1 11-961 Bindrum v. American Home Assurance Company, Inc.



### UNITED STATES COURT OF APPEALS **FOR THE SECOND CIRCUIT**



## SUMMARY ORDER

**R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT**  **. C**  **ITATION TO A SUMMARY ORDER FILED**

**ON OR AFTER J** **ANUARY 1,**  **2007, IS PERMITTED AND IS GOVERNED BY**  **F EDERAL**  **R ULE OF**  **A PPELLATE**  **P ROCEDURE**  **32.1 AND THIS COURT**  **’ S**  **L OCAL**  **R ULE**  **32.1.1. W**  **HEN CITING A SUMMARY ORDER IN A**

**DOCUMENT FILED WITH THIS COURT ,**  **A PARTY MUST CITE EITHER THE F**  **EDERAL A** **PPENDIX OR AN**

**ELECTRONIC DATABASE (**  **WITH THE NOTATION “**  **SUMMARY ORDER ”).**  **A PARTY CITING A SUMMARY ORDER MUST** 

**SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL .** 
**At a stated term of the United States Court of Appeals** 1 **for the Second Circuit, held at the Daniel Patrick Moynihan** 2 **United States Courthouse, 500 Pearl Street, in the City of** 3 **New York, on the 29 th** **day of September, two thousand eleven.** 4 5 **PRESENT: DENNIS JACOBS,** 6 **Chief Judge ,**  7 **PETER W. HALL,** 8 **GERARD E. LYNCH,** 9 **Circuit Judges**

. 10 11 - - - - - - - - - - - - - - - - - - - -X 12 **JEREMIAH BINDRUM,** 13 14 Plaintiff-Appellant **,** 15 16 **-v.- 11-961** 17 18 **AMERICAN HOME ASSURANCE COMPANY, INC.,** 19 **AMERICAN INTERNATIONAL GROUP, INC.,** 20 **AIG SPECIALTY CLAIMS SERVICES, INC.,** 21 **CHARTIS INSURANCE COMPANY,** 22 23 Defendants-Appellees **,** 24 25 26 - - - - - - - - - - - - - - - - - - - -X 27 282 **FOR APPELLANT:** Christopher J. McVeigh 1 McVeigh Skiff 2 Burlington, VT 3 4 5 **FOR APPELLEES:** Mark F. Werle (John A. Serafino, on the 6 brief ) 7 Ryan, Smith & Carbine, Ltd. 8 Rutland, VT 9 10 11 12 Appeal from a judgment of the United States District 13 Court for the District of Vermont (Reiss, C.J.). 14 15 **UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED** 16 **AND DECREED**that the district court’s judgment is **AFFIRMED**

. 17 18 Jeremiah Bindrum appeals the district court’s judgment 19 dismissing his complaint sua spontefor lack of subject 20 matter jurisdiction. We assume the parties’ familiarity 21 with the underlying facts, the procedural history, and the 22 issues presented for review. 23 24 We review de novoa district court’s sua sponte 25 dismissal of a complaint for lack of subject matter 26 jurisdiction. SeeDigitel, Inc. v. MCI Worldcom, Inc. , 239 27 F.3d 187, 190 (2d Cir. 2001). To invoke the diversity 28 jurisdiction of the federal district courts, the amount in 29 controversy must exceed $75,000 in value. 28 U.S.C. § 30 1332(a). As the party seeking to invoke this court’s 31 diversity jurisdiction, plaintiff “has the burden of proving 32 that it appears to a reasonable probability that the claim 33 is in excess of the statutory jurisdictional amount.” 34 Tongkook Am., Inc. v. Shipton Sportswear Co. , 14 F.3d 781, 35 784 (2d Cir. 1994) (internal quotation marks omitted). 36 “This burden is hardly onerous, however, for we recognize ‘a 37 rebuttable presumption that the face of the complaint is a 38 good faith representation of the actual amount in 39 controversy.’” Scherer v. Equitable Life Assurance Soc’y of 40 U.S. , 347 F.3d 394, 397 (2d Cir. 2003) (quoting Wolde-Meskel 41 v. Vocational Instruction Project Cmty. Servs., Inc. , 166 42 F.3d 59, 63 (2d Cir. 1999)). To overcome this presumption, 43 the party challenging jurisdiction must demonstrate “‘to a 443 legal certainty’ that the amount recoverable does not meet 1 the jurisdictional threshold.” Id. (quoting St. Paul 2 Mercury Indem. Co. v. Red Cab Co. , 303 U.S. 283, 288-89 3 (1938)). 4 5 **[1]** Plaintiff argues that the defendants delayed submitting 6 their Medicare Set-Aside (“MSA”) proposal to the Centers for 7 Medicare and Medicaid Services (“CMS”) as required under the 8 terms of the agreement between plaintiff and the defendants 9 settling plaintiff’s workers’ compensation claims. As a 10 result of such delay, plaintiff contends, he was forced to 11 draw monthly advances on the $225,000 settlement amount and 12 use the funds to finance medical expenses that would 13 otherwise have been reimbursable by Medicare. But, as the 14 district court concluded, the maximum amount of damages 15 which plaintiff could have suffered as a result of the 16 defendants’ failure to timely submit their MSA proposal is 17 $49,000, which represents the aggregate amount of advances 18 taken by plaintiff. SeeBindrum v. Am. Home Assurance Co., 19 No. 5:10-CV-116, 2011 WL 474408 , at *4 (D. Vt. Feb. 4, 20 2011). This is $26,000 shy of the jurisdictional threshold. 21 22 **[2]** Plaintiff next argues that the defendants 23 underestimated his expected medical costs and undervalued 24 the MSA in their initial proposal to CMS. But plaintiff’s 25 claim that the defendants did not adequately fund the MSA 26 cannot possibly lead to recovery. Under the settlement 27 agreement, the defendants were only obligated to fund the 28 MSA up to the amount required for CMS approval, which is 29 precisely what they did. Although CMS rejected the 30 defendants’ initial MSA estimate as inadequate, it then 31 conducted its own independent analysis and determined the 32 appropriate set-aside amount. Therefore, the amount which 33 the defendants ultimately funded was the amount required by 34 CMS, rather than defendants’ initial estimate. This is all 35 that the settlement agreement required. In addition, 36 because (1) the MSA funds are applied only to medical 37 expenses that would otherwise be reimbursable by Medicare, 38 (2) Medicare will cover any additional reimbursable expenses 39 once the MSA fund has been exhausted, and (3) any excess 40 amounts in the MSA account are remitted to the defendants 41 under the settlement agreement, the amount of the set-aside 42 has no bearing on plaintiff’s ability to obtain 43 reimbursement for his work-injury-related medical expenses. 444 Any inadequacy in the set-aside would therefore harm only 1 Medicare, not plaintiff. As such, plaintiff cannot 2 establish that he was damaged by any alleged undervaluation 3 of the MSA. SeeSmith v. Country Vill. Int’l, Inc. , 944 4 A.2d 240, 243 (Vt. 2007) (“To prove breach of contract, 5 plaintiff must show damages.”). 6 7 **[3]** Plaintiff argues that the district court erred by not 8 incorporating the possibility of a punitive damages award 9 into its amount in controversy calculations. Potentially 10 recoverable punitive damages can be considered in 11 determining whether the jurisdictional amount in controversy 12 has been satisfied if punitive damages are allowed under the 13 controlling law. A.F.A. Tours, Inc. v. Whitchurch , 937 F.2d 14 82, 87 (2d Cir. 1991). However, claims for punitive damages 15 merit “closer scrutiny” when calculating the amount in 16 controversy. Zahn v. Int’l Paper Co. , 469 F.2d 1033, 1034 17 n.1 (2d Cir. 1972). Under Vermont law, punitive damages may 18 only be awarded against a corporation if the plaintiff 19 establishes “actual malice” and if the challenged act is an 20 act “of the governing officers of the corporation or one 21 lawfully exercising their authority, or, if the act relied 22 upon is that of a servant or agent of the corporation, it 23 must be clearly shown that the governing officers either 24 directed the act, participated in it, or subsequently 25 ratified it.” Shortle v. Cent. Vt. Pub. Serv. Corp. , 399 26 A.2d 517, 518 (Vt. 1979) . Because the complaint contains no 27 allegation of such involvement by any officers of the 28 defendant insurance companies, the punitive damages claim 29 cannot survive the “closer scrutiny” to which we subject it, 30 and does not merit inclusion in the amount in controversy 31 calculation. 32 33 **[4]** The complaint also seeks attorney’s fees. The district 34 court held that attorney’s fees could not be considered as 35 part of the amount in controversy, and plaintiff has not 36 contested this holding. See, e.g. , Norton v. Sam’s Club

, 37 145 F.3d 114, 117 (2d Cir. 1998) (“Issues not sufficiently 38 argued in the briefs are considered waived and normally will 39 not be addressed on appeal”). Moreover, Vermont follows the 40 American Rule that “parties must bear their own attorneys’ 41 fees absent a statutory or contractual exception,” and the 42 standard for departing from that rule is “demanding.” 43 Concord Gen. Mut. Ins. Co. v. Woods , 824 A.2d 572, 579 (Vt. 445 2003) (internal quotation marks omitted). Plaintiff has not 1 presented any argument to suggest that he would be entitled 2 to attorney’s fees as a matter of right, and therefore we do 3 not consider them in determining whether the jurisdictional 4 threshold has been met. SeeIn re Ciprofloxacin 5 Hydrochloride Antitrust Litig. , 166 F. Supp. 2d 740, 755 6 (E.D.N.Y. 2001); see alsoGivens v. W.T. Grant Co. , 457 F.2d 7 612, 614 (2d Cir.), vacated on other grounds , 409 U.S. 56 8 (1972). 9 10 We have considered plaintiff’s remaining arguments and 11 find them to be without merit. For the foregoing reasons, 12 the judgment of the district court is hereby **AFFIRMED**

. 13 14 15 16 FOR THE COURT: 17 CATHERINE O’HAGAN WOLFE, CLERK 18 19 20