1

11-961

Bindrum v. American Home Assurance Company, Inc.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED

ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A

DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX 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.

1 At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Daniel Patrick Moynihan

3 United States Courthouse, 500 Pearl Street, in the City of

New York, on the 29th 4 day of September, two thousand eleven.

5

6 PRESENT: DENNIS JACOBS,

7 Chief Judge,

8 PETER W. HALL,

9 GERARD E. LYNCH,

10 Circuit Judges.

11

12 - - - - - - - - - - - - - - - - - - - -X

13 JEREMIAH BINDRUM, 

14

15 Plaintiff-Appellant,

16

17 -v.- 11-961

18

19 AMERICAN HOME ASSURANCE COMPANY, INC.,

20 AMERICAN INTERNATIONAL GROUP, INC., 

21 AIG SPECIALTY CLAIMS SERVICES, INC.,

22 CHARTIS INSURANCE COMPANY,

23

24 Defendants-Appellees,

25

26

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28
2

1 FOR APPELLANT: Christopher J. McVeigh

2 McVeigh Skiff

3 Burlington, VT

4

5

6 FOR APPELLEES: Mark F. Werle (John A. Serafino, on the

7 brief)

8 Ryan, Smith & Carbine, Ltd.

9 Rutland, VT

10

11

12

13 Appeal from a judgment of the United States District

14 Court for the District of Vermont (Reiss, C.J.).

15

16 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

17 AND DECREED that the district court’s judgment is AFFIRMED.

18

19 Jeremiah Bindrum appeals the district court’s judgment

20 dismissing his complaint sua sponte for lack of subject

21 matter jurisdiction. We assume the parties’ familiarity

22 with the underlying facts, the procedural history, and the

23 issues presented for review.

24

25 We review de novo a district court’s sua sponte

26 dismissal of a complaint for lack of subject matter

27 jurisdiction. See Digitel, Inc. v. MCI Worldcom, Inc., 239

28 F.3d 187, 190 (2d Cir. 2001). To invoke the diversity

29 jurisdiction of the federal district courts, the amount in

30 controversy must exceed $75,000 in value. 28 U.S.C. §

31 1332(a). As the party seeking to invoke this court’s

32 diversity jurisdiction, plaintiff “has the burden of proving

33 that it appears to a reasonable probability that the claim

34 is in excess of the statutory jurisdictional amount.” 

35 Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781,

36 784 (2d Cir. 1994) (internal quotation marks omitted). 

37 “This burden is hardly onerous, however, for we recognize ‘a

38 rebuttable presumption that the face of the complaint is a

39 good faith representation of the actual amount in

40 controversy.’” Scherer v. Equitable Life Assurance Soc’y of

41 U.S., 347 F.3d 394, 397 (2d Cir. 2003) (quoting Wolde-Meskel

42 v. Vocational Instruction Project Cmty. Servs., Inc., 166

43 F.3d 59, 63 (2d Cir. 1999)). To overcome this presumption,

44 the party challenging jurisdiction must demonstrate “‘to a
3

1 legal certainty’ that the amount recoverable does not meet

2 the jurisdictional threshold.” Id. (quoting St. Paul

3 Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89

4 (1938)). 

5

6 [1] Plaintiff argues that the defendants delayed submitting

7 their Medicare Set-Aside (“MSA”) proposal to the Centers for

8 Medicare and Medicaid Services (“CMS”) as required under the

9 terms of the agreement between plaintiff and the defendants

10 settling plaintiff’s workers’ compensation claims. As a

11 result of such delay, plaintiff contends, he was forced to

12 draw monthly advances on the $225,000 settlement amount and

13 use the funds to finance medical expenses that would

14 otherwise have been reimbursable by Medicare. But, as the

15 district court concluded, the maximum amount of damages

16 which plaintiff could have suffered as a result of the

17 defendants’ failure to timely submit their MSA proposal is

18 $49,000, which represents the aggregate amount of advances

19 taken by plaintiff. See Bindrum v. Am. Home Assurance Co.,

20 No. 5:10-CV-116, 2011 WL 474408, at *4 (D. Vt. Feb. 4,

21 2011). This is $26,000 shy of the jurisdictional threshold.

22

23 [2] Plaintiff next argues that the defendants 

24 underestimated his expected medical costs and undervalued

25 the MSA in their initial proposal to CMS. But plaintiff’s

26 claim that the defendants did not adequately fund the MSA

27 cannot possibly lead to recovery. Under the settlement

28 agreement, the defendants were only obligated to fund the

29 MSA up to the amount required for CMS approval, which is

30 precisely what they did. Although CMS rejected the

31 defendants’ initial MSA estimate as inadequate, it then

32 conducted its own independent analysis and determined the

33 appropriate set-aside amount. Therefore, the amount which

34 the defendants ultimately funded was the amount required by

35 CMS, rather than defendants’ initial estimate. This is all

36 that the settlement agreement required. In addition,

37 because (1) the MSA funds are applied only to medical

38 expenses that would otherwise be reimbursable by Medicare,

39 (2) Medicare will cover any additional reimbursable expenses

40 once the MSA fund has been exhausted, and (3) any excess

41 amounts in the MSA account are remitted to the defendants

42 under the settlement agreement, the amount of the set-aside

43 has no bearing on plaintiff’s ability to obtain

44 reimbursement for his work-injury-related medical expenses. 
4

1 Any inadequacy in the set-aside would therefore harm only

2 Medicare, not plaintiff. As such, plaintiff cannot

3 establish that he was damaged by any alleged undervaluation

4 of the MSA. See Smith v. Country Vill. Int’l, Inc., 944

5 A.2d 240, 243 (Vt. 2007) (“To prove breach of contract,

6 plaintiff must show damages.”).

7

8 [3] Plaintiff argues that the district court erred by not

9 incorporating the possibility of a punitive damages award

10 into its amount in controversy calculations. Potentially

11 recoverable punitive damages can be considered in

12 determining whether the jurisdictional amount in controversy

13 has been satisfied if punitive damages are allowed under the

14 controlling law. A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d

15 82, 87 (2d Cir. 1991). However, claims for punitive damages

16 merit “closer scrutiny” when calculating the amount in

17 controversy. Zahn v. Int’l Paper Co., 469 F.2d 1033, 1034

18 n.1 (2d Cir. 1972). Under Vermont law, punitive damages may

19 only be awarded against a corporation if the plaintiff

20 establishes “actual malice” and if the challenged act is an

21 act “of the governing officers of the corporation or one

22 lawfully exercising their authority, or, if the act relied

23 upon is that of a servant or agent of the corporation, it

24 must be clearly shown that the governing officers either

25 directed the act, participated in it, or subsequently

26 ratified it.” Shortle v. Cent. Vt. Pub. Serv. Corp., 399

27 A.2d 517, 518 (Vt. 1979). Because the complaint contains no

28 allegation of such involvement by any officers of the

29 defendant insurance companies, the punitive damages claim

30 cannot survive the “closer scrutiny” to which we subject it,

31 and does not merit inclusion in the amount in controversy

32 calculation.

33

34 [4] The complaint also seeks attorney’s fees. The district 

35 court held that attorney’s fees could not be considered as

36 part of the amount in controversy, and plaintiff has not

37 contested this holding. See, e.g., Norton v. Sam’s Club,

38 145 F.3d 114, 117 (2d Cir. 1998) (“Issues not sufficiently

39 argued in the briefs are considered waived and normally will

40 not be addressed on appeal”). Moreover, Vermont follows the

41 American Rule that “parties must bear their own attorneys’

42 fees absent a statutory or contractual exception,” and the

43 standard for departing from that rule is “demanding.” 

44 Concord Gen. Mut. Ins. Co. v. Woods, 824 A.2d 572, 579 (Vt.
5

1 2003) (internal quotation marks omitted). Plaintiff has not

2 presented any argument to suggest that he would be entitled

3 to attorney’s fees as a matter of right, and therefore we do

4 not consider them in determining whether the jurisdictional

5 threshold has been met. See In re Ciprofloxacin

6 Hydrochloride Antitrust Litig., 166 F. Supp. 2d 740, 755

7 (E.D.N.Y. 2001); see also Givens v. W.T. Grant Co., 457 F.2d

8 612, 614 (2d Cir.), vacated on other grounds, 409 U.S. 56

9 (1972). 

10

11 We have considered plaintiff’s remaining arguments and

12 find them to be without merit. For the foregoing reasons,

13 the judgment of the district court is hereby AFFIRMED.

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15

16

17 FOR THE COURT:

18 CATHERINE O’HAGAN WOLFE, CLERK

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