Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-3_06-cv-00815/USCOURTS-almd-3_06-cv-00815-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

EASTERN DIVISION

TYLER’S RESTAURANT, INC., )

)

Plaintiff, )

)

v. ) CIVIL ACTION NO. 3:06-CV-815-WC

) WO

TRAVELERS PROPERTY CASUALTY )

COMPANY OF AMERICA, )

)

Defendant, )

MEMORANDUM OPINION AND ORDER

The plaintiff brought this action in the Circuit Court of Lee County, Alabama. The

defendant removed to this court on the basis of diversity of citizenship. Pursuant to 28

U.S.C. § 636(c), both parties have consented to the conduct of all proceedings and entry of

a final judgment by the United States Magistrate Judge (Docs. #8-9, filed Nov. 27, 2006).

The case is now before this court on the plaintiffs’ motion to remand (Doc. #3, filed Oct. 10,

2006) . Upon consideration of the motion and for the following reasons, the court concludes

that the plaintiffs’ motion is due to be GRANTED.

I. BACKGROUND

According to the complaint, the defendant issued an insurance policy to the plaintiff,

insuring the plaintiff against losses. An employee of the plaintiff embezzled over $120,000,

and the plaintiff made an insurance claim, but the defendant refused to pay (compl. p. 2).

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The plaintiff brought this action in the Circuit Court of Lee County, Alabama, alleging

breach of contract, bad faith failure to pay, promissory fraud, and conversion, and explicitly

demanding $74,999 in damages (compl. p. 3-4). 

The defendant removed to this court (doc. #1, filed Sept. 11, 2006), stating that the

court had jurisdiction under 28 U.S.C. § 1332(a) (diversity of citizenship). The defendant

averred that it was a Connecticut corporation with its principal place of business in

Connecticut, while the plaintiff was an Alabama citizen. The defendant argues that the

alleged embezzlement of over $120,000 shows that the amount in controversy exceeds

$75,000. The defendant also provided several Alabama cases (doc. #1, exs. 2-3), in order

to show that in cases of this kind, an award of punitive damages would likely raise the

amount in controversy above $75,000.

 II. STANDARD FOR REMAND

 Federal courts have a strict duty to exercise the jurisdiction conferred on them by

Congress. Quackenbush v. Allstate Insurance Co., 517 U.S. 706, 716 (1996). However,

federal courts are courts of limited jurisdiction. Thus, with respect to motions to remand

cases removed to this court pursuant to 28 U.S.C. § 1441, the law of this circuit favors

remand where federal jurisdiction is not absolutely clear. In “deciding a motion to remand

where the plaintiff and defendant disagree on issues of jurisdiction, questions or doubts are

to be resolved in favor of returning the matter to state court.” Burns v. Windsor Insurance

Co., 31 F.3d 1092, 1095 (1994). 

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Under 28 U.S.C. 1332(c)(1), a corporation is a resident of both the state where it was 1

incorporated and the state where it has its principal place of business. 

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III. DISCUSSION

The court may assume jurisdiction under 28 U.S.C. § 1332(a) only if the parties are

residents of different states and the amount in controversy exceeds $75,000. The parties

agree that the plaintiff is an Alabama resident and the defendant is a Connecticut corporation

with its principal place of business in Connecticut. Therefore, the issue turns on the amount 1

in controversy. 

The rule in this circuit is clear: if the defendant explicitly demands less than $75,000,

as this plaintiff does, then this court lacks jurisdiction unless the defendant demonstrates to

a legal certainty that, if the plaintiff prevails, she will receive a larger amount. In other

words, an award below $75,000 must be “outside the range of permissible awards.” Burns

v. Windsor Insurance Co., 31 F.3d 1092, 1095-96 (11th Cir. 1994); Lindsay v. American

General Life & Accident Insurance Co., 133 F. Supp. 2d 1271, 1273 (M.D. Ala. 2001). 

While the complaint claims that the plaintiff’s employee embezzled over $120,000,

the defendant has not shown to a legal certainty that, in the event the plaintiff prevails, the

award must exceed $120,000. The insurance contract in question is not before the court; for

aught that appears in the record, the coverage (and hence the amount to be awarded in a

successful breach of contract action) may be less than that. The defendant’s argument

regarding punitive damages also fails. These damages are not awarded according to a fixed

formula, and the plaintiff can prevail without receiving such damages at all. Lindsay, 133 F.

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Supp. at 1276-77. Representative cases of the kind offered by the plaintiff may establish a

higher amount in controversy to a preponderance of the evidence (see Bolling v. Union

National Life Insurance Co., 900 F. Supp. 400, 405 (M.D. Ala. 1995)), but do not establish it

to a legal certainty, as would be required in this case. Accordingly, this case is due to be

remanded. 

IV. CONCLUSION

For the foregoing reasons, it is hereby

ORDERED that the plaintiff’s motion to remand be and hereby is GRANTED. 

The Clerk of the Court is DIRECTED to take the actions necessary to remand this case to

the Circuit Court of Lee County, Alabama. 

Done this 8th day of January, 2007.

/s/ Wallace Capel, Jr.

WALLACE CAPEL, JR.

UNITED STATES MAGISTRATE JUDGE

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