Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01527/USCOURTS-azd-2_11-cv-01527-0/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

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Channon Smith, 

Plaintiff, 

vs.

Colorado Casualty Insurance Company, 

Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-11-1527-PHX-FJM

ORDER

The court has before it plaintiff’s motion to remand pursuant to 28 U.S.C. § 1447(c)

(doc. 8), defendant’s response (doc. 9), and plaintiff’s reply (doc. 10).

Plaintiff filed this action in state court alleging bad faith and breach of contract against

defendant Colorado Casualty Insurance Company related to an underinsured motorist claim.

Plaintiff alleges that she was involved in an automobile collision with an underinsured driver.

She settled with the at-fault driver’s insurance company for the available policy limit of

$15,000. But that did not fully compensate her for her injuries, medical expenses, and lost

wages. Plaintiff then filed a claim for underinsured coverage with Colorado Casualty. She

contends that Colorado Casualty breached the insurance contract and acted in bad faith when

it unreasonably offered to settle her claim for $2,500, despite having valued her claim for

more than the offered amount. Her complaint seeks an unspecified amount of compensatory

damages, punitive damages, and attorney’s fees. 

Defendant removed the action asserting diversity of the parties and an amount in

Case 2:11-cv-01527-FJM Document 11 Filed 10/06/11 Page 1 of 4
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

27

28

- 2 -

controversy in excess of $75,000. Plaintiff now moves to remand, arguing that we lack

subject matter jurisdiction because defendant cannot show that the amount in controversy

exceeds the jurisdictional minimum. 

A civil action may be removed to federal court so long as original jurisdiction would

lie in the court to which the case is removed. 28 U.S.C. § 1441(a). Jurisdiction based on 28

U.S.C. § 1332 requires complete diversity and an amount in controversy that exceeds

$75,000. Id. “The intent of Congress drastically to restrict federal jurisdiction in

controversies between citizens of different states has always been rigorously enforced by the

courts.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S. Ct. 586, 590

(1938). Thus, we “strictly construe the removal statute against removal jurisdiction.” Gaus

v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 

Where a plaintiff’s state court complaint does not allege a specific amount of

damages, the removing defendant bears the burden of proving by a preponderance of the

evidence that the amount in controversy exceeds the jurisdictional amount. Sanchez v.

Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). The defendant must show that

it is “more likely than not” that the amount in controversy exceeds $75,000. Id. For

purposes of calculating the amount in controversy, we may consider possible compensatory

damages, punitive damages, and attorney’s fees, if such fees are authorized by contract or

statute. Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n.3 (9th Cir. 2000)

(punitive damages); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998)

(attorney’s fees). 

If the amount in controversy is not apparent on face of the complaint, we may

consider and weigh extrinsic evidence and resolve factual disputes. Singer v. State Farm

Mut. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). Judicial admissions and demand letters are

relevant to the amount in controversy inquiry. Valdez v. Allstate Ins. Co., 372 F.3d 1115,

1117 (9th Cir. 2004). 

Here, it is not facially evident from plaintiff’s complaint that the amount in

controversy exceeds $75,000. The complaint broadly seeks compensatory and punitive

Case 2:11-cv-01527-FJM Document 11 Filed 10/06/11 Page 2 of 4
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

27

28

- 3 -

damages, and attorney’s fees. No specific amount is pled. Plaintiff asserts that the only

determinable damages—her medical expenses—total $11,248.90. She received a settlement

of $15,000 from the party at fault, presumably leaving few uncompensated compensatory

damages. 

In order to satisfy its burden of establishing that the amount in controversy exceeds

$75,000, defendant argues that (1) plaintiff filed a certificate of compulsory arbitration in

state court indicating that the value of the case exceeds $50,000; (2) plaintiff made a demand

of $50,000 to settle the case; and (3) plaintiff rejected defendant’s offer to remand the case

in exchange for her agreement to limit her maximum recovery to $75,000. 

This is insufficient to prove that it is more likely than not that the amount in

controversy exceeds $75,000. Plaintiff’s concession that the case value exceeds $50,000 is

not evidence that it also exceeds $75,000. Defendant assumes that plaintiff’s claim valuation

contained in the compulsory arbitration certificate and the demand letter does not include

attorney’s fees and punitive damages, but there is no evidence to support this contention.

Nor is there any evidence to show that punitive damages and attorney’s fees will increase

plaintiff’s claim beyond $75,000. Defendant’s assertion that punitive damages awards in bad

faith cases are often a “significantly large amount of money,” Response at 6, is not sufficient

to establish the value of plaintiff’s punitive damages claim. Defendant has not explained

why the facts alleged in this case might warrant extraordinary punitive damages. 

Finally, plaintiff’s refusal to limit her claim to $75,000 is insufficient in itself to

satisfy defendant’s burden of proof. Defendant assumes that plaintiff would not stipulate to

the remand because she “is in fact seeking more than $75,000 in damages.” Response at 3.

But it is equally likely that plaintiff refused to limit her possible recovery because she

reasonably evaluated defendant’s inability to satisfy its jurisdictional burden of proof. 

“Where doubt regarding the right to removal exists, a case should be remanded to state

court.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003).

Because defendant has failed to establish by a preponderance of the evidence that the amount

in controversy in this case exceeds $75,000, we grant plaintiff’s motion to remand and

Case 2:11-cv-01527-FJM Document 11 Filed 10/06/11 Page 3 of 4
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

27

28

- 4 -

remand the case to state court.

IT IS ORDERED GRANTING plaintiff’s motion to remand (doc. 8).

IT IS FURTHER ORDERED REMANDING this case to the Superior Court of

Arizona in Maricopa County. 

DATED this 5th day of October, 2011.

Case 2:11-cv-01527-FJM Document 11 Filed 10/06/11 Page 4 of 4