Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-05226/USCOURTS-cand-3_06-cv-05226-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 12:635 Breach of Insurance Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

WOLLBORG/MICHELSON PERSONNEL

SERVICE,

Plaintiff,

 v.

EXECUTIVE RISK INDEMNITY,

Defendant. /

No. C 06-05226 WHA

ORDER REMANDING CASE TO

THE SUPERIOR COURT OF SAN

FRANCISCO AND VACATING

HEARING

INTRODUCTION

In this insurance-contract case, plaintiff moves to remand to state court, or, alternatively,

amend the complaint. For the reasons stated below, this order GRANTS plaintiff’s motion to

remand.

STATEMENT

On August 24, 2006, defendant Executive Risk Indemnity, Inc., removed this action

from San Francisco Superior Court to this Court. According to the complaint, plaintiff

Wollborg/Michelson Personnel Service Inc. is a company that hires its employees out as

temporary workers. In May 2005, one of plaintiff’s employees, Carlos Ortiz, filed a complaint

alleging, among other things, that plaintiff discriminated against its employees on the basis of

their race. After about a year of litigation, plaintiff settled with Ortiz (Compl. ¶¶ 1, 6). 

The complaint alleges that defendant Executive Risk, plaintiff’s insurance company,

was responsible for indemnifying plaintiff for the legal expenses incurred during the Ortiz

Case 3:06-cv-05226-WHA Document 20 Filed 10/23/06 Page 1 of 4
United States District Court

For the Northern District of California

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litigation (Compl. ¶ 10). The complaint requests declaratory relief and states claims against

Executive Risk for breach of written insurance policy, breach of the implied covenant of good

faith and fair dealing, and unlawful and fraudulent business practices (Compl. ¶¶ 14–23). The

complaint did not attach a specific dollar amount to the damages alleged in the complaint. 

Defendant removed the case to this Court, citing diversity of citizenship as the basis for

this Court’s jurisdiction. Defendant’s notice of removal stated that “plaintiff seeks to recover

general damages, attorney’s fees and costs it incurred in an underlying lawsuit, and the amounts

plaintiff paid to settle that lawsuit. Accordingly, the amount in controversy therefore exceeds

$75,000” (Notice of Removal ¶ 6). 

Plaintiff has filed two motions: (1) a motion to remand to state court, and alternatively,

(2) a motion for leave to amend the complaint and remand. Because this order finds that this

action must be remanded to state court, it does not address the motion for leave to amend.

ANALYSIS

For diversity jurisdiction to exist, the amount in controversy must exceed $75,000. 28

U.S.C. 1332(a). The complaint here does not specify the amount in controversy. “Where it is

not facially evident from the complaint that more than $75,000 is in controversy, the removing

party must prove, by a preponderance of the evidence, that the amount in controversy meets the

jurisdictional threshold.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th

Cir. 2003). The removal statute is strictly construed against removal jurisdiction and “federal

jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” 

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). When determining the amount in

controversy, a court may look to “facts presented in the removal petition as well as any

summary-judgement-type evidence relevant to the amount in controversy at the time of

removal.” Matheson, 319 F.3d at 1090. 

This order finds that the evidence defendant submitted falls far short of establishing that

the amount in controversy here exceeds the jurisdictional minimum. Defendant’s notice of

removal states in a wholly-conclusory manner that the amount in controversy exceeds $75,000. 

No facts in the notice support defendant’s allegation. Conclusory allegations regarding the

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*

 Plaintiff objects to the attorney’s fees invoices by alleging, among other things, that they are hearsay

and lack foundation. This order finds that even considering those records, defendant still has not satisfied its

burden. 

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amount in controversy may not be a basis for removal. Singer v. State Farm Mut. Auto. Ins.

Co., 116 F.3d 373, 377 (9th Cir. 1997).

Defendant claims that invoices for attorney’s fees and costs sent by plaintiff to

defendant during the Ortiz litigation also establish that the amount in controversy here exceeds

$75,000. Those invoices, allegedly provided to defendant in October 2005, establish that the

attorney’s fees incurred between May 2005 and October 2005 totaled $33,041.39. Defendant

contends that because the “Ortiz Lawsuit was litigated for at least another eight months

thereafter . . . it is reasonable to conclude that . . . attorney’s fees and costs Wollborg incurred in

defending the Ortiz Lawsuit, together with the settlement payment Wollborg made in that

lawsuit exceeded $75,000” (Opp. 4). This order disagrees. Nothing in the complaint or other

documents in the record indicates the amount of attorney’s fees incurred by plaintiff after

October 2005. Nor does the evidence establish the amount of the settlement with Ortiz. 

Although in some cases it may be proper to extrapolate established facts to establish the amount

in controversy, this is not such a situation. On these facts, it would be improper to find that the

amount in controversy exceeds $75,000, when defendant has only demonstrated an amount in

controversy of $33,041.39.*

 

Finally, defendant contends that the proposed first amended complaint filed by plaintiff

alleges that the amount in controversy exceeds $75,000. The proposed amended complaint,

however, only alleges that plaintiff suffered damages “in amounts in excess of the jurisdictional

minimum of this court” (Proposed Am. Compl. at 11–12). It does not specify a dollar amount

for plaintiff’s damages. Again, such conclusory allegations are not enough to satisfy

defendant’s burden.

In sum, defendant has not provided “competent proof” to establish the “jurisdictional

facts.” Gaus, 980 F.2d at 567. This order finds that there is significant doubt as to defendant’s

right of removal. Defendant has not established by a preponderance of the evidence that the

amount in controversy exceeds $75,000.

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United States District Court

For the Northern District of California

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CONCLUSION

Plaintiff’s motion to remand is GRANTED. This action is REMANDED to the Superior

Court of San Francisco. Plaintiff’s motion for leave to file amended complaint is DENIED as

moot. Plaintiff’s request for judicial notice is DENIED as moot. Plaintiff’s objections to

defendant’s evidence are DENIED as moot. The hearing currently scheduled for October 26,

2006, is hereby VACATED.

IT IS SO ORDERED.

Dated: October 23, 2006 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:06-cv-05226-WHA Document 20 Filed 10/23/06 Page 4 of 4