Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_06-cv-01144/USCOURTS-almd-2_06-cv-01144-0/pdf.json

Parties Involved:
CNA Foundation
Defendant
Grace L. Moore
Plaintiff

Document Text:

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

GRACE L. MOORE, )

)

Plaintiff )

) CIVIL ACTION NO. 

v. ) 2:06cv1144-MHT

) (WO)

CNA FOUNDATION, ) 

)

Defendant. )

OPINION AND ORDER

This lawsuit, which was removed from state court to

federal court based on diversity-of-citizenship

jurisdiction, 28 U.S.C. §§ 1332, 1441, is now before the

court on plaintiff Grace L. Moore’s motion to remand.

Moore contends that removal is improper because there is

not true diversity of citizenship, because the amount in

controversy is insufficient to confer federal

jurisdiction, and because the state court retains

jurisdiction over a judgment that is related to this

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litigation. For the reasons that follow, the court

concludes that Moore’s motion should be granted.

I. BACKGROUND

In 1986, Moore was involved in a work-related injury

while employed by Coastal Industries, Inc. Moore filed

a workers’ compensation suit against Coastal Industries

in state court, and, on December 16, 1987, that action

was terminated pursuant to a settlement agreement whereby

Moore would receive lifetime medical benefits to treat

her injury.

Moore filed this action in the Circuit Court of

Montgomery County, Alabama, on November 17, 2006. She

names Continental Casualty Company, which is Coastal

Industries’s workers’ compensation insurer, as the sole

defendant. (Continental Casualty is improperly

identified in Moore’s complaint as CNA Foundation).

Moore alleges that Continental Casualty committed various

torts in connection with its obligation to provide her

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with medical benefits pursuant to her workers’

compensation settlement. Specifically, Moore alleges the

common-law torts of outrage; fraud, misrepresentation,

and deceit; civil conspiracy; and intentional infliction

of mental anguish. Continental Casualty removed this

case to federal court, and Moore now moves to remand.

II. REMOVAL-AND-REMAND STANDARD

A civil action brought in state court may be removed

by the defendant or the defendants to federal court if it

could have been brought in federal court in the first

instance. 28 U.S.C. § 1441(a). Typically, removal is

premised either on federal-question jurisdiction or

diversity-of-citizenship jurisdiction. Federal-question

jurisdiction exists when the civil action arises under

the Constitution, laws, treaties of the United States.

28 U.S.C. § 1331. Diversity-of-citizenship jurisdiction

exists when the amount in controversy exceeds $ 75,000,

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exclusive of interest and costs, and the parties are

citizens of different States. 28 U.S.C. § 1332(a).

The party seeking removal has the burden of

establishing jurisdiction. Williams v. Best Buy Co., 269

F.3d 1316, 1319 (11th Cir. 2001). “Because removal

jurisdiction raises significant federalism concerns,

federal courts are directed to construe removal statutes

strictly. Indeed, all doubts about jurisdiction should

be resolved in favor of remand to state court.” Univ. of

S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir.

1999) (citation omitted); see also Miedema v. Maytag

Corp., 450 F.3d 1322, 1328 (11th Cir. 2006).

III. DISCUSSION

In her motion to remand, Moore argues that federal

jurisdiction is improper for three independent reasons.

First, she argues that the diversity requirement of

§ 1332 is not met. Second, she argues that the amountin-controversy requirement of $ 75,000 is not met.

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Third, she argues that the state court has jurisdiction

over this case because it is related to the 1987 statecourt judgment on her workers’ compensation claim.

This court concludes that the diversity requirement

is met but that the amount-in-controversy requirement is

not. Because the court remands based on Continental

Casualty’s failure to meet the amount-in-controversy

requirement, it is unnecessary for the court to determine

whether remand is also necessary based on the connection

between this action and the 1987 state-court judgment.

A. Diversity of Citizenship

Section 1332 requires ‘complete diversity,’ which

means that no party on one side of the suit can be from

the same State as any party on the other side.

Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806).

Although it is undisputed that Moore is a citizen of

Alabama and Continental Casualty is a citizen of

Illinois, Moore contends that complete diversity is

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defeated because Continental Casualty is the insurer of

her employer Coastal Industries, which is, like Moore, a

citizen of Alabama.

As Moore notes, Congress has added the following

proviso to § 1332’s complete diversity rule: “[I]n any

direct action against the insurer of a policy or contract

of liability insurance, whether incorporated or

unincorporated, to which action the insured is not joined

as a party-defendant, such insurer shall be deemed a

citizen of the State of which the insured is a

citizen....” 28 U.S.C. § 1332(c)(1). By adding this

“direct action” clause to § 1332, Congress intended to

exclude from federal jurisdiction those cases where state

law allowed injured parties to file claims directly

against an in-state tortfeasor’s out-of-state insurer

without joining the in-state tortfeasor as a defendant in

the suit. Northbrook Nat’l Ins. Co. v. Brewer, 493 U.S.

6, 9 (1989); Fortson v. St. Paul Fire & Marine Ins. Co.,

751 F.2d 1157, 1159 (11th Cir. 1985).

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The term “direct action,” however, does not cover

every suit where an insurer is sued by an injured party.

The statute is limited to suits where “there is a claim

held by a third party against an insured ... that is

identical to the one asserted against the insurance

company ...; it does not affect suits against the insurer

based on its independent wrongs.” 15 James Wm. Moore,

Moore’s Federal Practice § 102.58[2] (3d ed. 2006).

“Unless the cause of action against the insurance company

is of such a nature that the liability sought to be

imposed could be imposed against the insured, the action

is not a direct action.” Fortson, 751 F.2d at 1159. For

example, “where the suit ... is based not on the primary

liability covered by the liability insurance policy but

on the insurer’s failure to settle within policy limits

or in good faith, the section 1332(c) direct action

proviso does not preclude diversity jurisdiction.” Id.

In this case, Moore has filed suit directly against

her employer’s insurer and has not joined her employer,

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the insured, as a defendant in the suit. Therefore,

Moore argues, this action fits within the “direct action”

proviso of § 1332(c)(1). If Moore is correct, this would

defeat diversity jurisdiction and require remand to state

court.

This court concludes, however, that Moore’s suit is

not a “direct action” within the meaning of § 1332(c)(1).

Moore’s complaint alleges, among other things, that

Continental Casualty has “refus[ed] to authorize and pay

for necessary and reasonable medical treatment ... in an

effort to cause suffering and mental anguish on the part

of Plaintiff so she might settle her future medical

benefits” and “in the hopes that this would so frustrate

and affect the Plaintiff’s physical and emotional status,

that she would enter into a settlement for her future

medical benefits.” Compl. at 1-2. The complaint

therefore alleges “independent wrongs” by the insurer,

see Moore, supra, similar to an “insurer’s failure to

settle within policy limits or in good faith,” Fortson,

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*Although neither party raises the issue, it is also

worth noting that this is not a suit “arising under”

Alabama’s workers’ compensation laws. 28 U.S.C.

§ 1445(c) disallows removal of any civil action arising

under a State’s workers’ compensation laws. However, it

is appears that a common-law cause of action related to

a workers’ compensation claim is not affected by

§ 1445(c). Patin v. Allied Signal, Inc., 77 F.3d 782

(5th Cir. 1996).

9

751 F.2d at 1159. This is not a suit for a declaration

of liability on the underlying tort itself; it is a suit

against the tortfeasor’s insurer for that insurer’s own

tortious conduct in carrying out its obligations under

the insurance policy and the workers’ compensation

statute. Accordingly, this case meets the diversity-ofcitizenship requirement of § 1332, and remand is not

warranted on the basis of § 1332(c)(1).*

B. Amount in Controversy

In addition to diversity-of-citizenship, § 1332

requires that the amount in controversy exceed $ 75,000.

Where the plaintiff does not specifically allege an

amount in controversy or the total amount in damages

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demanded, the removing defendant must prove the amount in

controversy by a preponderance of the evidence. Leonard

v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.

2002). Removal is proper if it is “facially apparent”

from the complaint that the amount in controversy exceeds

the jurisdictional requirement. Williams v. Best Buy

Co., 269 F.3d 1316, 1319 (11th Cir. 2001). If the amount

in controversy is not facially apparent from the

complaint, the court looks to the notice of removal and

any evidence submitted by the parties. Id. However, a

mere “conclusory allegation in the notice of removal that

the jurisdictional amount is satisfied, without setting

forth the underlying facts supporting such an assertion,

is insufficient to meet the defendant’s burden.” Id. at

1319-20.

In this case, Moore did not specify in her complaint

an amount in controversy or how much she was seeking in

damages. Nor is it “facially apparent” from her

complaint that the jurisdictional requirement of $ 75,000

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is satisfied. Moore has alleged four common-law claims,

but her complaint is nowhere near specific enough as to

the duration, extent, severity, or kind of harms alleged

such that this court could hazard a reliable estimate as

to the value of such claims, were she to prevail.

Therefore, this court looks to the notice of removal and

any evidence submitted by the parties to determine

whether Continental Casualty has met its burden of

proving the jurisdictional amount by a preponderance of

the evidence.

The court concludes that Continental Casualty has not

met its burden. First, Continental Casualty cites

several ‘representative cases’ where Alabama courts

authorized a damage award greater than $ 75,000. The

court has reviewed those cases and concludes that they

are so factually and legally distinguishable from this

case that it is impossible to draw any reasonable

conclusions from them. See Alexander v. Captain D’s,

LLC, 437 F.Supp.2d 1320, 1322 (M.D. Ala. 2006)

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(Thompson, J.). Second, Continental Casualty argues that

the jurisdictional requirement is met because Moore has

requested punitive damages. But this argument begs the

question of what those punitive damages are likely to

be--a question that Continental Casualty bears the burden

of answering. Third, Continental Casualty notes that

Moore never states that she is not seeking an amount

greater than $ 75,000. But, as already stated, the

burden of proving federal jurisdiction is Continental

Casualty’s, not Moore’s.

Notably, nowhere does Continental Casualty discuss

specific facts or point to specific evidence in this case

that indicates the value of Moore’s claims. The court

cannot simply take Continental Casualty at its word that

the amount in controversy exceeds $ 75,000. To accept

“conclusory allegation[s],” Williams, 269 F.3d at 1319,

would overstep this court’s jurisdictional authority and

disrupt the federalism and comity concerns inherent in 28

U.S.C. § 1441.

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One remaining question is whether the court should

hold an evidentiary hearing to make findings of fact as

to the amount in controversy in this case. In Williams

v. Best Buy Co., the Eleventh Circuit Court of Appeals

held that in cases where the notice of removal asserts

the jurisdictional amount and the plaintiff does not

challenge the assertion in district court, the district

court should hold an evidentiary hearing if the amount in

controversy cannot be clearly determined by a review of

the existent record. 269 F.3d at 1321. In this case, by

contrast, Moore has challenged Continental Casualty’s

assertion, providing Continental Casualty with sufficient

opportunity and motive to prove the jurisdictional

requirement with specific facts and evidence.

Continental Casualty has not done so, and it must now

live with the consequence--proceeding with this case in

state, not federal, court.

* * *

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Because Continental Casualty has failed to establish

by a preponderance of the evidence that the amount in

controversy in this case exceeds $ 75,000, the court

finds it unnecessary to examine Moore’s third argument

for remand, that the state court has jurisdiction over

this matter because it is an action on the 1987 judgment

in her workers’ compensation case.

Accordingly, it is the ORDER, JUDGMENT, and DECREE of

the court that plaintiff Grace L. Moore’s motion to

remand (doc. no. 4) is granted and that, pursuant to 28

U.S.C. § 1447(c), this cause is remanded to the Circuit

Court of Montgomery County, Alabama, for want of subjectmatter jurisdiction.

The clerk of the court is DIRECTED to take

appropriate steps to effect the remand.

DONE, this the 23rd day of January, 2007.

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE 

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