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Sadler v. State Farm Fire and Casualty Co.

November 19, 2008

BILL AND LORI SADLER, HUSBAND AND WIFE, AND MARCEL AND PAMELA THIRY, HUSBAND AND WIFE, PLAINTIFFS,
v.
STATE FARM FIRE AND CASUALTY CO., DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM AND ORDER OF COURT GRANTING PLAINTIFFS' MOTION TO REMAND

I. Introduction

Plaintiffs Bill and Lori Sadler, husband and wife, are the owners of a house in Lawrence County, Pennsylvania that was damaged by an explosion at another nearby house; Plaintiffs Marcel and Pamela Thiry, husband and wife, are the owners of an adjacent house in Lawrence County, Pennsylvania that also was damaged by the explosion. Both houses were insured by defendant State Farm Fire and Casualty Company, and both couples made claims with State Farm to cover the damages to their respective houses.

Plaintiffs jointly filed a complaint in the Court of Common Pleas of Lawrence County against State Farm setting forth various state common law and statutory claims, including breach of contract and bad faith in failing to reasonably pay all of the damages claimed by each couple. Each couple's set of claims (i.e., the Sadler set and the Thiry set) in the complaint demanded damages in an indeterminate amount in excess of $20,000, plus punitive damages and attorneys fees.

On July 8, 2008, State Farm filed a Notice of Removal (doc. no. 1) pursuant to the removal statute, 28 U.S.C. § 1441, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332, based on diversity of citizenship of the parties and an amount in controversy in excess of the $75,000 threshold. Plaintiffs have filed a Motion to Remand to the Court of Common Pleas of Lawrence County. The diversity of the parties' citizenship is undisputed; plaintiffs' motion to remand is predicated solely on their contention that the "amount in controversy" does not meet the $75,000 threshold. The Court agrees with plaintiffs that defendant has not met its burden of showing that, at the time of filing the complaint, it was a legal certainty that the amount in controversy was at least $75,000, and will therefore grant plaintiffs' motion to remand to the Court of Common Pleas.

II. Removal Jurisdiction Based Upon Diversity of Citizenship

A. In General

The federal courts are courts of limited jurisdiction which is defined strictly by Congress, and so it is a "bedrock principle that federal courts have no jurisdiction without statutory authorization." Exxon Mobile Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 543, 553 (2005). Where the basis for removal is diversity of citizenship under section 1332, "the congressional intent to restrict federal diversity jurisdiction [must be] honored." Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999), citing, inter alia, Nelson v. Keefer, 451 F.2d 289, 293-95 (3d Cir. 1971) (federal judiciary has been "too timid" in eliminating the "plethora of cases which do not belong in federal courts."). "Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand." Brown v. Francis, 860, 864-65 (3d Cir. 1996), quoting Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir. 1985). See also Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992).

B. Burden of Proof

Because the federal courts have limited jurisdiction, the burden of establishing federal court jurisdiction is always on the proponent of jurisdiction, i.e., plaintiff in a case originally filed in federal court and defendant in a state case removed to federal court. Morgan v. Gay, 471 F.3d 469, 474 (3d Cir. 2006); Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085 (1991) ("party who urges jurisdiction on a federal court bears the burden of proving that jurisdiction exists."). Thus a removing defendant bears a heavy burden to persuade the federal court to which the state action was removed that it has jurisdiction under the removal statutes. Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (1921); Batoff, 977 F.2d at 851; Snap-On Tools Corp., 913 F.2d at 111.

C. Amount in Controversy

When an action is removed on the basis of diversity, the requisite diversity of citizenship and jurisdictional amount ordinarily must appear on the face of the complaint or the removal petition. See Levy v. Weissman, 671 F.2d 766, 767 (3d Cir. 1982). "The allegations on the face of the complaint control the amount in controversy unless it appears 'to a legal certainty the claim is really for less than the jurisdictional amount. . . .'" Horton v. Liberty Mut. Ins. Co., 367 U.S. 348, 353, (1961), quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). A removing defendant, as the party invoking federal jurisdiction, "must prove to a legal certainty that plaintiff can recover the jurisdictional amount." Frederico v. Home Depot, 507 F.3d 188, 197 (3d Cir. 2007).

Uncertainty arises where, as here, the complaint is for an indeterminate amount or is not a complaint for money damages at all. Where the complaint does not limit its request for damages to a precise monetary amount, the court may look to the notice of removal, and should make an independent evaluation of the value of the claim from the record before it, i.e., the state court records including the complaint, and the removal notice. Angus v. Shiley Inc., 989 F.2d 142, 146 (3d Cir.1993), citing with approval Corwin Jeep Sales & Service, Inc. v. American Motors Sales Corp., 670 F.Supp. 591, 596 (M.D.Pa. 1986); Omega Sports, Inc. v. Sunkyong America, Inc., 872 F.Supp. 201, 202 (E.D.Pa. 1995) ("To determine if the jurisdictional amount is satisfied . . ., this Court can look to several sources: first, I should examine the complaint itself; second, if the damages are unspecified in the complaint, I can look to defendant's notice of removal; third, I can independently assess the value of the claim."), citing Angus; Stone v. Food Haulers, Inc., 1989 WL 95244 (E.D.Pa. 1989) ("Because the plaintiff is ...


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