UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

CHAMBERS OF

MADELINE COX ARLEO

UNITED STATES MAGISTRATE JUDGE

MARTIN LUTHER KING COURTHOUSE

50 WALNUT ST.

ROOM 2060

NEWARK, NJ 07101

973-297-4903

April 2, 2012

Steven Kraus, Esq.

The Law Offices of Steven G. Kraus

122 Mount Bethel Road

Warren, NJ 07059

Scott Lazar, Esq.

Barrett, Lazar, LLC

145 W. Passaic Street

Maywood, NJ 07607

REPORT & RECOMMENDATION

Re: Encompass Insurance Co. of New Jersey v. Swift Transportation Co., et al.

Civil Action No. 11-1205 (SDW) 

Dear Counsel:

Before me is the motion of plaintiff Encompass Insurance Company of New Jersey

(“Encompass” or “plaintiff”)) to remand this action to the Superior Court of New Jersey, Law

Division, Middlesex County, for lack of diversity jurisdiction. (Dkt. No. 18). Defendant Swift

Transportation Company of Arizona LLC (“Swift” or “defendant”) opposes the motion. District

Judge Wigenton referred the motion to me for Report and Recommendation.

 

This Court held oral argument on February 29, 2012, and the Court reserved ruling from

the bench. This written opinion supplements the transcript of the February 29, 2012, hearing,

pursuant to LOCAL CIVIL RULE 52.1. Having considered the parties’ submissions, for good cause

shown, and for the reasons set forth on the record and herein, this Court recommends that

plaintiff Encompass’s motion to remand be GRANTED.

I. BACKGROUND

This suit arises out of an automobile accident that occurred on November 7, 2009 in New

Jersey. A tractor trailer owned by Swift collided with an automobile driven by Tung Nguyen

(“Nguyen”) with My Nhiem Le (“Le”) as a passenger. Nguyen and Le suffered personal injuries

as a result of the collision and applied for Personal Injury Protection (“PIP”) benefits from

Encompass. On January 24, 2011, Nguyen and Le filed a personal injury suit against Swift in

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Superior Court Hudson County (“the Nguyen Action”). On March 3, 2011, Swift removed the

Nguyen Action to this Court based on diversity jurisdiction.

On August 23, 2011, Encompass filed the instant suit against Swift in the Superior Court

of New Jersey, Law Division of Middlesex County. In its Complaint Encompass seeks

reimbursement from Swift for PIP medical benefits paid to Nguyen and Le as well as the costs of

processing those benefit claims and enforcing Encompass’s rights during PIP arbitrations over

the disputed benefits. In a pre-suit demand letter, Encompass asserted that it had paid

$38,588.90 in PIP benefits as of August 5, 2011. 

On September 28, 2011, Swift removed this action pursuant to 28 U.S.C. § 1332. The

diversity of the parties is undisputed. Encompass is a New Jersey insurance company with its

principal place of business in Middlesex County, New Jersey. Swift is an Arizona corporation

with its principal place of business in Phoenix, Arizona. In its removal petition, Swift asserts

“upon information and belief” that the damages incurred by Encompass exceeded $75,000, and

thus Swift has satisfied the jurisdictional amount. (See Notice of Removal ¶ 6).1

On November 7, 2011, Encompass served Fed. R. Civ. P. 26 Disclosures on Swift, stating

that it had paid PIP benefits totaling $39,868.06. Thereafter, Encompass advised that PIP

expenditures had increased to $45,961.61. 

On December 20, 2011, counsel for both parties participated in a settlement conference. 

At the time of the settlement conference, the amount in controversy remained below the $75,000

jurisdictional amount. Yet, plaintiff’s counsel verbally represented that Encompass is seeking

further damages in the form of reimbursement for additional PIP medical bills incurred by

Nguyen and/or Le for their continuing medical treatment, since the filing of the lawsuit. 

Significantly, Encompass disputes the medical necessity of this additional medical treatment, and

thus, is challenging these PIP medical bills in arbitrations that are scheduled for later this year.

2

II. MOTION TO REMAND

On January 1, 2012, Encompass filed the instant remand motion asserting lack of subject

matter jurisdiction. The thrust of plaintiff’s motion to remand is based on the alleged failure of

Swift to satisfy the $75,000 statutory minimum amount in controversy requirement. 

 On October 27, 2011, the Court issued an order consolidating the Nguyen Action with 1

the instant Encompass Action. After Le and Nguyen settled their claims, on November 28, 2011

and on January 9, 2012, Judge Wigenton issued Stipulations and Orders of Dismissal with

prejudice as to Nguyen’s and Le’s claims, respectively, against Swift.

 The parties dispute the amount of additional PIP medical bills at issue. While Swift 2

contends that Encompass is seeking an additional $50,000, Encompass asserts that $50,000 is the

maximum amount that it could possibly seek in the future.

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According to Encompass, at the time of removal and presently, the amount of controversy

does not exceed $75,000. Encompass contends that at the time of removal, it had incurred

$39,868.06 in damages, seeking reimbursement of PIP medical payments and the cost of

processing claim benefits. Encompass acknowledges that the amount of PIP payments has since

increased to $46,361.61. Encompass further admits that this amount could possibly increase in 3

the future because it is challenging the additional PIP medical bills which are the subject of the

scheduled arbitrations. Yet, Encompass has not yet incurred these charges for the additional PIP

benefits. As such, according to Encompass, no possible future outlays (i.e., additional PIP

payments) can be considered when determining the statutory amount in controversy requirement. 

Thus, as Swift has not met its burden to show by a preponderance of the evidence that the

amount of damages exceeds $75,000, remand is warranted.

In opposition, Swift relies exclusively on plaintiff’s counsel’s recent representation that

Encompass is seeking not only the $46,361.61 in damages but an additional $50,000 in

reimbursement for more medical charges. According to Swift, if Encompass now seeks

approximately $96,000 in reimbursement for all of the medical bills, both paid and/or contested,

the amount in controversy clearly exceeds the $75,000 statutory requirement, and is beyond mere

speculation. Thus, defendant submits the case was properly removed.

III. ANALYSIS

In a diversity action, a district court has subject matter jurisdiction over state law claims,

pursuant to 28 U.S.C. § 1332, if each of the plaintiffs is a citizen from a state different from each

defendant and the amount in controversy exceeds $75,000. See Werwinski v. Ford Motor Co.,

286 F.3d 661, 666 (3d. Cir. 2002). A claim brought in state court may be removed to federal

court under 28 U.S.C. § 1441. 

A party may seek to remand a civil action back to state court based on an alleged defect in

the removal procedure, or lack of subject matter jurisdiction. 28 U.S.C. § 1447(c). A party

opposing remand must show that federal subject matter jurisdiction exists and removal was

proper. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S.

1085 (1991). The Third Circuit has held that “the party asserting federal jurisdiction in a

removal case bears the burden of showing, at all stages of the litigation, that the case is properly

before the federal court.” Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing

Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004)). Thus, in opposing

a motion to remand based on lack of subject matter jurisdiction, the removing party, here

defendant, bears this burden. To satisfy its burden, “a removing party must provide more than

mere speculation or tenuous inferences about the amount in controversy.” Edington-Steward v.

 During oral argument on the remand motion, plaintiff’s counsel represented that, since 3

the filing of its motion, Encompass has paid an additional $400 in claim expenses. As such, the

total amount in controversy is presently $46,361.61. 

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Walmart Corp., civ. no. 11-4686, 2011 U.S. Dist. LEXIS 91706, *4 (citing Russ v. Unum Life

Ins. Co., 442 F. Supp. 2d 193, 198 (D.N.J. 2006)).

Here, there is no dispute that the parties are diverse. Encompass is a New Jersey

corporation, while Swift is an Arizona corporation. Rather, Encompass contends that Swift has

not met its burden of proving that plaintiff’s losses exceed $75,000. The appropriateness of

defendant’s removal and the heart of plaintiff’s remand motion turns on whether the amount in

controversy analysis should properly include possible future outlays, in this case additional PIP

medical payments, or whether such damages are too speculative. 

Where, as here, jurisdictional facts are disputed, a court must inquire whether “from the

face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the

amount claimed, or if, from the proofs, the court is satisfied to a like certainty that the plaintiff

never was entitled to recover that amount.” Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S.

283, 289 (1938). The Complaint does not specify the amount of damages sought by Encompass. 

Rather, at the time of removal, Encompass’s Complaint stated that “[p]ursuant to N.J.S.A.

39:6A-9.1, defendant [Swift] is a tortfeasor responsible for payment to plaintiff of the amount of

its PIP benefits payments plus claims expenses, attorney’s fees, interest and costs of suit.”

(Compl., at ¶ 11). 

When a plaintiff does not limit its request for damages in the complaint to an exact

monetary amount, the Court must independently review the value of each legal claim to

determine whether they satisfy the amount in controversy requirement independent of one

another. Dovale v. Marketsource, Inc. civ. no. 05-2872 (FLW) (D.N.J. Oct. 7, 2005) (citing

Ciancaglione v. Sutherlin, 2004 WL 2040342, *2 (E.D. Pa. Sept. 14, 2004)). As noted earlier,

Swift points to Encompass’s counsel’s prior verbal demand for reimbursement for additional PIP

medical bills contested, but not yet accrued, that are estimated to be $50,000 (in addition to the

$46,000 already incurred). Thus, according to Swift, plaintiff’s claims have potential value to

exceed $75,000. 

This Court disagrees. Indeed, having been faced with this issue, other judges in this

District have determined that it is inappropriate to consider future PIP payments in calculating

the amount in controversy. Russ v. Unum Life Ins. Co., 442 F. Supp.2d 193, 197 (D.N.J. 2006). 

As a general rule, “when calculating the amount in controversy, the District Court will only

consider the amount of damages that have accrued up until the point that the case was filed.” Id.

at 197 (citing Gray v. Occidental Life Ins. Co. of Calif., 387 F.2d 935, 936 (3d Cir. 1968)) (per

curiam) (relying only on payments that had been accrued at the time of filing to determine the

amount in controversy). See Unitrin Auto And Home Ins. Co. v. Gitter, Civ. No. 06-6035, 2007

WL 2705158, at * 3 (D.N.J. Sept. 13, 2007) (noting that “federal courts generally do not consider

possible future outlays when calculating the amount-in-controversy for claims seeking monetary

damages.”).

There is no dispute that Encompass has incurred $46,361.61 in damages based on PIP

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medical payments. However, as Encompass emphasizes, it is challenging additional outstanding

medical bills in upcoming PIP arbitrations, and thus, it has not yet incurred any charges for such

medical expenses. Whether plaintiff will be able to pursue reimbursement for such challenged

medical bills is at best speculative pending resolution through the PIP arbitration process. 

Indeed, Encompass challenges the additional medical treatment received by Nguyen and Le as

unnecessary and improper. If Encompass successfully challenges these bills at PIP arbitration,

Encompass will not have to reimburse Nguyen and Le’s health care providers for the medical

treatment received. Encompass would not and cannot seek reimbursement for any such

additional medical bills in the instant action. As such, at the time of removal, and through the

present, Encompass is entitled to damages that are far below the $75,000 threshold. Accordingly,

this Court finds that Swift has not satisfied its burden by a preponderance of the evidence, and

thus removal was not proper.

IV. CONCLUSION

Based on the foregoing reasons, this Court finds that the District Court does not have

subject matter jurisdiction under 28 U.S.C. § 1332. Therefore, I respectfully recommend that

Encompass’ motion for remand be GRANTED.

The parties have fourteen (14) days from receipt hereof to file and serve objections.

s/Madeline Cox Arleo 

MADELINE COX ARLEO

United States Magistrate Judge

cc: Clerk

Hon. Susan D. Wigenton, U.S.D.J.

All Parties

File

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