Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00700/USCOURTS-azd-2_11-cv-00700-0/pdf.json

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

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All Documents are in CV 11-0700 unless otherwise indicated.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

DOMINIC and HEATHER DELA

FUENTE, husband and wife, 

Plaintiffs, 

vs.

HUMANA INSURANCE COMPANY, a

foreign insurer,

Defendant. 

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No. CV-11-0700-PHX-JAT

ORDER

Currently before the Court is Plaintiffs Dominic and Heather dela Fuente’s Motion

to Remand. (Doc. 7.1

) Defendant Humana Insurance Company filed a Response on May 5,

2011. (Doc. 9.) Plaintiffs filed a Reply on May 18, 2011. (Doc. 10.) For the reasons that

follow, the Court denies Plaintiffs’ Motion to Remand. 

I. Background

Plaintiffs Dominic and Heather dela Fuente, and their four children who are not

named as plaintiffs in this matter, received health insurance coverage from Defendant

beginning on May 2, 2008. Plaintiffs allege that their son, Cody dela Fuente, was injured in

a serious car accident and had to receive emergency treatment and several surgical

procedures. Plaintiffs allege that Defendant assured them that the doctors performing the

surgical procedures were network providers under Defendant’s plan. However, Plaintiffs

Case 2:11-cv-00700-JAT Document 12 Filed 09/13/11 Page 1 of 6
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subsequently received several notifications from Defendant stating that the doctors who

performed the procedures were not network providers. As such, Plaintiffs allege that

Defendant breached their contract by refusing to provide insurance coverage.

On August 9, 2010, Plaintiffs commenced this action in Maricopa County Superior

Court. (Doc. 1 in CV 10-2210, Ex. 1, Complaint.) In the Complaint, Plaintiffs allege breach

of contract and breach of good faith and fair dealing. (Id.) Plaintiffs seek actual, general,

and consequential damages, as well as punitive damages and reasonable attorneys’ fees and

costs. (Compl., 9:3–7.) 

On October 15, 2010, Defendant removed the case to this Court based on diversity

jurisdiction. (Doc. 1 in CV 10-2210.) Plaintiffs filed a timely motion to remand claiming

this Court lacked subject matter jurisdiction because Defendant had not provided sufficient

evidence to establish that the amount in controversy exceeded $75,000. (Doc. 8 in CV 10-

2210.) Defendant argued that the amount in controversy requirement was met by Plaintiffs’

claim of actual damages, consequential damages, punitive damages, attorneys’ fees, and

Plaintiffs’ concession that damages exceeded $50,000. (Doc. 10 in CV 10-2210.) On

February 17, 2011, this Court granted Plaintiffs’ Motion to Remand. (Doc. 12 in CV 10-

2210.) 

On April 4, 2011, Defendant removed the case to this Court for the second time.

(Doc. 1.) Plaintiffs filed a timely motion to remand claiming, once again, that this Court

lacks subject matter jurisdiction because Defendant has failed to prove that the amount in

controversy exceeds $75,000. (Doc. 7 at 4.) Defendant claims that after this Court remanded

the case back to Maricopa County Superior Court, the parties initiated settlement discussions.

(Doc. 1 at 6.) Defendant argues that the amount in controversy requirement has been met by

the Plaintiffs’ opening settlement offer of $135,000, which Defendant claims Plaintiffs admit

to making since this Court’s initial remand. (Doc. 9 at 2.)

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,

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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: “any 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); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only . . . actions that

originally could have been filed in federal court may be removed to federal court by the

defendant.”). 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). There is a “strong presumption” against removal, and

“[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the

first instance.” Gaus, 980 F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d

1062, 1064 (9th Cir. 1979)). “The ‘strong presumption’ against removal jurisdiction means

that the defendant always has the burden of establishing that removal is proper.” Id. “If at

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

jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c).

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

the plaintiff instituted the case in state court, ‘[t]here 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

preponderance of the evidence that the amount in controversy exceeds [$75,000].” Id. at 376

(citing Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996)). “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, 102 F.3d at 404. “[R]emoval

‘cannot be based simply upon conclusory allegations’ where the [complaint] is silent” as to

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the dollar amount of damages the plaintiff seeks. Singer, 116 F.3d at 377 (quoting Allen v.

R&H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995)).

III. Analysis

Plaintiffs’ Complaint does not demand a specific dollar amount in damages. Defendant

therefore bears the burden of proving by a preponderance of the evidence that the amount in

controversy exceeds $75,000. Id. at 376. Defendant cannot base removal upon conclusory

allegations, Sanchez, 102 F.3d at 404, but rather must prove the facts to support the

jurisdictional amount. Gaus, 980 F.2d at 566–67. Defendant claims that Plaintiffs’

settlement offer of $135,000 represents new and different grounds for removal and is

sufficient evidence to satisfy Defendant’s burden of establishing that removal is proper.

(Doc. 1 at 6–7.) 

The Ninth Circuit has held 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.” Cohn

v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). Although the parties agree that Cohn

is the decisive authority, they disagree regarding the requirements that must be satisfied in

order for a settlement offer to represent relevant evidence of the amount in controversy.

Plaintiffs incorrectly assert that a proper settlement letter is required for an offer of

settlement to be used to prove the amount in controversy. (Doc. 7 at 5.) Although Cohn’s

holding includes the language “settlement letter,” it is unlikely that the court intended to

make that a requirement. Two cases that the court relied on in its holding support this

conclusion. See Chase v. Shop ‘N Save Warehouse Foods, Inc., 110 F.3d 424, 428–30 (7th

Cir. 1997) (holding that a settlement offer is properly consulted in determining “plaintiffs

assessment of the value of her case”) (emphasis added); Burns v. Windsor Ins. Co., 31 F.3d

1092, 1097 (11th Cir. 1994) (holding that although not determinative, a settlement offer

“counts for something”) (emphasis added). Accordingly, a settlement offer can be used as

evidence of the amount in controversy, even if it is not embodied in a formal settlement

letter. 

Plaintiffs also incorrectly assert that in order for a settlement letter to be considered

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relevant evidence of the amount in controversy, it must contain more than a mere dollar

amount. (Doc. 10 at 4.) The only requirement that Cohn specifies is that the settlement offer

appear “to reflect a reasonable estimate of the plaintiff’s claim.” 281 F.3d at 840. Plaintiffs

have not demonstrated that there are any additional requirements for a settlement letter to be

used as evidence of the amount in dispute. In fact, the Ninth Circuit has said that the amount

in controversy may even be proven by an imprecise settlement letter. Babasa v. Lenscrafters,

Inc., 498 F.3d 972, 975 (9th Cir. 2007). 

As in Babasa, Plaintiffs’ settlement offer does not stand alone. Id. Here, Defendant’s

initial Response in Opposition to Plaintiffs’ Motion to Remand presented a five element

argument that the amount in controversy exceeded $75,000. (Doc. 10 in CV 10-2210 at 4)

(arguing that the compulsory arbitration certificate, actual damages, punitive damages,

attorneys’ fees and Plaintiffs’ failure to indicate an amount less than $75,000, lead to the

conclusion that the amount in controversy has been proven). Although Plaintiff correctly

asserts that the Court will not reconsider an issue that has already been decided (Doc. 7 at 4),

nothing bars the Court from considering Defendant’s former arguments in light of its new

and different grounds for removal. Therefore, taking into account Defendant’s five element

argument, Plaintiffs’ settlement offer of $135,000 appears to reflect a reasonable estimate of

Plaintiffs’ claim.

Defendant correctly asserts that courts have relied heavily on a plaintiff’s failure to

disavow the offered settlement amount. See Cohn, 281 F.3d at 840 (“[Plaintiff] could have

argued that the demand was inflated and not an honest assessment of damages, but he made

no attempt to disavow his letter or offer contrary evidence.”); Krajca v. Southland Corp., 206

F. Supp. 2d 1079, 1082 (D. Nev. 2002) (“Plaintiffs . . . do not claim that the settlement letter

inflated damages or is otherwise incorrect.”). Although neither dispositive nor obligatory,

Plaintiffs’ failure to disavow the offered settlement amount is another reason why their

settlement offer “appears to reflect a reasonable estimate of the Plaintiff[s’] claim.” Cohn,

281 F.3d at 840. As a result, Defendant has proven by a preponderance of the evidence that

the amount in controversy exceeds $75,000. 

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IV. Motion for Attorneys’ Fees

Federal Rule of Civil Procedure 11 justifies sanctions “when a filing is frivolous,

legally unreasonable, or without factual foundation, or is brought for an improper purpose.”

Estate of Blue v. County of L.A., 120 F.3d 982, 985 (9th Cir. 1997). A “frivolous” filing is

one that is “both baseless and made without a reasonable and competent inquiry.” Townsend

v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990). Prior to filing a

complaint, an attorney has a duty to conduct a reasonable factual investigation and to perform

adequate legal research that confirms whether the theoretical basis of the complaint is

“warranted by existing law or a good faith argument for an extension, modification or

reversal of existing law.” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)

(quoting Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1537 (9th Cir.

1986)); Fed. R. Civ. P. 11(b)(2). 

Obviously, given the Court’s ruling on the Motion to Remand, Plaintiffs have failed

to show that Defendant was legally unreasonable or that it acted for an improper purpose

when it removed. Accordingly, Plaintiffs are not entitled to attorneys’ fees. 

Based on Cohn’s holding that a settlement letter is relevant evidence of the amount in

controversy, and considering the evidence presented, the Court concludes that Defendant has

met its burden to prove by a preponderance of the evidence that the amount in controversy

exceeds the jurisdictional threshold of $75,000.

Accordingly,

IT IS ORDERED that Plaintiffs’ Motion to Remand (Doc. 7) is DENIED. 

IT IS FURTHER ORDERED that Plaintiffs’ request for attorneys’ fees is DENIED.

DATED this 13th day of September, 2011.

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