Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02541/USCOURTS-azd-2_06-cv-02541-0/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Andy H. Nguyen, an unmarried )

man )

)

Plaintiff, ) No. CIV06-2541-PHX RCB

)

vs. ) O R D E R

)

Hartford Casualty Insurance, )

Company, a Connecticut )

corporation )

)

Defendant. ) )

Currently pending before the court is a motion by plaintiff,

Andy H. Nguyen, to remand this action to the Superior Court of

Arizona in Maricopa County pursuant to 28 U.S.C. § 1447(c) (doc.

9). After carefully considering that motion, the response by

defendant Hartford Casualty Insurance Company ("Hartford") (doc.

13), and plaintiff's reply(doc. 14), and having determined that

oral argument is not necessary, the court rules as follows.

Background

Plaintiff filed his complaint in Arizona state court on

approximately September 25, 2006, alleging that Hartford improperly 

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28 1 The basic time period for removal under section 1446(b) is 30 days. 

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denied a property damage claim arising out of burglary and

vandalism to a nail salon which he formerly owned. Plaintiff

asserts two state law causes of action: (1) breach of the duty of

good faith and fair dealing and (2) breach of contract. See Doc. 1

(Not. of Removal), exh. A thereto. Plaintiff is seeking "general

damages," as well as damages for emotional distress, "other

consequential damages," attorneys' fees pursuant to A.R.S. § 12-

341.01 and costs, as well as punitive damages. Id., exh. A thereto

at 4, ¶¶ 15-17. Nowhere in his complaint does plaintiff specify

the amount of damages which he is seeking, however. In his reply,

plaintiff notes that "[i]t appears that the actual amount of unpaid

benefits under the policy is only $15,635.01." Reply (doc. 14) at

4. 

On October 24, 2006, Hartford timely filed its Notice of

Removal pursuant to 28 U.S.C. § 1446(b).1 The federal removal

statute allows for removal of, among other actions, "any civil

action brought in a State court of which the district courts of the

United States have original jurisdiction[.]" 28 U.S.C. § 1441(a). 

Hartford contends that removal jurisdiction is proper because this

court has original jurisdiction over the present action under 28

U.S.C. § 1332. That statute provides in relevant part that

"district courts shall have original jurisdiction of all civil

actions where the matter in controversy exceeds the sum or value of

$75,000, exclusive of interest and costs, and is between . . .

citizens of different States[.]" 28 U.S.C. § 13321(a)(1) (emphasis

added). Hartford reasons that diversity of citizenship exists here

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2 Hartford also claims that this court has jurisdiction pursuant to 28

U.S.C. § 1446. See Doc. 1 at 1, ¶ 1. Section 1446 is not a jurisdiction statute,

however. Rather that statute governs the "[p]rocedure for removal[.]" 28 U.S.C.

§ 1446. Plainly then, Hartford's reliance upon section 1446 as a jurisdictional

basis is misplaced.

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because "[p]laintiff is an Arizona citizen and . . . Hartford . . .

is an Indiana corporation with its principal place of business in

Connecticut." Doc. 1 at 1, ¶ 1. Further, according to Hartford's

Notice of Removal, the amount in controversy "exceed[s] the sum or

value of $75,000, exclusive of interest and costs."2 Id. 

Shortly after Hartford's removal, plaintiff timely filed this

remand motion. Plaintiff contends that remand is required because

Hartford did not meet its burden of showing that the amount in

controversy exceeds $75,000.00. Plaintiff's argument is welltaken.

Discussion

I. Legal Standards

As noted above, "[u]nder 28 U.S.C. § 1441(a), the district

courts have removal jurisdiction over any claim that could have

been brought in federal court originally." Hall v. North American

Van Lines, Inc., 476 F.3d 683, 686-87 (9th Cir. 2007). By the same

token though, "[f]ederal courts are courts of limited

jurisdiction." Vacek v. U.S. Postal Service, 447 F.3d 1248, 1250

(9th Cir. 2006) (internal quotation marks and citation omitted),

cert. denied, 127 S.Ct. 2122 (2007). Thus, "[i]f 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) (emphasis added).

"The removal statute is strictly construed against removal

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jurisdiction." Sullivan v. BNSF Railway Company, 447 F.Supp.2d 

1091, 1096 (D. Ariz. 2006) (citing, inter alia, Shamrock Oil & Gas

Corp. v. Sheets, 313 U.S. 100, 108-08 (1941)); see also Gaus v.

Miles, Inc., 980 F.2d 565, 566 (9th Cir. 1992) (internal quotation

marks and citations omitted) (There is a "strong presumption

against removal jurisdiction[.]") In light of that "strong

presumption," the Ninth Circuit has unequivocally stated that

"[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 (citation omitted) (emphasis added). In part this is because

of the distinction between original and removal jurisdiction "where

the amount of controversy is in doubt[.]" Id. In the latter

situation, "[b]ecause 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 or that the parties have colluded to that end.'" Singer v.

State Farm Mutual Automobile Insurance Co., 116 F.3d 373, 375 (9th

Cir. 1997) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303

U.S. 283, 290, 58 S.Ct. 586, 591, 82 L.Ed.2d 845 (1938)).

Consistent with the foregoing, there is "a longstanding, nearcanonical rule that the burden on removal rests with the removing

defendant." Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676,

684 (9th Cir. 2006) (citation omitted). "More generally, [i]t is

to be presumed that a cause lies outside [the] limited jurisdiction

[of the federal courts] and the burden of establishing the contrary

rests upon the party asserting jurisdiction." Id. (internal

quotation marks and citations omitted). As the foregoing

demonstrates, Hartford, as the removing defendant and the party

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asserting jurisdiction, has a high hurdle to clear on this remand

motion. 

There is no dispute that diversity of citizenship exists in

the present case. Plaintiff concedes as much. See Resp. (doc. 13)

at 2. Rather, the sole issue which this motion presents is whether

Hartford has met its burden of establishing that the amount in

controversy exceeds $75,000.00 -- the minimum jurisdictional amount

for a diversity action. See Abrego, 443 F.3d at 682-83 (quoting

Gaus, 980 F.2d at 566) ("[T]he removing defendant has 'always'

borne the burden of establishing federal jurisdiction, including

any applicable amount in controversy requirement.") A defendant can

meet this burden "if the plaintiff claims a sum greater than the

jurisdictional requirement." Gaus, 980 F.2d at 566 (citing Red

Cab, 303 U.S. at 288-90, 58 S.Ct. at 590-01). In Abrego the Ninth

Circuit reiterated, however, that "[w]here the complaint does not

specify the amount of damages sought, the removing defendant must

prove by a preponderance of the evidence that the amount in

controversy requirement has been met." Id. at 683 citing, Gaus,

980 F.2d at 566-67). 

The "appropriate procedure" for satisfying this burden is for

the district court to "consider whether it is facially apparent

from the complaint that the jurisdictional amount is in

controversy." Id. at 690 (internal quotation marks and citations

omitted). If it is not "facially apparent" that the amount in

controversy requirement has been met, "the court may consider facts

in the removal petition, and may require parties to submit summaryjudgment-type evidence relevant to the amount in controversy at the

time of removal." Id. (internal quotation marks and citations

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omitted). 

In accordance with the foregoing, because plaintiff Nguyen's

complaint is silent as to the amount in controversy, the court must

look to Hartford' Notice of Removal. In that Notice Hartford

"alleges[:] . . . This Court has jurisdiction pursuant to 28 U.S.C.

§ 1332, 1441 and 1446 as this action involves diversity of

citizenship and an amount exceeding the sum or value of $75,000,

exclusive of interest and costs." Doc. 1 at 1, ¶ 1. That is the

only reference in the Removal Notice as to the amount in

controversy. Hartford did not cite to any facts or evidence in its

Notice to support this conclusory allegation. As the Ninth Circuit

has made clear on more than one occasion, however, "such

allegations, 'although attempting to recite some 'magical

incantation,' neither overcome[] the 'strong presumption' against

removal jurisdiction nor satisf[y] [defendant's] burden of setting

forth, in the removal petition itself the underlying facts

supporting its assertion that the amount in controversy exceeds'

$75,000." Abrego, 443 F.3d at 689 (quoting Gaus, 980 F.2d at 567)

(other citation omitted) (emphasis in original). Thus, the wholly

unsubstantiated allegation in Hartford's Removal Notice that the

jurisdictional amount is satisfied here falls far short of meeting

its heavy burden as the removing defendant. As discussed below,

Hartford has failed to meet its burden even taking into account the

fact that plaintiff is also seeking punitive damages.

1. Punitive Damages

Clearly "[p]unitive damages may . . . be included in

determining the amount in controversy if they are recoverable under

the applicable law." Burk v. Medical Savings Insurance Co., 348

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F.Supp.2d 1063, 1069 (D. Ariz. 2004) (citing, inter alia, Bell v.

Preferred Life Assurance Soc'y, 320 U.S. 238, 240, 64 S.Ct. 5, 88

L.Ed. 15 (1943)). Hartford accurately notes that plaintiff is

seeking punitive damages, which are recoverable under Arizona law

in bad faith insurance cases. See id. (citing Filasky v. Preferred

Risk Mut. Ins. Co., 152 Ariz. 591, 598, 734 P.2d 76, 83 (1987)). 

What Hartford fails to take into account, however, is that "the

mere possibility of a punitive damages award is insufficient to

prove that the amount in controversy requirement has been met." 

Id. (citation omitted). Yet a "mere possibility" is all which

Hartford offers. Hartford has not, for example, "present[ed]

evidence that punitive damages will more likely than not exceed the

amount needed to increase the amount in controversy to $75,000." 

See id. (citation omitted). Similarly Hartford has not proffered

any evidence of the likelihood of plaintiff Nguyen recovering

punitive damages based upon "evidence of jury verdicts in analogous

cases." See id. 

Instead, in its Response Hartford makes the bald assertion

that "[t]here is not a single reported Arizona case in the last 15

years in which a punitive damage award did not exceed $75,000.00."

Resp. (doc. 13) at 2. Defense counsel made this exact same

unsupported argument in Burk. 348 F.Supp.2d at 1069 (quoting doc.

#11 at 5) (Defendant "provides no evidence of the likely punitive

damages in this case but states in its brief, 'there is not a

single reported Arizona case decided in the last 15 years in which

punitive damages did not exceed $75,000.'"). After a cogent

discussion of the relevant law in Burk, Judge Wake rejected this

defense argument:

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Defendant not only failed to compare 

the facts of Plaintiff's case with the 

facts of other cases where punitive damages 

have been awarded in excess of the 

jurisdictional amount, it failed even to 

cite any such cases. In summary, Defendant

has established only that Plaintiffs seek 

punitive damages and that such damages are 

available as a matter of law. This is 

insufficient to establish that it is more 

likely than not that a potential punitive 

damage award will increase the amount in

controversy above $75,000.

Burk, 348 F.Supp.2d at 1070 (citations omitted). Adopting this

reasoning, more recently Judge Teilborg also rejected this

argument, which, as in the present case, was made by the same

defense counsel on behalf of Hartford. See Bruemmer v. Hartford

Accident and Indmenity Co., 2007 WL 1063164, at *3 (D.Ariz. April

6, 2007). 

There is no basis for departing from the sound reasoning of

the Burk court; and certainly Hartford has not given the court any

reason to contemplate such a departure. Thus the court finds that

although plaintiff, as he is entitled to do, is seeking an

unspecified amount of punitive damages in his complaint, that "is

insufficient to establish that it is more likely than not a

potential punitive damage award will increase the amount in

controversy above $75,000." See Burk, 348 F.Supp.2d at 1070

(citations omitted). Accordingly, even with the punitive damage

claim, Hartford has not met its burden of proving by a

preponderance of the evidence that the amount in controversy

exceeds $75,000.00.

. . .

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3 Attorney Myles himself made this demand in Burke, 348 F.Supp. at 1070;

and his firm, also representing Hartford, requested the same stipulation in

Bruemmer, supra, and again in Haller v. Hartford Fire Insurance Co., 2006 WL

1182016, at *2 (D.Ariz. April 28, 2006).

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2. Request for Stipulation

As is evidently customary for defense counsel's firm,3

Hartford is demanding that plaintiff "stipulate that the amount of

damages do not meet the amount in controversy requirement necessary

for federal diversity jurisdiction." Resp. (doc. 13 at 3); and

exh. 1 thereto (proposed stip.). The court will not "require"

plaintiff to so stipulate. See id. Once again, the court agrees

with Judges Wake and Teilborg: Because "[t]he burden is on

Defendant to prove the amount in controversy[,]" . . . Plaintiff[]

[is] not required to stipulate to a limitation of [his] damages." 

Burk, 348 F.Supp.2d at 1070 (citation omitted); and Bruemmer, 2007

WL 1063164, at *4 (citations omitted). Stated somewhat

differently, plaintiff "need not stipulate to limit [his] future

remedies" as a quid pro quo "to preventing Defendant's removal to

federal court." See id. (citation omitted). Moreover, 

"[p]laintiff's refusal to stipulate that h[is] claims do not exceed

$75,000.00, standing alone, does not assist [Hartford] in its

burden of proof on the jurisdictional issue." Haller, 2006 WL

1182016, at *2 (citing Williams v. Best Buy Company, Inc., 269 F.3d

1316, 1320 (11th Cir. 2001)). 

Conclusion

In summary, Hartford, as the removing defendant did not meet 

its burden of proving by a preponderance of the evidence that the

amount in controversy here exceeds $75,000.00. Accordingly,

because this court lacks subject matter jurisdiction over this

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action, remand is necessary. Further, plaintiff has no obligation

bo stipulate to the amount of his damages.

IT IS ORDERED that this case shall be remanded (doc. # 9) to

the Superior Court of Arizona in Maricopa County. 

DATED this 27th day of July, 2007.

Copies to all counsel of record

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