Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00804/USCOURTS-caed-2_06-cv-00804-1/pdf.json

Parties Involved:
Glen Cable
Plaintiff
Merit Life Insurance
Defendant

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28 This motion was determined to be suitable for decision *

without oral argument. L.R. 78-230(h).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

GLEN CABLE, )

) 2:06-cv-0804-GEB-KJM

Plaintiff, )

)

v. ) ORDER*

)

MERIT LIFE INSURANCE COMPANY, and )

DOES 1-30, )

)

Defendants. )

)

Plaintiff moves to remand this action to state court for

lack of subject matter jurisdiction and requests $6,090 in attorney

fees and costs incurred due to improper removal. Defendant opposes

the motion. 

BACKGROUND

In June 2004, Elizabeth Franz (“Franz”) purchased an

Accidental Death and Disbursement Policy from Defendant Merit Life

Insurance Company (“Defendant”). (Pl.’s Compl. ¶ 5.) Franz named her

son, Plaintiff Glen Cable (“Plaintiff”), as the policy beneficiary. 

(Id.) Approximately one year later, Franz suffered an accidental

death. (Id. ¶¶ 8, 12.) Plaintiff submitted a claim to Defendants for

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District courts have diversity jurisdiction over civil 2

actions between citizens of different states where the amount in

controversy exceeds $75,000. 28 U.S.C. § 1332. 

Plaintiff does not dispute the diverse citizenship of the 3

parties. (Pl.’s Mot. at 4.) 

2

accidental death benefits under the policy, but Defendants refused to

pay the policy proceeds to Plaintiff. (Id. ¶¶ 8-9, 13.) 

On March 13, 2006, Plaintiff filed a Complaint against

Defendant in Sacramento County Superior Court, asserting claims for

breach of contract and breach of the duty of good faith and fair

dealing, and requesting an unspecified amount of contractual damages,

general damages for mental and emotional distress, punitive damages,

and attorney fees. (Id. ¶¶ 10-31.) On April 13, 2006, Defendant

removed the action to federal court on the basis of diversity

jurisdiction. (Def.’s Not. of Removal ¶ 12.) Plaintiff subsequently 2

moved to remand the action to state court, arguing no federal

diversity jurisdiction exists because the amount in controversy does

not exceed $75,000. (Pl.’s Mot. at 4.) 3

DISCUSSION

An action filed in state court may be removed to federal

court only if it could have been brought there originally. 28 U.S.C.

§ 1441(a). The removal statute is strictly construed, and federal

jurisdiction “must be rejected if there is any doubt as to the right

of removal in the first instance.” Duncan v. Stuetzle, 76 F.3d 1480,

1485 (9th Cir. 1996). Further, “in diversity cases, where the amount

in controversy is in doubt . . . a strong presumption [exists] that

the plaintiff has not claimed a large amount in order to confer

jurisdiction on a federal court . . . .” Gaus v. Miles, Inc., 980

F.2d 564, 566 (9th Cir. 1992). “The ‘strong presumption’ against

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removal jurisdiction means that the defendant always has the burden of

establishing that removal is proper.” Id. Usually, this burden is

satisfied when the plaintiff requests “a sum greater than the

jurisdictional requirement” in the complaint. Id. However, when the

amount of damages the plaintiff seeks is unclear, the defendant must

prove facts supporting the jurisdictional amount by a preponderance of

the evidence. Matheson v. Progressive Specialty Ins., 319 F.3d 1089,

1090 (9th Cir. 2003). Thus, the defendant must establish the amount

in controversy “more likely than not” exceeds $75,000. Sanchez v.

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

defendant must meet this burden by presenting facts in the removal

petition or other “summary-judgment-type evidence relevant to the

amount in controversy . . . .” Matheson, 319 F.3d at 1090. 

“Speculative argument regarding the potential value of the award is

insufficient . . . .” Lee v. Reliance Standard Life Ins. Co., 2006 WL

1716396, *1 (E.D. Cal. 2006).

Defendant acknowledges the insurance policy benefits

Plaintiff seeks as contractual damages only total $40,000, but asserts

the amount in controversy requirement is satisfied because the general

damages, attorney fees, and punitive damages Plaintiff seeks in his

Complaint will likely exceed $35,000. (Def.’s Not. of Removal ¶ 7.) 

Plaintiff rejoins that Defendant “has not submitted any evidence or

facts to show the amount in controversy is more than $75,000 . . .

[and that Defendant only] make[s] blanket statements about [his]

request for attorney fees, punitive damages, and emotional distress

damages.” (Pl.’s Mot. at 5.) 

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4

I. Punitive Damages

The amount in controversy includes punitive damages only if

those damages are recoverable as a matter of law. Miller v. Michigan

Millers Ins., 1997 WL 136242, *4 (N.D. Cal. 1997). Under California

law, punitive damages are recoverable by a plaintiff when the

defendant refuses to pay insurance policy benefits in bad faith and in

conscious disregard of his rights. Id. (citing Neal v. Farmers Ins.

Exch., 21 Cal.3d 910, 921-23 (1978)). Plaintiff alleges Defendant

consciously disregarded his rights when it refused in bad faith to pay

him insurance policy benefits for the accidental death of his mother. 

(Pl.’s Compl. ¶¶ 16-31.) Consequently, the amount in controversy

includes the punitive damages Plaintiff seeks in his Complaint.

Plaintiff does not request a specific amount of punitive

damages, but rather “an amount appropriate to punish or set an example

of [Defendant].” (Id. at 5.) When the plaintiff does not specify the

amount of punitive damages sought, the defendant “may introduce

evidence of jury verdicts in cases involving analogous facts” in order

to establish the amount of punitive damages the plaintiff would likely

recover. Surber, 110 F. Supp. 2d at 1232. In its removal petition,

Defendant lists several cases it contends “involved similar causes of

action in the insurance claims handling context.” (Def.’s Not. of

Removal ¶ 10; see also Def.’s Opp’n at 4.) However, review of these

cases reveals that each involves extraordinary facts and punitive

damages awards. E.g. Fox vs. Health Net, 1993 WL 794305, *1

(Riverside County Superior Court 1993) (jury awarded $77 million in

punitive damages where health insurer refused to pay for a bone marrow

transplant for a cancer patient); Clayton v. United Services

Automobile Assoc., 54 Cal. App. 4th 1158, 1160 (1997) (jury awarded

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$3.9 million in punitive damages where automobile insurer attempted to

settle for a “fraction of the policy limits” a claim by a father for

the death of “his 15-year-old only child in an automobile accident”);

Hughes v. Blue Cross of N. Cal., 215 Cal. App. 3d 832 (1989) (jury

awarded $700,000 where health insurer refused to pay mother for the

hospitalization of her mentally ill son who had attempted suicide). 

Defendant does not explain how these cases are factually similar to

this case, but merely asserts that the list of cases demonstrate

“punitive damages in this case could . . . exceed the sum of $75,000

if plaintiff were [sic] able to prove the allegations set forth in the

Complaint.” (Def.’s Not. of Removal ¶ 10.) However, “‘[i]t would be

inherently speculative for this Court to conclude that the amount in

controversy requirement [was] met . . . simply [because] . . . large

punitive damage awards have been awarded in the past against insurance

companies.’” Miller, 1997 WL 136242, *4 (quoting Haisch v. Allstate

Ins. Co., 942 F.Supp. 1245, 1249 (D. Ariz. 1996)). Since “Defendant

has failed to articulate why the particular facts that are alleged in

the instant action might warrant extraordinary punitive damages . . .

no reliable basis [exists] . . . to determine how a potential punitive

damages award would sufficiently increase the amount in controversy to

meet the jurisdictional requirement.” Id.

II. General Damages for Emotional Distress 

The amount in controversy includes claims for general

damages, exclusive of costs and interest. Conrad Associates v.

Hartford Acc. & Indem. Co., 994 F. Supp. 1196, 1198 (N.D. Cal. 1998);

Miller, 1997 WL 136242, *4. Plaintiff does not seek a specific amount

of emotional distress damages, but asserts he has experienced “severe

anxiety, worry, mental and emotional distress . . . in a sum to be

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determined at the time of trial.” (Pl.’s Compl. ¶ 29.) Defendant

argues Plaintiff might recover a significant amount of emotional

distress damages at trial because juries have awarded “emotional

distress damages . . . in excessive amounts” in other cases. (Def.’s

Opp’n at 6.) In support of its contention, Defendant lists many of

the same cases it cited regarding punitive damages. (Compare Def.’s

Not. of Removal ¶ 11, with ¶ 12.) Again, however, Defendant fails to

explain how the extraordinary facts of these cases are analogous to

the facts of this case. (See id. ¶ 12.) As a result, Defendant

provides no reliable basis for determining the amount of emotional

distress damages likely to be recovered in this case. See Miller,

1997 WL 136242, *4-5.

III. Attorney Fees

The amount in controversy includes attorney fees if those

fees are recoverable by statute, contract, or as an element of

damages. Miller, 1997 WL 136242, *3-4. Attorney fees incurred by a

plaintiff to obtain benefits under an insurance policy are recoverable

as an element of damages when the defendant withheld those benefits in

bad faith. Id. (citing Brandt v. Superior Court, 37 Cal.3d 813,

816-19 (1985)). Accordingly, the amount in controversy includes the

attorney fees Plaintiff has and will incur to obtain the accidental

death benefits under the insurance policy. Id.

Defendant argues Plaintiff will likely incur substantial

attorney fees because “[o]n this motion to remand alone, [P]laintiff

estimates that his attorney has spent (or will spend) a total of

$6,090.00 in attorney fees at a rate of $275.00 per hour for a total

of 15 hours of work.” (Def.’s Opp’n at 7.) Defendant does not

estimate the amount of time this case will require to litigate after

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the remand motion is decided; Defendant merely states “[i]t is fully

likely that [P]laintiff’s counsel’s ultimate attorney fees . . .

exceeds the $75,000 amount-in-controversy requirement.” (Def.’s Opp’n

at 7.) However, a “bald statement, unsupported by any evidence” that

“[attorney] fees may well, in and of themselves, exceed the

jurisdictional minimum . . . does not suffice to create subject matter

jurisdiction.” Surber v. Reliance Nat’l Indem. Co., 110 F. Supp. 2d

1227, 1232 (N.D. Cal. 2000); Conrad Assoc. v. Hartford Accident &

Indem. Co., 994 F. Supp. 1196, 1200 (N.D. Cal. 1998) (noting that a

defendant should “estimate the amount of time each major task will

take” in order to demonstrate the likely amount of attorney fees). 

In light of the “strong presumption” against removal

jurisdiction, Defendant has not established by a preponderance of the

evidence that the total amount in controversy exceeds $75,000. 

The Court is skeptical that the potential damages Plaintiff requests

do not exceed the jurisdictional amount, but ultimately, Defendant 

failed to satisfy its “burden of establishing that removal is proper.”

Gaus, 980 F.2d at 566. Therefore, federal jurisdiction “must be

rejected . . . [because] there is . . . doubt as to the right of

removal in the first instance.” Duncan, 76 F.3d at 1485. 

IV. Request for Attorney Fees

Plaintiff requests $6,090 in attorney fees and costs

incurred as a result of improper removal from state court. (Pl.’s

Mot. at 8.) “An order remanding [a] case may require payment of just

costs and any actual expenses, including attorney fees, incurred as

the result of removal.” 28 U.S.C. 1448(c). “Such fee awards are

within the sound discretion of the court.” Rawson v. Tosco Refining

Co., 1996 WL 33991, *4 (N.D. Cal. 1996). Since the damages Plaintiff

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seeks are unclear and arguably could have been shown to meet the

jurisdictional amount, “an award of attorney fees would not be just.”

Reilly v. State Farm Mutual Automotive Ins. Co., 2005 WL 2334343 (N.D.

Cal. 20005) (indicating that the plaintiff’s potential damages could

justify denial of attorney fees for improper removal). Therefore,

Plaintiff’s request for attorney fees and costs is denied. 

CONCLUSION

Plaintiff’s motion to remand this action to Sacramento

Superior Court is granted, but his request for attorney fees and costs

is denied. The Clerk of the Court is directed to remand this action

to Sacramento Superior Court. 

IT IS SO ORDERED. 

Dated: July 14, 2006

/s/ Garland E. Burrell, Jr.

GARLAND E. BURRELL, JR.

United States District Judge

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