Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-00736/USCOURTS-azd-2_13-cv-00736-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Betty Lou Haldiman, an individual; John B. 

Haldiman, Jr., an individual, 

Plaintiffs, 

v. 

Continental Casualty Company, an Illinois 

corporation, 

Defendant.

No. CV-13-00736-PHX-GMS

ORDER 

Pending before the Court is Plaintiffs’ Motion to Remand, (Doc. 17), and Second 

Application for Order to Show Cause Regarding Request for Preliminary Injunction, (Doc. 8). 

For the reasons discussed below, the Motions are denied. 

BACKGROUND 

 On March 15, 2013, Plaintiffs Betty Lou Haldiman and John B. Haldiman (“the 

Haldimans”), filed this action in the Superior Court of Arizona. (Doc. 1 ¶ 2.) The Haldimans 

allege breach of contract, breach of the duty of good faith and fair dealing (insurance bad faith), 

and unfair practices and frauds. (Doc. 1-1, Ex. A (Compl.) ¶¶ 17–37.) On April 11, 2013, 

Defendant Continental Casualty Company (“CCC”), removed this case to federal court, alleging 

subject matter jurisdiction based on diversity of citizenship and an amount in controversy greater 

than $75,000. (Doc. 1 ¶ 3.) CCC is an Illinois corporation and has its principal place of business 

in Illinois. (Id. ¶ 9.) The Haldimans are citizens of Arizona. (Doc. 1-1, Ex. A (Compl.) ¶ 1.) 

 Many years ago the Haldimans purchased a “Long-Term Care Insurance Policy” (“the 

policy”) from CCC. (Id. ¶ 3.) Under the policy, Ms. Haldiman is entitled to benefits of $151 per 

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day for long-term care in a qualifying facility after an elimination period of 90 days. (Doc. 1 ¶ 

14.) The benefits last as long as Ms. Haldiman is alive and receiving qualifying care. (Id.) 

According to a class action settlement, even if Ms. Haldiman does not reside in a facility that 

provides qualifying care, she is nevertheless entitled to 25% of the daily Long Term Care 

Facility Benefit contained in [the] policy or 25% of the actual daily cost of the facility, 

whichever is greater.” (Doc. 12-1, Ex. B at 4.)1

 At some point, Ms. Haldiman moved to the 

Beatitudes Campus. (Doc. 1-1, Ex. A (Compl.) ¶¶ 5–7.) CCC determined that Ms. Haldiman’s 

place of residence did not qualify as a long term care facility under its policy. (Id. ¶¶ 10–15.) 

Although CCC has sent checks for 25% of Ms. Haldiman’s benefits in accordance with the 

settlement agreement, (Doc. 20-1, Ex. A), the Haldimans’ claims for full benefits have been 

denied by CCC thus far, (Doc. 1-1, Ex. A (Compl.) ¶¶ 10–16). Without specifying a dollar 

amount, the Haldimans seek an award of (1) actual damages, (2) general damages including 

those for emotional distress and consequential damages, (3) punitive damages, (4) a temporary 

restraining order, preliminary injunction and permanent injunction preventing CCC from 

denying full benefits, (5) reasonable attorneys’ fees and costs, (6) and further relief as the Court 

deems proper. (Id. ¶¶ 17–37.) 

 After filing their Complaint, the Haldimans submitted an Arizona Rule of Civil 

Procedure 68 Offer of Judgment, proposing judgment for $17,747 and an additional $4,222 per 

month as long as Ms. Haldiman is a resident at the Beatitudes. (Doc. 1-1 Ex. A at 16.) The 

Haldimans also submitted a certificate in Superior Court stating that their case was not subject to 

the Uniform Rules of Procedure for Arbitration because they are seeking injunctive relief. (Doc. 

1-1 Ex. A at 15.) 

/ / / 

/ / / 

 

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 The Court takes judicial notice of the insurance policy and the class action settlement notice because they are Error! Main Document Only.documents “whose 

contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading,”Knievel v. ESPN, 393 F.3d 1068, 

1076 (9th Cir. 2005) (quoting In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 

(9th Cir. 1999) (alteration in original). 

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DISCUSSION 

I. MOTION TO REMAND 

 A. Legal Standard 

 “[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 or the defendants, 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). A party may remove an action from state court only if 

the action could have been brought in the district court originally. Ramirez v. Fox Television 

Station, Inc., 998 F.2d 743, 747 (9th Cir. 1993). The party asserting federal jurisdiction has the 

burden of proof on a motion to remand to state court, and the removal statute is strictly construed 

against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (noting a 

“strong presumption” against removal jurisdiction, and stating that “[f]ederal jurisdiction must be 

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

 When removal is based on diversity jurisdiction, the removing party must show that (1) 

the opposing parties are not citizens of the same state and (2) “the matter in controversy exceeds 

the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). The burden of 

proving the amount in controversy depends on whether the plaintiff’s complaint is ambiguous or 

whether it alleges a specific amount. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th 

Cir. 2007); Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 402, 404 (9th Cir. 1996). Where 

it is unclear from the complaint whether the plaintiff has pleaded the required amount in 

controversy, “the removing defendant bears the burden of establishing, by a preponderance of 

the evidence, that the amount in controversy exceeds [the jurisdictional amount].” Sanchez, 102 

F.3d at 40; see also Gaus, 980 F.2d at 566–67. “[R]emoval ‘cannot be based simply upon 

conclusory allegations’ where the [complaint] is silent.” Singer v. State Farm Mut. Auto. Ins. 

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

/ / / 

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/ / / 

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B. CCC Has Shown that the Amount in Controversy More Likely Than Not 

 Exceeds $75,000. 

 CCC removed this action based on diversity jurisdiction. (Doc. 1 ¶ 3.) The Haldimans 

contend that CCC has not met its burden to establish the requisite amount in controversy. The 

Haldimans did not specify the amount in controversy in their Complaint, which places the 

burden on CCC to establish, by a preponderance of the evidence, that the amount in controversy 

exceeds $75,000. There are several bases on which CCC carries its burden. 

 1. Compulsory Arbitration Certificate 

 The Notice of Removal relies in part on the certificate that the Haldimans filed in 

Superior Court stating that the claim was not subject to compulsory arbitration. (Doc. 1 ¶ 13.) 

Arbitration is required when “[n]o party seeks affirmative relief other than a money judgment” 

and “[n]o party seeks an award in excess of the jurisdictional limit [$50,000] for arbitration.” 

Ariz. R. Civ. P. 72(b). CCC contends that the amount in controversy is at least greater than 

$50,000 because Plaintiffs have filed a certificate saying they are not subject to compulsory 

arbitration. (Doc. 1 ¶ 13.) However, as stated in the Haldimans’ certificate, they are not subject 

to arbitration because they seek injunctive relief; not because they seek an award greater than 

$50,000. (Doc. 1, Ex. 1 at 15.) Moreover, even if damages exceeded $50,000, whether damages 

exceed $75,000 or not would remain unclear. The arbitration certificate is consequently not 

enough to establish the amount in controversy. 

2. Injunctive Relief 

 “‘In actions seeking declaratory or injunctive relief, it is well established that the amount 

in controversy is measured by the value of the object of the litigation.’” Cohn v. Petsmart, Inc., 

281 F.3d 837, 840 (9th Cir. 2002) (quoting Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 

333, 347 (1977)). There is evidence that the injunction is worth somewhere between $4,222 per 

month, (Doc. 20 at 2), or as much as $151 per day, roughly $4,530 per month, (Doc. 1 ¶ 14). The 

monetary value of the injunction is contingent upon the length of Ms. Haldiman’s life. (Doc. 10 

at 9–10.) The value of the injunction will exceed $75,000 within a year or two and is thus 

probative evidence that the amount in controversy requirement has been met. 

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3. Punitive Damages 

In addition, the court may consider damages for emotional distress, punitive damages, 

and attorneys’ fees when calculating the amount in controversy. See Kroske v. U.S. Bank Corp., 

432 F.3d 976, 980 (9th Cir. 2005) (stating that the amount in controversy includes attorneys’ fees 

and that courts should include emotional distress damages as compared to similar cases); see also

Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001) (“[P]unitive damages are part of the 

amount in controversy in a civil action.”). 

 CCC contends that together, potential punitive damages and attorneys’ fees exceed 

$75,000 because several other long-term care insurance coverage cases have authorized large 

rewards. (Doc. 19 at 6, 7 (citing cases).) Courts analyze comparable awards in determining the 

amount in controversy. See, e.g., Ansley v. Metro. Life Ins. Co., 215 F.R.D. 575, 578 (D. Ariz. 

2003). Based on the cases cited by CCC, the amount in controversy requirement is met.

4. Emotional Distress, Consequential, and Tort Liability Under Ariz. 

Rev. Stat. § 20-443 

 The Haldimans have also made claims for emotional distress damages, consequential 

damages, and tort damages. (Doc. 1-1, Ex. A at 11, 12.) For these potential awards, CCC lists 

other similar cases where the award exceeded $75,000. As with punitive damages, those 

comparisons help demonstrate that it is more likely than not that the combination of emotional 

distress, consequential damages, and tort liability damages for this case will exceed $75,000. 

 5. Compensatory Damages: Future Benefits 

Under the tort theory of bad faith, future benefits are included as compensatory damages. 

See Leavey v. UNUM/Provident Corp., CV-02-2281-PHX-SMM, 2006 WL 1515999 (D. Ariz. 

May 26, 2006), aff’d sub nom. Leavey v. Unum Provident Corp., 295 F. App’x 255 (9th Cir. 

2008); Greenberg v. Paul Revere Life Ins. Co., 91 F. App’x 539, 541–42 (9th Cir. 2004) ([W]ere 

the Arizona Supreme Court to address this issue, it would likely hold that future policy benefits 

may be awarded as compensatory damages.”). Further, compensatory damages are included 

when calculating the amount in controversy. Ansley v. Metro. Life Ins. Co., 215 F.R.D. 575, 577 

(D. Ariz. 2003). Other district courts have allowed future benefits to be considered when 

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calculating the amount in controversy. Albino, 349 F. Supp. 2d at 1339 (“[T]he amount in 

controversy is met in this case because Plaintiff’s future policy benefits could be awarded as 

compensatory damages under her claim for tortious breach of the covenant of good faith and fair 

dealing.”); Thomas v. Standard Ins. Co., CV-09-02121-PHX-JAT, 2010 WL 994507 at *2 (D. 

Ariz. Mar. 17, 2010). The present case involves a claim that CCC has breached the duty of good 

faith and fair dealing. (Doc. 1-1 at 10.) Thus, because future benefits are included as 

compensatory damages and compensatory damages are included when determining the amount 

in controversy, this Court will consider future benefits as part of the amount of controversy for 

this case. 

 Ms. Haldiman’s benefits will reach $75,000 within a relatively short period of time. It is 

more likely than not that her future benefits, especially when combined with the value of the 

injunction, and the potential recovery for emotional and punitive damages will exceed $75,000. 

Thus, CCC has met its burden in proving the amount in controversy requirement has been met 

and this case will remain under this Court’s jurisdiction. 

II. ORDER TO SHOW CAUSE REGARDING REQUEST FOR PRELIMINARY 

 INJUNCTION 

 A. Applicable Law 

While the Parties have not expressly addressed it, there is a question as to which legal 

standard—state or federal—should apply to the Haldimans’ request for order to show cause. 

Under the principles set forth in Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), and its progeny, a 

federal court with diversity jurisdiction over state law claims must apply state law to substantive 

claims and federal law to procedural issues. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 

726 (1966); Hanna v. Plumer, 380 U.S. 460, 464–66 (1965). To determine whether an issue is 

procedural or substantive, a court will decide whether the issue is outcome determinative with 

“reference to the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of 

inequitable administration of the laws.” Id. at 468. 

 The Haldimans cite the Arizona standard for a Temporary Restraining Order in their 

request, (Doc. 8 at 6–7), while CCC cites the federal standard for preliminary injunctions, (Doc. 

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12 at 8–9). This Court agrees with other courts in this district that Arizona state law for 

preliminary injunctions is not outcome determinative and that federal law therefore applies. 

Compass Bank v. Hartley, 430 F. Supp. 2d 973, 978 n.9 (D. Ariz. 2006) (“Although there is 

confusion over whether to utilize a federal or state law standard in examining requests for 

preliminary injunctions in diversity actions, in this case, federal law applies because the state law 

is not outcome-determinative under the Erie doctrine.”) 

 B. Legal Standard 

 To receive a preliminary injunction, a plaintiff must establish “that he is likely to succeed 

on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that 

the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. 

Nat’l Res. Def. Council, 555 U.S. 7, 20 (2008); see Fed. R. Civ. P. 65. The Ninth Circuit 

continues to analyze these four elements using a “sliding scale” approach, in which “the 

elements of the preliminary injunction test are balanced, so that a stronger showing of one 

element may offset a weaker showing of another.” Alliance for the Wild Rockies v. Cottrell, 632 

F.3d 1127, 1131 (9th Cir. 2011). The element of irreparable injury, however, is not subject to 

balance; the moving party must “demonstrate that irreparable injury is likely in the absence of an 

injunction.” Winter, 555 U.S. at 22, 129 S. Ct. 365 (emphasis in original). 

 C. Analysis 

 1. The Heightened Standard of a Mandatory Injunction 

A prohibitory injunction preserves the status quo, Johnson v. Kay, 860 F.2d 529, 541 (2d 

Cir.1988), while a mandatory injunction “goes well beyond simply maintaining the status quo”, 

Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994) (quoting Anderson v. United 

States, 612 F.2d 1112, 1114 (9th Cir.1979)). A district court should deny a mandatory 

preliminary injunction “unless the facts and law clearly favor the moving party.” Id. 

 Here, the Haldimans are not seeking to preserve the status quo because they are 

requesting CCC to begin paying benefits where it has otherwise denied coverage. (Doc. 8 at 7.) 

Thus, the Haldimans are seeking a mandatory injunction, and, to obtain such relief, the facts and 

law must clearly favor them. 

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 2. The Haldimans Have Not Shown that Irreparable Harm is Likely 

 A showing of irreparable harm is required to obtain a preliminary injunction. Alliance for 

the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). Injuries that can be 

compensated with money are not normally considered irreparable. Sampson v. Murray, 415 U.S. 

61, 90 (1974) (“Mere injuries, however substantial, in terms of money, time and energy 

necessarily expended in the absence of a stay, are not enough. The possibility that adequate 

compensatory or other corrective relief ... weighs heavily against a claim of irreparable harm.”) 

(internal citations omitted); Los Angeles Mem’l Coliseum Comm’n v. Nat’l Football League, 634 

F.2d 1197, 1202 (9th Cir. 1980) (“[M]onetary injury is not normally considered irreparable.”). 

 Here, the Haldimans contend that CCC’s partial payment of benefits causes a “great deal 

of distress and damage under circumstances where an insured is forced to relocate from a long 

term care facility.” (Doc. 8 at 7.) They have not argued that this type of injury cannot be 

compensated with money and they did not file a reply to CCC’s response. The Haldimans have 

sought monetary relief in their complaint and presented a monetary offer of judgment for every 

alleged injury. (Doc. 1-1, Ex. A at 12–13, 16.) Although the Haldimans seek an injunction, 

the injunction sought is simply another request for money payments. (Doc. 1-1 Ex. A at 

9–10.) And they have not presented evidence to substantiate their bare assertions that Ms. 

Haldiman has suffered irreparable harm due to CCC’s denial of benefits. Irreparable injury is a 

fundamental requirement for a preliminary injunction and the Haldimans have not shown that 

they are likely to suffer irreparable harm in the absence of an injunction. In fact, any harm they 

may have suffered can be adequately compensated by damages. The heightened standard that the 

facts and law must clearly favor the Haldimans because they seek a mandatory injunction further 

weighs against granting a preliminary injunction. This Court need not address the other three 

prongs of the Winter test in denying the Haldimans’ Second Application for Order to Show 

Cause because they have not met the irreparable harm requirement. 

CONCLUSION 

 The amount in controversy in this case likely exceeds $75,000 and the case therefore 

remains in federal court. The Haldimans’ request for an Order to Show Cause is denied for 

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failure to demonstrate that irreparable harm is likely.

IT IS THEREFORE ORDERED that the Halimans’ Motion to Remand, (Doc. 17), is 

DENIED. 

 IT IS FURTHER ORDERED that the Haldimans’ Second Application for Order to 

Show Cause Regarding Request for Preliminary Injunction, (Doc. 8), is DENIED. 

Dated this 2nd day of August, 2013. 

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