaintiff's claim for damages in excess of the amount in controversy requirement was barred by law even though plaintiff was ignorant of such fact when the Complaint was filed). The only claims properly considered here are thus breach of contract and unjust enrichment. However, the plaintiff did not claim punitive damages or attorney fees for those causes of action. It is well established under Kentucky law that punitive damages are not available for breach of contract actions. See Ford Motor Co. v. Mayes, 575 S.W.2d 480, 486 (Ky.Ct.App. 1978) (recognizing that "Kentucky has long followed the general rule that punitive damages ordinarily are not recoverable for a breach of contract [absent tortious conduct]."). Plaintiff only seeks reimbursement for premiums paid after the Rider expired. As the premiums were only $60.00 per year, it is logically impossible for the sought after amount to exceed $75,000.
As plaintiff notes, even "[a]ssuming an insured paid unearned yearly premiums to [defendant] on the Child Term Rider for one hundred years, the total recovery would amount to only $6,000.00." (Pltf. Mot. Remand at 7).
Defendant further argues that even if we do not consider plaintiff's fraud/misrepresentation and Kentucky Consumer Protection Act claims, the amount in controversy requirement is met because the class members' unjust enrichment claims may be aggregated. Defendant relies on the U.S. District Court, Eastern District of Michigan's opinions in In re Cardizem C.D. Antitrust Litig., 90 F. Supp.2d 819 (E.D.Mich. 1999) and Durant v. Service Master Co. Trugreen, Inc., 147 F. Supp.2d 744 (E.D.Mich. 2001) in support of its argument. However, those cases recognized that aggregation is proper when unjust enrichment damages constitute a disgorgement to be distributed amongst the entire class. The class interest may thus be considered "common and undivided" because "if one plaintiff cannot or does not collect his share, the shares of the remaining plaintiffs are increased." In re Cardizem, 90 F. Supp.2d at 825 (quoting Sellers, 701 F.2d at 579). Here, on the other hand, each class member would be seeking only those unearned premiums he or she paid. (First Am. Compl. § 22). The damages sought are therefore better considered as reimbursement to the individual plaintiffs than as disgorgement to a common fund. Cf. Durant, 147 F. Supp.2d at 749 (finding aggregation proper where "Plaintiffs would recover per capita from the disgorgement fund regardless of any actual, individualized losses that each may have suffered."). Thus, the general rule that "the jurisdictional amount must be satisfied by each class member, and the class members' claims may not be aggregated" applies. Id. at 824 (citing Zahn v. Intn'l paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973)).
CONCLUSION
The defendant has failed to demonstrate that the requisite amount or amounts in controversy are sufficient to invoke our diversity jurisdiction. Therefore, plaintiff's Motion to Remand will be GRANTED.
ORDER
For the reasons set forth in the Memorandum Opinion entered this date and the Court being otherwise sufficiently advised, IT IS HEREBY ORDERED AND ADJUDGED that plaintiff's Motion to Remand is GRANTED and that this action is remanded to Jefferson Circuit Court, Division Twelve (12), Jefferson County, Kentucky.
IT IS SO ORDERED.