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Louisiana Farm Bureau Mutual Insurance Co v. Whirlpool Corp.

United States District Court, W.D. Louisiana, Shreveport Division

January 26, 2018

LOUISIANA FARM BUREAU MUTUAL INSURANCE CO.
v.
WHIRLPOOL CORP.

          HICKS CHIEF JUDGE

          REPORT AND RECOMMENDATION

          MARK L. HORNSBY I U.S. MAGISTRATE JUDGE

         Introduction

         Louisiana Farm Bureau Mutual Insurance Company (“Farm Bureau”) filed this subrogation action in state court against Whirlpool Corporation (“Whirlpool”) to recover amounts that Farm Bureau paid one of its insureds after a house fire. Whirlpool removed the case based on an assertion of diversity jurisdiction. Farm Bureau promptly filed a Motion to Amend Complaint (Doc. 13) and Motion to Remand (Doc. 15) that are before the court. Farm Bureau asks to dismiss one of its claims for admitted lack of merit, and it argues that the elimination of the claim requires remand because it reduces the amount in controversy below $75, 000. For the reasons that follow, it is recommended that Farm Bureau's motions be granted.

         Relevant Facts

         Farm Bureau alleged in its state court petition that it insured the home of Kenneth Watson, and the home suffered extensive fire damage after a Roper brand dryer manufactured by Whirlpool caught fire. Farm Bureau alleged that it paid certain amounts to Mr. Watson and that it is legally and conventionally subrogated to his rights to seek recovery of those amounts from Whirlpool on the grounds that the dryer was defective.

         Farm Bureau alleged in its petition that it paid Mr. Watson $58, 890.02 for property damage to the structure and $15, 000 for damage to contents, for a total of $73, 890.02. Petition, ¶ 13. Farm Bureau alleged that it had the right to recover from Whirlpool those amounts “paid to date, in addition to any other sums it may be required to pay under said policy in the future.” ¶ 14. Farm Bureau then added that “Kenneth Watson is entitled to collect FIVE THOUSAND AND NO/100 ($5, 000.00) DOLLARS, which he has been required to pay under the deductible portion of said policy.” ¶ 15 (Italics added.) Farm Bureau then stated that Whirlpool was indebted to Farm Bureau for the full sum of $78, 890.02, “in addition to any other sums [Farm Bureau] may be required to pay in the future pursuant to the policy at issue to Kenneth Watson.” ¶ 16.

         Whirlpool filed a notice of removal based on diversity jurisdiction. In satisfaction of the amount in controversy element, Whirlpool pointed to Farm Bureau's demand for more than $75, 000 in damages. About a month after removal, Farm Bureau filed its motion for leave to amend and asked to strike the paragraph of its petition where it sought to recover Mr. Watson's $5, 000 deductible. Farm Bureau filed its motion to remand that same day and explained in it that the removal of that paragraph “corrects the amount in controversy” and changes it to $73, 890.02.

         Farm Bureau requested remand on the grounds that the court lacks subject matter jurisdiction because the amount in controversy does not exceed $75, 000. The insurer pointed out that it is the sole plaintiff in this case, asserted that the original demand for $5, 000 was in error, and said that the claim for the $5, 000 deductible “is specific to Kenneth Watson, who is not a Plaintiff herein.” Farm Bureau admitted that it “has no legal right to claim the deductible paid by Kenneth Watson.” It urged that the true amount in controversy is and has always been $73, 890.02.

         Whirlpool filed a single response (Doc. 17) to both motions. It stated that it does not oppose the requested amendment “unless this amendment is intended to create an argument that the Court lacks subject matter jurisdiction as a result of the amendment.” The motion to remand shows that is the case. Whirlpool argues that the amendment does not deprive the court of subject matter jurisdiction because (1) the amount in controversy was determined by the amount claimed in good faith by Farm Bureau at the time of removal, (2) the prayer for unspecified future sums that might have to be paid under the policy must be considered, and (3) Farm Bureau's request for an award of expert witness fees must be considered.

         The Amount Claimed

         The district courts have original jurisdiction over civil actions where there is diversity of citizenship and “the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Subject to some exceptions, any civil action brought in a state court of which the district courts have original jurisdiction may be removed by a defendant. 28 U.S.C. § 1441(a). If removal is sought on the basis of diversity jurisdiction, “the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy” except that the notice of removal may assert the amount in controversy in certain circumstances, such as when the original petition does not demand a specific sum. 28 U.S.C. § 1446(c)(2).

         The statutory provision regarding the amount in controversy in removal cases was enacted in 2011. It is consistent with the long-standing jurisprudential rule that where a plaintiff has alleged a sum certain that exceeds the requisite amount in controversy “the sum claimed by the plaintiff controls if the claim is apparently made in good faith.” St. Paul Mercury Indemnity Co. v. Red Cab Co., 58 S.Ct. 586, 590 (1938). It is also the general rule that the “jurisdictional facts that support removal must be judged at the time of the removal.” Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000). And a post-removal amendment to a complaint to limit damages for jurisdictional purposes does not strip the district court of subject matter jurisdiction. Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995); Jones v. Compass BancShares, Inc., 339 Fed.Appx. 410, 410-11 (5th Cir. 2009).

         If, however, a claim asserted by a plaintiff does not have a good-faith basis, courts have excluded the amount or value of that claim when assessing the amount in controversy. Bailey v. U.S. Fidelity and Guaranty Co., 181 F.3d 96 (5th Cir. 1999) (unpublished) (multi-million dollar claim for punitive damages was frivolous and lacked a good-faith basis necessary to fulfill the amount in controversy requirement); Watring v. SunTrust Mortgage, Inc., 2016 WL 5340548, *4 (N.D.Ga. 2016) (claim that had no basis under state law was not considered in the amount in controversy), and Thomas v. State Farm Mut. Auto Co., 2009 WL 3379063 *2 (S.D. Ga. 2009) (claim for punitive damages was not allowed by state law so it did not enter the amount in controversy calculation). Similarly, a federal court may lack jurisdiction despite a demand made by the plaintiff if it ...


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