Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-00525/USCOURTS-azd-2_15-cv-00525-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Allison Wood,

 Plaintiff,

vs.

State Farm Mutual Automobile

Insurance Company, et al.,

 Defendants.

)

)

)

)

)

)

)

)

)

)

)

No. CV-15-00525-PHX-PGR 

 ORDER

 

 

Pending before the Court is plaintiff Allison Wood’s Motion to Remand (Doc.6),

wherein she argues that this action should be remanded to the Maricopa County

Superior Court for lack of subject matter jurisdiction because the amount in

controversy does not exceed the statutory jurisdictional threshold required for

diversity of citizenship jurisdiction. Having considered the parties’ memoranda in

light of the relevant record, the Court finds that the Motion to Remand should be

denied.

Background

The plaintiff commenced this action in the Maricopa County Superior Court on

January 23, 2015. Defendant State Farm Mutual Automobile Insurance Company,

the sole named defendant, removed this action on the basis of diversity 

of citizenship jurisdiction on March 23, 2015. 

Case 2:15-cv-00525-PGR Document 17 Filed 06/29/15 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

- 2 -

The plaintiff’s claims arise out of an accident in which the plaintiff’s vehicle

was struck by a non-party’s vehicle. The plaintiff settled her claims against the atfault non-party for $30,000, which was the “per occurrence” limit of that person’s

automobile liability insurance policy. The plaintiff thereafter sought underinsured

motorist benefits from the defendant, her automobile liability insurer, which the

defendant has not paid. The complaint, which alleges claims for breach of contract,

bad faith, and underinsured motorist benefits, seeks judgment, in relevant part, “for

the full amount of underinsured motorist benefits[,]” for special and general damages

and for punitive damages, and for attorneys’ fees pursuant to A.R.S. § 12-341.01.

Concomitantly with the complaint, the plaintiff filed a Certificate on Compulsory

Arbitration wherein she stated that the largest award she was seeking, including

punitive damages but excluding interest, attorneys’ fees and costs, exceeded the

amount set by the Maricopa County Superior Court’s local rule for compulsory

arbitration; that limit is $50,000. The plaintiff, through counsel, sent the defendant

a settlement demand letter prior to the commencement of this action wherein she

demanded the “Underinsured Motorists Limits.” 

On April 1, 2015, the same day she filed her Motion to Remand, the plaintiff

sent the defendant an Offer of Judgment whereby she offered to allow judgment to

be taken against the defendant “in the total amount of $ 75,000.00 and taxable

costs incurred to date (it being understood that such taxable costs do not include

attorneys’ fees[;])” the next day she sent the defendant her First Amended Offer of

Judgment wherein she stated that she would allow judgment to be taken against the

defendant “in the total amount of $ 75,000.00.” Both offers of judgment specifically

stated that they were pursuant to Ariz.R.Civ.P. 68, and both were captioned as being

filed in the Maricopa County Superior Court case notwithstanding that this action had

Case 2:15-cv-00525-PGR Document 17 Filed 06/29/15 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

- 3 -

been removed approximately one month earlier.

Discussion

In an action such as this one where the complaint does not specify the amount

of damages the plaintiff is seeking, removal is appropriate if the removing defendant

proves by a preponderance of evidence that the amount in controversy exceeds the

$75,000 jurisdictional threshold. 

The amount in controversy includes the amount of damages in dispute,

including punitive damages. Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir.

2001) (“It is well established the punitive damages are part of the amount in

controversy in a civil action.”); the plaintiff could potentially recover punitive damages

here under Arizona law given her bad faith claim. See Filasky v. Preferred Risk

Mutual Insurance Co., 734 P.2d 76, 83 (Ariz.1987) (“Punitive damages may be

awarded in a bad faith insurance case.”) The amount in controversy also includes

reasonable attorneys’ fees if such fees are allowed by the governing law. Galt G/S

v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir.1998) (“We hold that where an

underlying statute authorizes an award of attorneys’ fees, either with mandatory or

discretionary language, such fees may be included in the amount in controversy.”);

the plaintiff could potentially recover her attorneys’ fees under Arizona law pursuant

to A.R.S. § 12-341.01 since this is a contested action arising out of a contract. If it

is not apparent from the face of the complaint that the amount in controversy is over

$ 75,000, the Court may consider facts in the notice of removal, which in this case

includes the defendant’s statement, which the plaintiff has neither objected to nor

controverted, that “Plaintiff carried $100,000 per person limits of underinsured

motorist coverage under a State Farm policy which she contends she is owned in

its entirety.”

Case 2:15-cv-00525-PGR Document 17 Filed 06/29/15 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

- 4 -

The Court concludes that the defendant has satisfied its burden of setting forth

underlying facts sufficient to overcome the strong presumption against removal

jurisdiction. The evidence relied upon by the defendant at the time of removal meets

the preponderance of the evidence standard because (1) the plaintiff had asserted

the value of her claim by sending the defendant a pre-suit demand letter in which

she asked for the full amount of her policy’s underinsured motorist benefits

coverage, which is $100,000. See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th

Cir.2002) (In determining whether the removal amount in controversy was met, the

court stated that “[a] settlement letter is relevant evidence of the amount in

controversy if it appears to reflect a reasonable estimate of the plaintiff’s claim.”); (2)

the plaintiff reiterated this value by specifically stating in her state court complaint

that she was seeking as damages the full amount of her underinsured motorist

benefits; (3) the plaintiff stated in her complaint that she was additionally seeking

punitive damages for her separate bad faith claim; and (4) she further stated in her

complaint that she was seeking her attorneys’ fees. These facts, taken in the

aggregate, clearly show an amount in controversy of over $75,000.

The Court is unpersuaded by the plaintiff’s argument that the jurisdictional

amount in controversy is not met here, and that remand is required by 28 U.S.C. §

1447(c), because she has “clearly and timely offered to settle for $75,000.00,

period.” While the Court is required to remand an action pursuant to § 1447(c) “if

at any time before final judgment it appears that the district court lacks subject

matter jurisdiction[,]” the plaintiff’s offer of judgment is not sufficient to divest the

Court of jurisdiction. First, the plaintiff’s post-removal attempt to reduce her total

recovery below the jurisdictional minimum does not establish that removal was

improper because “diversity jurisdiction is determined at the time the action

Case 2:15-cv-00525-PGR Document 17 Filed 06/29/15 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

Since the offer of judgment was made post-removal, it was improperly

captioned as being filed in the state court action, and was improperly based on

Ariz.R.Civ.P. 68. Any offer of judgment made after removal is required to be made

in this action and solely pursuant to Fed.R.Civ.P. 68, which only permits “a party

defending against a claim” to make an offer of judgment. See Fed.R.Civ.P. 81(c)(1)

(stating that “[t]hese [federal procedural] rules apply to a civil action after it is

removed from a state court.”)

- 5 -

commences, and a federal court is not divested of jurisdiction if ... the amount in

controversy drops below the minimum jurisdictional level[.]” Hill v. Blind Industries

and Services of Maryland, 179 F.3d 754, 757 (9th Cir.1999); accord, St. Paul Mercury

Indemnity Co. v. Red Cab Co., 303 U.S. 283, 292 (1938) (“[If] the plaintiff after

removal, by stipulation, by affidavit, or by amendment of his pleadings, reduces his

claim below the requisite amount, this does not deprive the district court of

jurisdiction. Events occurring subsequent to removal which reduce the amount

recoverable, whether beyond the plaintiff’s control or the result of his volition, do not

oust the district court’s jurisdiction once it has attached.”) (footnotes omitted).

Second, the plaintiff’s offer of judgment is merely a post-removal offer to settle

this matter for $75,000.1

 The offer does not establish, as the plaintiff seems to

argue, that federal jurisdiction has now ceased to exist for § §1447(c) purposes

because it does not establish that the plaintiff will not seek an amount greater than

$75,000 if her settlement offer is not accepted. Therefore,

IT IS ORDERED that the plaintiff’s Motion to Remand (Doc. 6) is denied.

DATED this 29th day of June, 2015.

Case 2:15-cv-00525-PGR Document 17 Filed 06/29/15 Page 5 of 5