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Menendez v. American Strategic Insurance Corp.

United States District Court, N.D. Alabama, Southern Division

June 14, 2019

MATTHEW B. MENENDEZ, et al, Plaintiffs,
v.
AMERICAN STRATEGIC INSURANCE CORPORATION, et al, Defendants.

          MEMORANDUM OPINION AND ORDER

          MADELINE HUGHES HAIKALA UNITED STATES DISTRICT JUDGE.

         Plaintiffs Matthew and Emily Menendez filed this insurance coverage action in state court against defendants American Strategic Insurance Corporation and the Progressive Corporation. (Doc. 1-1). The insurance companies removed the action to federal court on the basis of diversity jurisdiction. (Doc. 1). The plaintiffs have moved to remand their claims to state court, arguing that the insurance companies cannot demonstrate that the amount in controversy exceeds $75, 000.00. (Doc. 5).[1] For the reasons discussed below, the Court denies the motion to remand.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         ASI issued a home insurance policy to Mr. and Mrs. Menendez in June of 2012. (Doc. 1-1, p. 7, ¶ 7). In April of 2018, after discovering that two areas of their home-the kitchen and the front wall-had water damage, Mr. and Mrs. Menendez filed a claim under their policy. In their complaint, the plaintiffs allege that ASI denied the claim. (Doc. 1-1, p. 9, ¶ 17).[2] They filed this lawsuit in the Circuit Court of Jefferson County, Alabama, seeking a declaration that they are entitled to benefits under their policy. (Doc. 1-1). Mr. and Mrs. Menendez also seek damages for breach of contract and bad faith failure to pay their insurance claim. (Doc. 1-1).

         The insurance companies timely removed this action to federal court pursuant to 28 U.S.C. § 1332. (Doc. 1). ASI has filed evidence supporting its contention that the amount in controversy exceeds $75, 000.00. (Docs. 2-1 through 2-6). Mr. and Mrs. Menendez contend that ASI's evidence is improper and does not demonstrate that the amount in controversy exceeds $75, 000.00. (Doc. 5). Mr. and Mrs. Menendez have filed evidence in support of their position. (Docs. 5-2, 5-2, 7-1). Mr. and Mrs. Menendez recently have asserted that they are not alleging that they suffered mental anguish, and they are not seeking punitive damages. (Doc. 11).[3]

         II. LEGAL STANDARD

         A “civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). Where, as here, the removing parties rely on 28 U.S.C. § 1332(a) as the basis for removal, there must be complete diversity of citizenship, and the amount in controversy must exceed $75, 000.00, exclusive of interest and costs. Underwriters at Lloyd's, London v. Osting-Schwinn, 613 F.3d 1079, 1085 (11th Cir. 2010) (“For federal diversity jurisdiction to attach, all parties must be completely diverse, and the amount in controversy must exceed $75, 000.”) (internal citations omitted). The removing parties bear the burden of demonstrating that federal jurisdiction exists. Williams v. Best Buy Company, Inc., 269 F.3d 1316, 1319 (11th Cir. 2001).

         When “the plaintiff has not pled a specific amount of damages, ” Williams, 269 F.3d at 1319 (internal citations omitted), or when, after removal, the plaintiff contests the defendants' assertion of the amount in controversy, Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 553-54 (2014), the removing defendants must prove “by the preponderance of the evidence” that the amount in controversy exceeds $75, 000. 135 S.Ct. at 553-54. The preponderance of the evidence standard does not require a removing defendant “to prove the amount in controversy beyond all doubt or to banish all uncertainty about it, ” Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010), but a “conclusory allegation in the notice of removal that the jurisdictional amount is satisfied, without setting forth the underlying facts supporting such an assertion, is insufficient, ” Williams, 269 F.3d at 1319-20.

         In analyzing the amount in controversy, district courts may make “reasonable deductions, reasonable inferences, or other reasonable extrapolations, ” Pretka, 608 F.3d at 754, and may use “judicial experience and common sense, ” Roe v. Michelin North America, Inc., 613 F.3d 1058, 1062 (11th Cir. 2010). “[E]stimating the amount in controversy is not nuclear science, ” and “the undertaking is not to be defeated by unrealistic assumptions that run counter to common sense.” S. Fla. Wellness, Inc. v. Allstate Ins. Co., 745 F.3d 1312, 1317 (11th Cir. 2014). Moreover, gamesmanship in pleading can neither create nor defeat federal jurisdiction. Goodwin v. Reynolds, 757 F.3d 1216 (11th Cir. 2014).

         III. DISCUSSION

         In their complaint, Mr. and Mrs. Menendez do not claim a specific amount of damages, and the amount in controversy is not apparent on the face of the complaint. (Doc. 1-1). Mr. and Mrs. Menendez allege that because of the defendants' purported breach of contract and bad faith failure to properly investigate their claim, they (the plaintiffs) suffered “the financial loss of the insurance benefits to which they are entitled, ” (Doc. 1-1, p. 9, ¶¶ 14, 15, 17, 18, 23, 26), and they “demand judgment against Defendants in such sums as a jury may assess, ” (Doc. 1-1, p. 10). In their motion to remand, the plaintiffs state that the “sums that a jury may assess” consist of “the damage caused by the covered loss and the attendant bad faith damages.” (Doc. 5, p. 2).[4]

         To establish that the amount in controversy exceeds $75, 000, the insurance companies rely primarily on two pieces of evidence -- an estimate for kitchen repairs of $47, 650.00 that Ms. Menendez submitted to ASI on April 27, 2018, (Doc. 2-5, p. 2), and the affidavit of Viki Miles, a lead adjuster for ASI, (Doc. 2-1, p. 2, ¶ 2). Plainly, the $47, 650.00 estimate does not exceed the $75, 000 jurisdictional threshold, but the estimate concerns only kitchen repairs and does not account for structural and mold damage elsewhere in the house for which Mr. and Mrs. Menendez seek coverage. In her affidavit, Ms. Miles asserts that the structural and mold damage to the front of the house is “more extensive” and “will likely exceed the kitchen repair estimate given the extensive damage to the structural elements of the front of the home.” (Doc. 2-1, p. 4, ¶ 8). Ms. Miles describes the repairs as “necessary.” (Doc. 2-1, p. 4, ¶ 8).

         Mr. and Mrs. Menendez argue that the Court may not rely on the $47, 650.00 kitchen repair estimate in evaluating the amount in controversy because the estimate is not limited to water damage repairs but instead reflects the total cost of remodeling the kitchen, a project that was underway when Mr. and Mrs. Menendez discovered the water damage in their house. In their motion to remand, the plaintiffs state: “Plaintiffs were already in the midst of a remodel to their home when they discovered the covered water damage. Plaintiffs do not and have never claimed that their covered losses include entire cost of their remodel.” (Doc. 5, p. 6). In their reply in support of their motion to remand, the plaintiffs assert:

to the extent this construction estimate i[s] offered as evidence of the amount in controversy in this case, it is over-inclusive: Plaintiffs do not and have never suggested, either in their Complaint or in any claim filed with Defendants that Defendants were obligated under the Policy to pay for granite countertops or any of the other line items in the estimate ...

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