Walton v. GEICO Casualty Co.

          ORDER

          Honorable John J. Tuchi United States District Judge.

         At issue is Plaintiff's Motion to Remand (Doc. 9, Mot.), to which Defendant GEICO Casualty Company (“GEICO”) filed a Response (Doc. 10, Resp.) and Plaintiff filed a Reply (Doc. 12, Reply). For the reasons that follow, the Court grants Plaintiff's Motion and remands the case back to state court.

         I. BACKGROUND

         Plaintiff had an automobile insurance policy with GEICO. After Plaintiff sustained damage to his car, GEICO recommended Plaintiff get the repairs done by Defendant Gerber Group, Inc. (“Gerber”), GEICO's preferred shop. (Doc. 1 Ex. A, Compl. ¶ 8.) Plaintiff alleges that both GEICO and Gerber guaranteed the work would be free from defects in materials and workmanship. (Compl. ¶ 9 & Ex. A.) Shortly after the repairs were done, Plaintiff states that while he was driving, the front wheel stopped responding and became detached from the vehicle. His car was towed from Sedona to Gerber's shop in Tempe, where it presently remains. Plaintiff asserts that despite its guarantee, GEICO has tried to deny coverage for the repairs, and that Gerber is attempting to charge Plaintiff for the cost of towing after promising to tow the vehicle free of charge. (Compl. ¶¶ 24-26, 35.)

         Plaintiff originally filed this case in Maricopa County Superior Court. (Mot. at 1.) He alleges claims of breach of contract and breach of the duty of good faith and fair dealing, and seeks a “just and reasonable amount” of actual damages, general damages, punitive damages, and attorneys' fees. (Compl. at 7, 8.) GEICO timely removed^[1] the action under 28 U.S.C. § 1441, asserting diversity of citizenship as the basis for federal subject matter jurisdiction. (Doc. 1 ¶ 4.) Plaintiff then filed the present Motion to Remand.

         II. LEGAL STANDARD

         Federal courts may exercise removal jurisdiction over a case only if subject matter jurisdiction exists. 28 U.S.C. § 1441(a); Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004). Federal courts have diversity jurisdiction over actions between citizens of different states where the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The Supreme Court has concluded that, under § 1446(a), a “notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014). “Evidence establishing the amount is required by § 1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant's allegation.” Id. “[D]iversity jurisdiction is determined at the time the action commences, and a federal court is not divested of jurisdiction . . . if the amount in controversy subsequently drops below the minimum jurisdictional level.” Hill v. Blind Indus. & Servs of Md., 179 F.3d 754, 757 (9th Cir. 1999).

         When a defendant's assertion of the amount in controversy is challenged, then “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Dart Cherokee Basin, 135 S.Ct. at 554; Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996) (“[T]he defendant must provide evidence establishing that it is ‘more likely than not' that the amount in controversy exceeds that amount.”).

         The Ninth Circuit has noted that the Supreme Court did not decide the procedure for each side to submit proof, leaving district courts to set such procedure. See Ibarra v. Manheim Inv., 775 F.3d 1193, 1199-1200 (9th Cir. 2015) (citing Dart Cherokee Basin, 135 S.Ct. at 554). “[E]vidence may be direct or circumstantial, ” and “a damages assessment may require a chain of reasoning that includes assumptions.” Id. at 1199. “When this is so, those assumptions cannot be pulled from thin air but need some reasonable ground underlying them.” Id. In making an amount in controversy determination, courts may consider, inter alia, evidence of jury awards or judgments in similarly situated cases, settlement letters, affidavits, and declarations. See, e.g., Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002); Ansley v. Metro. Life Ins. Co., 215 F.R.D. 575, 578 & n.4 (D. Ariz. 2003).

         III. ANALYSIS

         The Court notes at the outset that GEICO's notice of removal conclusorily alleges only that “Plaintiff will seek an amount that exceeds the sum or value of $75, 000.” (Doc. 1 ¶ 4.) However, because evidence in the Response is treated as an amendment to the notice of removal, the Court will consider it in determining whether the requirements for diversity jurisdiction are satisfied.^[2] Cohn, 281 F.3d at 840 n.1. GEICO argues that the types of damages sought (including contract, tort, and punitive damages, as well as attorneys' fees), together with Plaintiff's state court filings, settlement demand, and refusal to stipulate that damages are less than $75, 000, make “clear that the Court has jurisdiction.” (Resp. at 4.) The Court will address each proposed basis in turn.

         A. Contract Damages

         Plaintiff maintains that the underlying dispute-the breach of contract claim- concerns a “relatively small amount of money” which he is confident is less than $10, 000. (Mot. at 3, 10.) Plaintiff alleges that the issue plaguing his car is a broken control arm, which was also what prompted Plaintiff's first repair job with Gerber. He attached to the Motion the invoice from Gerber for the first repair, which lists the cost of the control arm as $289.36. (Mot. Ex. C.) Plaintiff acknowledges there will be labor costs, as well. Plaintiff also got an estimate from his current insurance company, Metlife, which projected the total repair cost-including “additional damage as a result of the control arm failure”-to be $3, 744. (Mot. at 3 & Ex. D.) Finally, Plaintiff asserts that Gerber refuses to turn over the car to Plaintiff until he pays the towing bill, which Plaintiff “has not seen, but was told at one time was $1, 200.” (Mot. at 3.)

         GEICO's Response failed to contest or even discuss any of the above figures. Indeed, GEICO never provided any estimate of what it thinks Plaintiff's damages- contract or otherwise-might be. Yet, GEICO is in a better position to provide the estimate for the repair and towing, which is the heart of this dispute, as Gerber is its preferred shop and GEICO covered the first repair of Plaintiff's car. Accordingly, the Court will accept Plaintiff's ...