Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02039/USCOURTS-azd-2_11-cv-02039-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Tort/Non-Motor Vehicle

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Jeremiah Welsh, 

Plaintiff, 

vs.

New Hampshire Insurance Company,

Specialty Risk Services, LLC (aka

Sedgwick Claims Mngmt Svcs Inc), 

Defendants. 

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No. CV 11-2039-PHX-JAT

ORDER

Pending before the Court is Plaintiff’s Motion to Remand (Doc. 7). The Court now

rules on the motion. 

I. BACKGROUND

Plaintiff was an employee of Lowe’s Home Improvement Warehouse, Inc. (Doc. 1,

Ex.1 at 2). While fixing a cabinet door at work, Plaintiff stood up and felt a sharp pain in his

back. (Id. at 3). Defendants denied Plaintiff’s workers’ compensation claim, prompting

Plaintiff to request a hearing with the Industrial Commission. (Id. at 4). The Industrial

Commission hearings resulted in an Administrative Law Judge ordering Defendants to

compensate the claim.

Plaintiff commenced this action in Maricopa County Superior Court against

Defendants, alleging two state causes of action for breach of the implied covenant of good

faith and fair dealing and aiding and abetting. (Id. at 6–7). Plaintiff seeks compensatory

Case 2:11-cv-02039-JAT Document 14 Filed 02/07/12 Page 1 of 6
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damages, financial damages, punitive damages and attorneys’ fees, as well as costs. (Id. at

9). Defendants filed their Notice of Removal of this action pursuant to 28 U.S.C. § 1441(b),

claiming diversity jurisdiction pursuant to 28 U.S.C. §1332. (Doc. 1 at 2). In their Notice

of Removal, Defendants allege that “[t]his action . . . is a civil action between citizens of

different states and the matter in controversy exceeds the sum of $75,000.” (Id.) Both

parties agree that the action is between citizens of different states. (Doc. 8 at 2).

Accordingly, the Court must determine whether Defendants have established the requisite

amount in controversy for this Court to have subject matter jurisdiction. 

II. LEGAL STANDARD

Pursuant to 28 U.S.C. § 1332, “district courts shall have original jurisdiction of all

civil actions where the matter in controversy exceeds the sum or value of $75,000,

exclusive of interests and costs, and is between . . . citizens of different States[.]”

28 U.S.C. § 1332(a)(1).

The removal statute, 28 U.S.C. § 1441, provides, in pertinent part: “[A]ny civil action

brought in a State court of which the district courts of the United States have original

jurisdiction, may be removed by the defendant . . . to the district court of the United States

for the district and division embracing the place where such action is pending.” 28 U.S.C.

§ 1441(a). Courts strictly construe the removal statute against removal jurisdiction. See

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Gaus v. Miles, Inc., 980

F.2d 564, 566 (9th Cir. 1992). “The ‘strong presumption’ against removal jurisdiction means

that the defendant always has the burden of establishing that removal is proper.” Gaus, 980

F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979).)

“In a removed case, . . . the plaintiff chose a state rather than federal forum. Because

the plaintiff instituted the case in state court, ‘there is a strong presumption that the plaintiff

has not claimed a large amount in order to confer jurisdiction on a federal court[.]’” Singer v.

State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997) (quoting St. Paul Mercury

Indem. Co. v. Red Cab Co., 303 U.S. 283, 290 (1938)). “Where the complaint does not

demand a dollar amount, the removing defendant bears the burden of proving by a

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preponderance of the evidence that the amount in controversy exceeds [$75,000].” Id. at

376. “Under this burden, the defendant must provide evidence establishing that it is ‘more

likely than not’ that the amount in controversy exceeds [$75,000].” Sanchez v. Monumental

Life Insurance Co., 102 F.3d 398, 404 (9th Cir. 1996). “[R]emoval ‘cannot be based simply

upon conclusory allegations’ where the [complaint] is silent” as to the dollar amount of

damages the plaintiff seeks. Singer, 116 F.3d at 377 (citing Allen v. R&H Oil & Gas Co., 63

F.3d 1326, 1335 (5th Cir. 1995)). However, the inquiry into the amount in controversy is not

confined to the face of the complaint. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117 (9th

Cir. 2004). 

III. ANALYSIS

Plaintiff has not demanded a dollar amount in his complaint. Accordingly, it is

Defendants’ burden to prove by a preponderance of the evidence that the amount in

controversy exceeds $75,000. Singer, 116 F.3d at 376. Defendant may not rely upon

conclusory allegations, but may submit summary-judgment-type evidence. Valdez, 372 F.3d

at 1117.

Defendants submitted four pieces of evidence to support their assertion that the

amount in controversy is greater than $75,000. (Doc. 8 at 3-5). First, Defendants requested

that the parties agree to limit damages to no more than $75,000 in exchange for Defendants’

stipulation to remand this case. (Id.) Plaintiff did not agree. (Id.) Second, Plaintiff certified

that the claim is not subject to compulsory arbitration because the amount in controversy

exceeded $50,000. (Id. at 3). Third, Defendants claim that punitive damages could be “a

significant amount easily satisfying the jurisdictional requirements.” (Id. at 4). Finally,

Plaintiff has requested attorneys’ fees, which Defendants claim will likely exceed $25,000.

(Id.) In sum, Defendants argue that Plaintiff’s certification that the amount in controversy

exceeds $50,000, in addition to the potential punitive damages and attorneys’ fees establish

that the jurisdictional requirement is met. (Id.)

Defendants have not satisfied their burden in demonstrating that the amount in

controversy meets the $75,000 requirement. Although Plaintiff’s certificate regarding

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compulsory arbitration is undisputed, it estimates that the amount in controversy is at least

$50,000. Defendants’ statements that attorneys’ fees and punitive damages make up the

remaining $25,000 are unsupported by further evidence. Also, a lack of agreement between

the parties to limit damages to $75,000 is not conclusive.

A. Arbitration Certificate 

Defendants correctly assert that the certification that the amount in controversy

exceeds $50,000 can be included in calculating the total amount in controversy. Ansley v.

Metro. Life Ins. Co., 215 F.R.D. 575, 578 (D. Ariz. 2003); cf. Singer, 116 F.3d at 376 (district

judge has discretion to accept plaintiff’s admission as to the amount in controversy). Plaintiff

concedes that the $50,000 certification is an estimate only and does not prove that damages

will exceed $75,000. The Court agrees. See Ferguson v. First Am. Specialty Ins. Co., No.

CV 09-01581-PHX-JAT, 2009 WL 4154653, at *3 (D. Ariz. Nov. 23, 2009) (stating “the

certificate regarding compulsory arbitration does nothing more than establish that the amount

in controversy is likely more than $50,000”). Thus, the certification only demonstrates that

the amount in controversy is at least $50,000.

B. Attorneys’ Fees

Defendants are also correct that attorneys’ fees may be included in the amount in

controversy when a statute authorizes those fees. Galt G/S v. JSS Scandinavia, 142 F.3d

1150, 1156 (9th Cir. 1998). Under Arizona law, attorneys’ fees for actions arising out of

contract, including those incurred pursuing a bad faith action, may be awarded to a successful

litigant. Noble v. Nat’l Am. Life Ins. Co., 624 P.2d 866, 868 (D. Ariz. 1981).

Defendants argue that “it is highly likely that Plaintiff will incur well over $25,000.00

in attorneys’ fees.” (Doc. 8 at 4). Defendants offer no other evidence to substantiate their

statement and a statement of mere opinion is speculative. See Burk v. Med. Sav. Ins. Co., 348

F. Supp. 2d 1063, 1068 (D. Ariz. 2004); Ferguson, 2009 WL 4154653, at *3 (stating that an

affidavit estimating the attorneys fees is too speculative to be used in calculating the amount

in controversy). As a result, this statement cannot support a finding that the attorneys’ fees

would sufficiently increase the amount in controversy. 

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C. Punitive Damages

Punitive damages, recoverable under law, may be included in computing the amount

in controversy. Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001); Ferguson,

2009 WL 4154653, at *4. Under Arizona law, punitive damages may be awarded in bad

faith insurance cases. Filasky v. Preferred Risk Mut. Ins. Co., 734 P.2d 76, 83 (Ariz. 1987).

“However, the mere possibility of a punitive damages award is insufficient to prove that the

amount in controversy requirement has been met.” Burk, 348 F. Supp. 2d at 1069 (citing

Surber v. Reliance Nat’l Indem. Co., 110 F. Supp. 2d 1227, 1232 (N.D. Cal. 2000)). To

show that the claim for punitive damages establishes that it is more likely than not that the

amount in controversy exceeds $75,000, Defendants must present appropriate evidence. Id.

(citing McCaa v. Mass. Mut. Life Ins. Co., 330 F. Supp. 2d 1143, 1149 (D. Nev. 2004)).

Defendants argue punitive damages “could likely be a significant amount easily

satisfying the jurisdictional requirements.” (Doc. 8 at 4). Defendants cite Sanchez, to state

that if bad faith is shown, punitive damages will likely be a significantly large amount of

money. (Id.) However, Sanchez is inapposite because it discusses trebling punitive damages

per a California statute in regard to “unfair or deceptive practices against senior citizens or

disabled persons.” 102 F.3d at 405. In addition, in Sanchez, the Ninth Circuit Court of

Appeals vacated the district court’s judgment and remanded the case with instructions to

remand to the state court because defendant did not establish that the amount in controversy

exceeded the requirement. Id. at 406. Defendants offer no other support that possible

punitive damages in this case would satisfy the jurisdictional requirement for the amount in

controversy. 

D. $75,000 Agreement

Defendants’ last argument is that Plaintiff’s refusal to stipulate to limit damages is

direct evidence that Plaintiff is seeking over $75,000 in damages. Such evidence can be

considered in determining the amount in controversy. See Ansley, 215 F.R.D. at 578; see

also, Del Real v. Healthsouth Corp., 171 F. Supp. 2d 1041, 1043 (D. Ariz. 2001). However,

such evidence is not conclusive in establishing that the amount in controversy is greater than

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$75,000. 

The Court is not persuaded by Defendants’ argument that Plaintiff tacitly admitted to

seeking damages in excess of $75,000 by requesting Defendant stipulate that they owe a

minimum of $75,000.

IV. CONCLUSION

The Defendants have not met their burden to show that the amount in controversy

exceeds the jurisdictional requirement of $75,000. The arbitration certificate suggests that

the amount in controversy exceeds $50,000, but the conclusory allegations that punitive

damages, attorneys’ fees, and failure to jointly agree to limit damages have not persuaded the

Court that the amount in controversy exceeds $75,000. Therefore, Plaintiff’s Motion to

Remand is granted.

V. ATTORNEYS’ FEES

Plaintiff requests attorneys’ fees pursuant to 28 U.S.C. § 1447(c) because Plaintiff

claims Defendants did not have an “objectively reasonable basis” for removal. Although the

Court is granting the motion to remand, Defendants had an objectively reasonable argument

for removal. The complaint does not request a specific amount of damages and it is

objectively reasonable to argue that attorneys’ fees and punitive damages from claims of

breach of the implied covenant of good faith and fair dealing and aiding and abetting satisfy

the jurisdictional requirements. Therefore, Plaintiff’s request for attorneys’ fees is denied.

Accordingly,

IT IS ORDERED that Plaintiff’s request for attorneys’ fees is DENIED.

IT IS FURTHER ORDERED that Plaintiff’s Motion to Remand (Doc. 7) is

GRANTED. The Clerk of the Court shall remand this action to Maricopa County Superior

Court.

DATED this 7th day of February, 2012.

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