Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-00888/USCOURTS-azd-2_09-cv-00888-0/pdf.json

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

David W. Turner, 

Plaintiff, 

vs.

American Hardware Mutual Insurance

Company, 

Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-09-0888-PHX-JAT

ORDER

Currently before the Court is Plaintiff’s Motion to Remand. (Dkt. #13.) Defendant

filed a response (Dkt. #14) and Plaintiff filed a reply. (Dkt. #15.) The court now rules on the

motion.

I. Background

Plaintiff alleges that on or about December 3, 2007, the Plaintiff was seriously injured

in a motorcycle accident in the vicinity of North Hayden Road and 83rd Street in the city of

Scottsdale, Arizona. Plaintiff alleges that he sustained significant injuries and damages as a

result of the accident.

Plaintiff alleges that the at-fault driver’s insurer tendered to Plaintiff the full limit of

liability coverage available, but was inadequate to compensate the Plaintiff for the injuries

and damages he sustained. Plaintiff alleges that he was at all times insured under Defendant’s

underinsured motorist policy, and entitled to underinsured motorist coverage and benefits.

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 1 of 7
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 -

The Plaintiff allegedly filed a claim under the policy for underinsured motorist coverage

which the Defendant in response denied.

As a result, on or about March 27, Plaintiff commenced this action in the Superior

Court of the State of Arizona, in and for the County of Maricopa. (Dkt. #1, Ex. 1,

Complaint). In his Complaint, Plaintiff alleges breach of contract and breach of good faith

and fair dealing (bad faith). (Id.) Plaintiff seeks actual damages, as well as attorney’s fees and

costs. 

On April 28, 2008, Defendant removed the case to the United States District Court for

the District of Arizona based on diversity jurisdiction. (Dkt. #1.) Plaintiff timely filed a

Motion to Remand claiming that this Court lacks subject matter jurisdiction because

Defendant has not provided sufficient evidence to establish that the amount in controversy

exceeds $75,000.00.

II. Legal Standard

“[D]istrict courts shall have original jurisdiction of all civil actions where the matter

in controversy exceeds the sum or value of $75,000, exclusive of interests and costs, and is

between . . . citizens of different States[.]” 28 U.S.C. § 1332(a)(1). See Caterpillar Inc. v.

Lewis, 519 U.S. 61, 68 (1996) (holding that original jurisdiction exists in cases of complete

diversity, where each of the plaintiffs is a citizen of a different state than each of the

defendants, and the amount in controversy exceeds $ 75,000).

The removal statute, 28 U.S.C. § 1441, provides, in pertinent part: “[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 . . . 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). Consistent with the limited jurisdiction of federal courts, 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 v. Miles, Inc., 980 F.2d 564, 566

(9th Cir. 1992) (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

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 2 of 7
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 -

always has the burden of establishing that removal is proper.” Id. at 566. See also Prize

Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir. 1999) (“The burden of

establishing federal jurisdiction is on the party seeking removal, and the removal statute is

strictly construed against removal jurisdiction.”) (citations omitted).

“[W]here the amount in controversy is in doubt, the Supreme Court has drawn a sharp

distinction between original jurisdiction and removal jurisdiction.” Gaus, 980 F.2d at 566

(citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-90, (1938)). “In a

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

instituted the case in state court, ‘there 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., 303 U.S. at 290). But, “[w]here 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)). 

“[R]emoval ‘cannot be based simply upon conclusory allegations’ where the

[complaint] is silent” as to the amount of damages the plaintiff seeks. Singer, 116 F.3d at 377

(citing Allen v. R&H Oil and Gas Co., 63 F.3d 1326, 1335 (5th Cir, 1995)). Thus, the inquiry

into the amount in controversy is not confined to the face of the complaint. See Valdez v.

Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004). “[T]he court may consider facts in the

removal petition, and may ‘require parties to submit summary-judgment-type evidence

relevant to the amount in controversy at the time of removal.’”Abrego Abrego v. The Dow

Chem. Co., 443 F.3d 676, 690 (9th Cir. 2006) (quoting Singer, 116 F.3d at 377). A court may

also consider supplemental evidence later proffered by the removing defendant, which was

not originally included in the removal notice. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.

1 (9th Cir. 2002). However, a court “cannot base [its] jurisdiction on a [d]efendant’s

speculation and conjecture.” Lowdermilk v. United States Bank Nat'l Assoc., 479 F.3d 994,

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 3 of 7
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 -

1002 (9th Cir. 2007). Accordingly, the defendant must set forth facts supporting the assertion

that the amount in controversy exceeds the statutory minimum. See Gaus, 980 F.2d at 567.

III. Discussion

In his motion to remand, Plaintiff argues that Defendant bears the burden of proving

by a preponderance of the evidence that the amount in controversy is sufficient to confer

jurisdiction and that Defendant has failed to satisfy its burden of proof. 

This Court has a duty to ensure that it has subject matter jurisdiction over all cases

before it. See Valdez, 372 F.3d at 1116. In the notice of removal, Defendant alleges

jurisdiction based on diversity. Because Plaintiff does not demand a dollar amount in the

Complaint, the Defendant has the burden to prove by a preponderance of the evidence that

the amount in controversy exceeds $75,000.00. Singer, 116 F.3d at 376. This requires that

Defendant submit evidence to show it is more likely than not that the amount in controversy

exceeds $75,000.00. Sanchez, 102 F.3d at 404. As for the type of evidence Defendant may

rely upon, the Ninth Circuit has “endorsed the Fifth Circuit’s practice of considering facts

presented in the removal petition as well as any ‘summary-judgment-type evidence relevant

to the amount in controversy at the time of removal.’” Valdez, 372 F. 3d at 1117 (citations

omitted). Defendants cannot rely simply upon conclusory allegations. Singer, 116 F.3d at

377.

In his removal petition, Defendant points to Plaintiff’s allegations that Defendant

failed to issue policy benefits in the amount of $500,000.00 to demonstrate the jurisdictional

amount. (Dkt. #1.) However, in regards to insurance claims, “the jurisdictional amount in

controversy is measured by the value of the underlying claim -- not the face amount of the

policy.” Hartford Ins. Group v. Lou-Con Inc., 293 F.3d 908, 911 (5th Cir. 2002). See also

Budget Rent-A-Car, Inc. v. Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997); Infinity Ins.

Co. v. Guerrero, 2007 WL 2288324 (E.D. Cal., 2007);14B CHARLES ALAN WRIGHT,

ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE & PROCEDURE § 3710 (3d

ed. 1998). Therefore, Defendant’s recitation of the policy limit at issue does not sufficiently

establish the jurisdictional amount.

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 4 of 7
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

- 5 -

In Valdez, the Ninth Circuit made clear that the party asserting jurisdiction must show

facts sufficient to satisfy its burden of proving by a preponderance of the evidence that the

amount in controversy exceeds $75,000.00. 372 F.3d at 1117 (“[A] conclusory allegation

neither overcomes the strong presumption against removal jurisdiction, nor satisfies the

defendant’s burden of setting forth, in the removal petition itself, the underlying facts

supporting its assertion that the amount in controversy exceeds the applicable dollar value”)

(internal quotations omitted). Here, the Court finds that the allegation in the notice of

removal is insufficient to establish by a preponderance of the evidence that this Court has

jurisdiction. Therefore, the party asserting jurisdiction, Defendant, has failed to meet its

burden. See Trentacosta v. Frontier Pac. Aircraft Indus., 813 F.2d 1553, 1559 (9th Cir. 1987);

see also McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 188 (1936). 

Having made this finding that the removal petition is insufficient, the Court’s

inclination would be to remand the case. However, in Valdez, the panel found the allegation

in the removal petition to be insufficient, and remanded the case, “to the district court for a

determination of whether the amount in controversy is sufficient to establish jurisdiction . .

. . We leave to the district court to conduct the proceedings and consider the evidence it

deems appropriate for its task.” 372 F.3d at 1118 (emphasis added).

The evidence offered by the Defendant in support of the requisite jurisdictional

amount includes a letter sent by Plaintiff’s former counsel to the Defendant, advising the

Defendant to “set [] proper reserves.” (Dkt. # 14, Ex.2.) That letter stated, “I anticipate Mr.

Turner’s total medical expense will exceed $250,000.00.” (Id.) In determining whether the

jurisdictional requirement has been met, this Court may consider evidence submitted

subsequent to the notice of removal, including evidence submitted in conjunction with an

opposition to a motion to remand. Cohn, 281 F.3d at 840 n.1; see also Willingham v.

Morgan, 395 U.S. 402, 407 n.3 (1969) (“it is proper to treat the removal petition as if it had

been amended to include the relevant information contained in the later-filed affidavits”).

The letter from Plaintiff’s former attorney may not be deemed admissible for the purposes

of trial, however, evidence submitted to the Court need not be admissible for the court to

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 5 of 7
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

- 6 -

consider in determining the amount in controversy. Cohn, 281 F.3d at 840 (citing Chase v.

Shop’ N Save Warehouse Foods, Inc., 110 F.3d 424, 428-30 (7th Cir. 1997) (holding that

plaintiff’s settlement offer, although inadmissible, is properly consulted in determining

“plaintiff’s assessment of the value of her case”)). See also Burns v. Windsor Ins. Co., 31

F.3d 1092, 1097 (11th Cir. 1994) (while a “settlement offer, by itself, may not be

determinative, it counts for something”). So long as the letter reflects a reasonable and honest

assessment of damages, it is relevant to the amount in controversy, and may therefore be

consulted. Cohn, 281 F.3d at 840.

Plaintiff contends that the letter is too speculative to form the basis of a determination

of the jurisdictional amount. See Lowdermilk, 479 F.3d at 998. However, the Ninth Circuit

has only propounded two scenarios where the requirements of 28 U.S.C. § 1332(d) must be

supported by evidence to a legal certainty: (1) when a complaint alleges damages in excess

of the federal amount-in-controversy requirement; or (2) the complaint alleges damages less

than the jurisdictional amount. Id. In both instances the legal certainty standard is appropriate

because, “the plaintiff has alleged her facts and pled her damages, and [so long as] there is

no evidence of bad faith, the defendant must not only contradict the plaintiff’s own

assessment of damages, but must overcome the presumption against federal jurisdiction.” Id.

at 999. In contrast, “when the plaintiff fails to plead a specific amount of damages, the

defendant seeking removal ‘must prove by a preponderance of the evidence that the amount

in controversy requirement has been met.’” Id. at 998 (quoting Abrego, 443 F.3d at 683)

(internal citations omitted). Here, the Complaint does not allege specific damages, and

therefore the Defendant is not required to demonstrate to any certainty the amount of

damages Defendant is liable for.

After consulting the letter, this Court finds the letter to be sufficient evidence that the

amount in controversy is more likely than not to exceed $75,000.00. The letter, which was

sent so that the Defendant “may set the proper reserves,” made clear that Plaintiff’s former

counsel “anticipated” damages to exceed a certain amount. (Dkt. # 14, Ex.2.) The plain

language of the letter leaves no ambiguity that the amount of compensation Plaintiff seeks

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 6 of 7
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

- 7 -

from the Defendant exceeds $250,000.00. The word ‘anticipation’ is commonly understood

to mean “looking forward to as certain.” WEBSTER’S THIRD NEW INTERNATIONAL

DICTIONARY 94 (Philip Gove ed., G. & C. Merriam Co.) (1968). In context of the letter’s

purpose, which was to ensure that the Defendant “may set the proper reserves,” the Court is

persuaded that the Plaintiff looked forward to recovering from the Defendant at least

$250,000.00 in medical expenses. When the recovery of a monetary sum entails a payment

by the Defendant, then that sum must be included within any amount-in-controversy

calculation. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 701 (9th Cir. 2007). See also

Ridder Bros. v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944) (holding that for purposes of

calculating amount in controversy, “[t]he value of the thing sought to be accomplished by the

action may relate to either or any party to the action”) (internal quotation omitted). Therefore,

the Court finds that the amount in controversy was more likely than not to exceed

$250,000.00. Accordingly, the Court concludes that it does not lack subject matter

jurisdiction over this action.

For the foregoing reasons,

IT IS ORDERED that Plaintiff’s Motion to Remand (Doc. #13) is DENIED.

DATED this 28th day of July, 2009.

Case 2:09-cv-00888-JAT Document 16 Filed 07/29/09 Page 7 of 7