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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

PREFERRED REHABILITATION, INC., et al.,

Plaintiffs, Civil Action No.

 09-CV-11409

vs.

 PAUL D. BORMAN

ALLSTATE INSURANCE COMPANY, UNITED STATES DISTRICT JUDGE

Defendant.

________________________________________/

OPINION AND ORDER DENYING PLAINTIFFS’

MOTION TO REMAND AND FOR SANCTIONS

I.

This is an insurance case involving personal injury protection benefits. Plaintiffs, Preferred

Rehabilitation, Inc. (“PRI”) f/k/a Preferred Medicine, Inc. (“PMI”) and Spine, Sports &

Occupational Medicine, P.C. (“SSOM”), provided physical therapy and rehabilitation services to

those insureds of Defendant Allstate Insurance Company (“Allstate”) who were entitled to such

benefits. However, Allstate allegedly stopped paying invoices submitted by Plaintiffs for services

rendered upon Allstate insureds beginning in April 2003 and has refused to pay such invoices ever

since. Plaintiffs are suing for the unpaid balances of these invoices along with attorney’s fees and

interest to which Plaintiffs claim they are statutorily entitled. Plaintiffs also seek damages for

tortious interference with a business relationship and defamation.

The sole issue presently before the Court is whether Allstate’s removal of the case was

timely under 28 U.S.C. § 1446(b) (requiring a case be removed “within thirty days after the receipt

by the defendant . . . of a copy of the initial pleading” or “[i]f the case stated by the initial pleading

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 As an Amended Complaint was filed later, the Court refers to the first Complaint as the

“Original Complaint” in order to avoid confusion.

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 Allstate states that the caption in this case is a “misnomer” because “PMI and PRI are

both still in existence, still operating, and are separate and district corporations, thus making it an

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is not removable, . . . within thirty days after receipt by the defendant . . . of a copy of an amended

pleading, motion, order or other paper from which it may first be ascertained that the case is . . .

removable”). The Original Complaint1

 was filed in Wayne County Circuit Court on August 21,

2008. Allstate did not seek removal of the Original Complaint. On March 27, 2009, an Amended

Complaint was filed. Allstate filed its Notice of Removal on April 15, 2009, within thirty days after

the filing of the Amended Complaint. Allstate contends that it was unable to ascertain from the

Original Complaint whether federal court jurisdiction was proper because “[t]he initial complaint

did not plead verifiable damages that met the jurisdictional limits of the federal court.” Plaintiffs,

on the other hand, argue that the “initial Complaint clearly sought a recovery of unpaid PIP benefits

well exceeding the jurisdictional removal sum of $75,000.00, and Defendant was well aware of this

fact.”

Now before the Court is Plaintiffs’ Motion to Remand and for Sanctions [docket entry 16].

This matter has been fully briefed and the Court heard oral argument on December 17, 2009. For

the reasons that follow, the Court will deny Plaintiffs’ motion.

II.

A.

This action was filed in Wayne County Circuit Court on April 21, 2008. The Original

Complaint is captioned as follows: Preferred Rehabilitation, Inc. f/k/a Preferred Medicine, Inc. a

Michigan Corporation v. Allstate Insurance Company.2

 In the opening paragraph of the Original

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impossibility that Preferred Rehabilitation was somehow formerly known as Preferred

Medicine.” In support of its position, Allstate attaches to its response brief the corporate

documents of PMI, on the one hand, and PRI, on the other hand, which show that the two entities

are separate. Therefore, for the present purposes, and because the record contains no evidence to

the contrary, the Court must consider the two entities separate.

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 The acronym “PMI” appears, by the Court’s count, more than 30 times throughout the

Original Complaint, including the final prayer for relief.

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Complaint, Plaintiff is defined as “Preferred Medicine, Inc. (‘PMI’).” Throughout the remainder

of the Original Complaint, Plaintiff is referred to as “PMI.”3

 At no point in the Original Complaint

does PRI seek any relief. The only party asserting any claim of relief in the Original Complaint is

PMI.

B.

The Original Complaint contains four counts as follows:

Count I: Violation of the Michigan Insurance Code

Count II: Tortious interference with a business relationship

Count II: Quantum Meruit

Count IV: Defamation

Count I states, in relevant part, as follows:

13. PMI’s invoices to Allstate (see attached Exhibit A) for physical

therapy and medical services detail expenses reasonably incurred for

the products, services and accommodations reasonably necessary for

the care, recovery and/or rehabilitation of Allstate patients. 

14. PMI’s invoices to Allstate therefore constitute allowable expenses

pursuant to the Michigan Insurance Code, and specifically MCL §§

500.3107 and 500.3157. 

* * * *

17. Allstate, however, failed and refused to pay PMI’s invoices . . .

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notwithstanding repeated requests by PMI for payment.

18. Allstate currently owes in excess of $249,000.00 on the unpaid

invoices, excluding interest, for physical therapy and medical

services rendered to Allstate patients.

19. Allstate’s failure and refusal to pay these invoices is unreasonable, in

bad faith, and entitled Plaintiff to: (a) simple interest at the rate of

12% per annum; and (b) statutory attorney fees.

WHEREFORE, PMI requests Judgment against Allstate in whatever

amount exceeding $25,000.00 is due to Plaintiff, plus interest, costs and

statutory attorney fees.

Original Compl. at ¶¶13-14, 17-19. Count II states, in relevant part, as follows:

25. PMI has suffered and will continue to suffer damages as a direct and

proximate consequence of Allstate’s wrongful, tortuous interference

in Plaintiff’s existing and prospective business relationships, which

damages include, without limitations, injury to their reputation and

good will, lost profits and additional damages greatly exceeding the

jurisdictional amount, but otherwise incapable of precise and definite

calculation.

WHEREFORE, PMI requests Judgment against Allstate in whatever

amount exceeding $25,000.00 is due to Plaintiff, plus interest, costs and

statutory attorney fees.

Id. at ¶ 25. Count III states, in relevant part, as follows:

28. By virtue of the physical therapy and medical services Plaintiff

rendered to the Allstate patients, Allstate has received and wrongfully

retained the benefit of physical therapy and medical services valued

in excess of $249,000.00, which has unjustly enriched Allstate.

29. In justice, Allstate must not be allowed to retain this amount at

Plaintiff’s expense.

WHEREFORE, PMI requests Judgment against Allstate in whatever

amount exceeding $25,000.00 is due to Plaintiff, plus interest, costs and

statutory attorney fees.

Id. at ¶¶ 28-29. Finally, Count IV states, in relevant part, as follows:

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31. [A]t all times material hereto, Defendant was not privileged to nor

otherwise legally permitted to communicate and publish the

following defamatory per se statements about Plaintiff:

a. Services by Preferred Rehabilitation, Inc. violate the

Professional Service Corporation Act;

b. Services by Preferred Rehabilitation, Inc. violate the

Michigan Public Health Code and Michigan Insurance Code;

c. Services by Preferred Rehabilitation, Inc. were not lawful

within the meaning of the Michigan No-Fault Statute since

they were in violation of the Michigan Professional Service

Corporation Act.

 * * * *

35. Plaintiff’s reputation as a health care provider was damaged by these

defamatory per se statements; Plaintiff likewise suffered humiliation,

embarrassment and other elements of damage recognized by the

Michigan Standard Jury Instructions . . .

WHEREFORE, PMI requests Judgment against Allstate in whatever

amount exceeding $25,000.00 is due to Plaintiff, plus interest, costs and

statutory attorney fees.

Id. at ¶¶ 31, 35.

C.

Significantly, attached to the Original Complaint is a table listing the amounts that Allstate

owes to PMI, PRI, and a third entity, “Spine, Sports & Occupational Medicine, P.C. (“SSOM”), for

unpaid invoices. The table indicates that Allstate owes $82,250 to SSOM, $170,860 to PRI, and

$32,025 to PMI. Thus, the sole party seeking damages in the instant complaint, PMI, seeks damages

of $32,025.

D.

Allstate never removed the Original Complaint, claiming that it was unclear from its face that

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 The parties do not dispute that complete diversity existed between the original parties,

as PMI is a Michigan corporation with its principal place of business in Michigan and Allstate is

an Illinois corporation with its principal place of business in Illinois. 

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the amount in controversy exceeded the jurisdictional amount of $75,000.4

E.

On March 27, 2009, while the action was still pending in state court, an Amended Complaint

was filed. The claims asserted in the Amended Complaint are substantially identical to those

asserted in the Original Complaint. That is, the Amended Complaint contains much of the same

language as the Original Complaint and all of the same causes of action. However, one difference

between the two complaints is noteworthy: the Amended Complaint contains an added plaintiff –

SSOM. The Amended Complaint is captioned as follows: Preferred Rehabilitation, Inc. f/k/a

Preferred Medicine, Inc. a Michigan corporation and Spine, Sports & Occupational Medicine, P.C.,

a Professional Corporation v. Allstate Insurance Company. 

In the opening paragraph of the Amended Complaint, Plaintiffs are defined as “Preferred

Rehabilitation, Inc. (‘PRI’) and Spine, Sports & Occupational Medicine (‘SSOM’).” Throughout

the remainder of the Amended Complaint, Plaintiffs are frequently and consistently referred to as

“PRI and SSOM.” As noted supra, the table breaking down the damages requested attached to the

Original Complaint, stated SSOM’s damages as $82,250.

F.

Allstate filed its Notice of Removal on April 15, 2009, within thirty days after it was served

with the Amended Complaint. Allstate argues that it first ascertained that federal jurisdiction is

proper when Plaintiff filed its Amended Complaint in which a new party, SSOM, was added as a

party plaintiff. It was at that time, according to Allstate, when it became apparent that the amount

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 As explained in footnote two, above, for the present purposes, the Court will accept as

true Allstate’s representation that PMI and PRI are separate legal entities.

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in controversy exceeded $75,000. Allstate reasons as follows: (1) the only party plaintiff with

respect to the Original Complaint is PMI,5

 (2) the table attached to the Original Complaint indicates

that PMI owes only $32,025, an amount below the jurisdictional threshold of $75,000, (3) therefore,

it could not ascertain from the Original Complaint that the amount in controversy was more than

$75,000, (4) but when SSOM was added as a party plaintiff, it became apparent that the amount in

controversy exceeds $75,000 because the table indicates that Allstate owes $82,250 to SSOM, the

newly added plaintiff.

III.

A.

A civil case filed in state court may be removed to federal court if it could have been brought

in federal court originally. See 28 U.S.C. § 1441(a). A federal court has diversity jurisdiction

“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. § 1332. As stated by Wright and

Miller, 

when the amount in controversy claimed in the plaintiff’s state court

complaint exceeds $75,000, the complaint generally is determinative of the

amount in controversy for purposes of federal jurisdiction upon removal,

unless the plaintiff seeks remand to the state court on the ground that the

requisite amount is not in controversy.

14C CHARLES ALAN WRIGHT, ARTHUR R. MILLER, EDWARD H. COOPER & JOAN E. STEINMAN,

FEDERAL PRACTICE AND PROCEDURE §3725.1, pp. 43-44 (4th ed. 2009) (footnote omitted). 

A defendant wishing to remove a civil action from state court to federal court is statutorily

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obligated to file the notice of removal “within thirty days after the receipt by the defendant, through

service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which

such action or proceeding is based.” 28 U.S.C. § 1446(b) (first paragraph). The second paragraph

of § 1446(b), however, provides an exception, sometimes called the “revival exception,” to the strict

thirty-day deadline:

If the case stated by the initial pleading is not removable, a notice of removal

may be filed within thirty days after receipt by the defendant . . . of a copy

of an amended pleading, motion, order or other paper from which it may first

be ascertained that the case is one which is or has become removable, except

that a case may not be removed on the basis of jurisdiction conferred by

section 1332 of this title more than 1 year after commencement of the action.

Id. (second paragraph). As explained by Wright and Miller,

[t]he [removal] statute specifies that the supplementary 30-day period for

filing a notice of removal, set out in the second paragraph of Section 1446(b),

is available only when “it may be first ascertained that the case is one which

is or has become removable.” Thus, an amendment of the complaint often

will not revive the period for removal if the state court case previously was

removable but the defendant failed to exercise his right to remove. The result

will be the same when any other change occurs or any other paper is

interposed that shows a ground for removal that previously was palpable but

was not invoked by the defendant. 

Wright and Miller, at § 3731, p. 562. “The strict time requirement for removal in civil cases is not

jurisdictional; rather, ‘it is a strictly applied rule of procedure and untimeliness is a ground for

remand so long as the timeliness defect has not been waived.’” Seaton v. Jabe, 992 F.2d 79, 81 (6th

Cir. 1993) (footnote omitted) (quoting N. Ill. Gas Co. v. Airco Indus. Gases, 676 F.2d 270, 273 (7th

Cir. 1982)). “Further, ‘[a]ll doubts as to the propriety of removal are resolved in favor of remand.’”

Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 407 (6th Cir. 2007) (quoting cases).

B.

As discussed above, the Original Complaint seeks relief only for PMI’s claims and not for

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 Again, PMI is the only party asserting a claim for relief in the Original Complaint. The

Original Complaint consistently and repeatedly states: “PMI requests . . .” Never does PRI seek

relief. To the extent that PRI is involved in any way as to the Original Complaint, as the caption

might imply, it is seeking relief for PMI’s claims, which are alleged to be only $32,025.

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 Plaintiffs argued extensively at oral argument that Allstate had actual knowledge that

PRI was a party plaintiff to the Original Complaint and that it therefore had actual knowledge

that the amount claimed in the Original Complaint exceeded the jurisdictional amount. In

support of their argument, Plaintiffs rely upon the case of Mielke v. Allstate Ins. Co., 472 F.

Supp. 851, 853 (E.D. Mich. 1979), for the proposition that “there is no reason to allow a

defendant additional time [to remove] if the presence of grounds for removal are unambiguous in

light of the defendant’s knowledge and the claims made in the initial complaint.” The Court

rejects the argument that Allstate knew that PRI was a party plaintiff because Allstate’s attorney

represented to the Court that any statements made by her to that effect were based on a mistaken

reading of the Original Complaint. Because relief was sought in the Original Complaint as to

only PMI’s claims, which are $32,025, Allstate could not have reasonably believed that the

amount claimed in the Original Complaint was above the jurisdictional amount. Accordingly,

Mielke is not relevant here.

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the claims of any other entity.6

 The table attached as an exhibit to the Original Complaint reflects

that Allstate allegedly owes $32,025 in unpaid invoices to PMI, which is an amount that is well

below the jurisdictional amount of $75,000. While it is true that paragraphs 18 and 28 of the

Original Complaint state that Allstate owes an amount in excess of $249,000.00 on the unpaid

invoices, it is entirely unclear, even by Plaintiff counsel’s own admission during oral argument,

where this number came from. Moreover, the table attached to the Original Complaint, which is

referenced in the body of the Original Complaint, reflects that only $32,025 is owed by PMI on the

unpaid invoices. Thus, paragraphs 18 and 28 are directly contradicted by the table upon which

Allstate was entitled to rely. In light of this inexplicable contradiction, the Court concludes that the

Original Complaint was not removable.7

C.

An Amended Complaint was filed in state court on March 27, 2009. Notwithstanding the

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confusing caption, the claims asserted in the Amended Complaint are clearly brought by PRI and

SSOM. Again, the table indicates that Allstate owes $82,250 to SSOM and $170,860 to PRI. As

such, the Amended Complaint pleads an amount well in excess of $75,000 and the case became

removable at this point in time. Allstate filed its Notice of Removal on April 15, 2009, within thirty

days after it was served with the Amended Complaint. Accordingly, the removal was timely

pursuant to the second paragraph of 28 U.S.C. § 1446(b).

D.

Alternatively, Allstate claims that the existence of federal question jurisdiction became

apparent when it received the Amended Complaint. The Court need not address this argument

because, as explained above, it did not become clear that the jurisdictional amount in controversy

requirement was satisfied until the filing of the Amended Complaint.

IV. 

Accordingly, 

IT IS ORDERED that Plaintiffs’ Motion to Remand and for Sanctions [docket entry 16] is

denied.

S/Paul D. Borman 

PAUL D. BORMAN

UNITED STATES DISTRICT JUDGE

Dated: December 29, 2009

CERTIFICATE OF SERVICE

Copies of this Order were served on the attorneys of record by electronic means or U.S. Mail on

December 29, 2009.

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S/Denise Goodine 

Case Manager

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