Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_07-cv-08069/USCOURTS-azd-3_07-cv-08069-0/pdf.json

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

Harry Zibners and Brenda Zibners,

husband and wife, 

Plaintiffs, 

vs.

Foremost Insurance Company of Grand

Rapids, Michigan, a foreign corporation, 

Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-07-8069-PCT-DGC

ORDER

At the Case Management Conference held on September 21, 2007, the Court raised

the issue of whether federal subject matter jurisdiction exists in this case. The Court

discussed the issue with the parties and stated that it would consider the issue further

following the Conference. As explained below, the Court concludes that federal subject

matter jurisdiction is lacking and that the case must be remanded to state court.

I. Background.

Plaintiffs filed a complaint against Defendant in Arizona state court on July 5, 2007.

The complaint asserts a breach of contract claim and a bad faith tort claim arising out of a

covered loss to Plaintiffs’ insured mobile home. Plaintiffs seek compensatory, consequential,

and punitive damages. Dkt. #1-2.

Defendant removed the action to this Court. Defendant asserts in its notice of removal

that the Court has subject matter jurisdiction under 28 U.S.C. § 1332 because the parties are

diverse and it appears that the matter in controversy exceeds $75,000. Dkt. #1.

Case 3:07-cv-08069-DGC Document 14 Filed 09/25/07 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 -

II. Removal and Remand Standards.

Pursuant to the removal statute, 28 U.S.C. § 1441, any civil action brought in state

court over which the federal district courts have original jurisdiction may be removed to the

federal district court for the district where the action is pending. 28 U.S.C. § 1441(a). Courts

strictly construe the statute against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564,

566 (9th Cir. 1992). Indeed, 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.” Id. “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).

III. Discussion.

The complaint in this case does not demand a dollar amount. Defendant therefore

“bears the burden of establishing, by a preponderance of the evidence, that the amount in

controversy exceeds [$75,000].” Sanchez v. Monumental Life Ins. Co., 102 F.3d 398,

404 (9th Cir. 1996); see Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090

(9th Cir. 2003). To meet its burden, Defendant “must provide evidence establishing that it

is ‘more likely than not’ that the amount in controversy exceeds [$75,000].” Id.; see Gaus,

980 F.2d at 566-67 (“If it is unclear what amount of damages the plaintiff has sought, . . .

then the defendant bears the burden of actually proving the facts to support jurisdiction,

including the jurisdictional amount.”) (emphasis in original); McNutt v. GM Acceptance

Corp. of Ind., 298 U.S. 178, 189 (1936) (“[T]he court may demand that the party alleging

jurisdiction justify his allegations by a preponderance of evidence.”).

It is undisputed that a covered loss resulted in water damage to Plaintiffs’ home. As

explained in the parties’ joint case management report, the primary dispute is the extent to

which the total damage to the home was caused by the covered loss. Dkt. #12 at 2. Plaintiffs

allege that when a rodent bit into a water line under their kitchen sink, water sprayed out of

the line causing damage to the surrounding walls and ceiling. Id. Plaintiffs claim that the

Case 3:07-cv-08069-DGC Document 14 Filed 09/25/07 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 -

cost of repairing all water damage is approximately $45,000. Id. at 3. Defendant contends

that the covered water damage was limited to the kitchen sink area and that any further

damage to the home was the result of mold formation or some other cause unrelated to water

contact. Id. Defendant estimated the cost of repair to the kitchen sink area at approximately

$14,000, and has tendered payment to Plaintiffs in this amount (discounted to actual cash

value). Id.; see Dkt. #1-6.

It is clear from the parties’ positions that the amount in controversy on the breach of

contract claim is approximately $31,000. Defendant asserts in its notice of removal that

compensatory damages on the bad faith claim “could result in an award several times the

amount in controversy on the breach of contract claim.” Dkt. #1 ¶ 9. Defendant made a

similar assertion at the Case Management Conference with respect to Plaintiffs’ request for

punitive damages. Defendant’s answer alleges on “information and belief” that the

jurisdictional amount is met. Dkt. #3 ¶ 3. 

These conclusory statements “neither overcome[] the ‘strong presumption’ against

removal jurisdiction, nor satisf[y] [Defendant’s] burden of setting forth . . . the underlying

facts supporting its assertion that the amount in controversy exceeds [$75,000].” Gaus, 980

F.2d at 567 (emphasis in original); see Matheson, 319 F.3d at 1090-91 (“Conclusory

allegations as to the amount in controversy are insufficient.”); Singer v. State Farm Mut.

Auto. Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997) (“removal ‘cannot be based simply upon

conclusory allegations’ where the [complaint] is silent” as to the amount of damages)

(citation omitted); Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116-17 (9th Cir. 2004)

(removal cannot be based upon mere “information and belief” that the amount in controversy

exceeds $75,000); see also Haisch v. Allstate Ins. Co., 942 F. Supp. 1245, 1249 (D. Ariz.

1996) (“It would be inherently speculative for this Court to conclude that the amount in

controversy requirement can be met by simply asserting that large punitive damages have

been awarded in the past against insurance companies . . . . Defendant has failed to articulate

why the particular facts that are alleged in the instant action might warrant extraordinary

punitive damages.”). Because the amount-in-controversy requirement has not been met,

Case 3:07-cv-08069-DGC Document 14 Filed 09/25/07 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 -

federal subject matter jurisdiction is lacking. The Court accordingly will remand this matter

to state court. See 28 U.S.C. § 1447(c); Valdez, 372 F.3d at 1118 (“If the district court

determines that it is sufficiently doubtful that the amount-in-controversy requirement has

been met and thus that federal subject matter jurisdiction is lacking, the district court should

. . . remand to state court.”); Matheson, 319 F.3d at 1090 (“Where doubt regarding the right

to removal exists, a case should be remanded to state court.”); Sanchez, 102 F.3d at 406

(directing the district court to remand to state court where the defendant had failed to

establish the jurisdictional amount by a preponderance of the evidence).

IT IS ORDERED that the Clerk shall remand this action to state court.

DATED this 25th day of September, 2007.

Case 3:07-cv-08069-DGC Document 14 Filed 09/25/07 Page 4 of 4