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Los Amigos Five, Inc. v. Canopius U.S. Insurance, Inc.

United States District Court, E.D. Virginia, Richmond Division

October 29, 2018




         This matter comes before the Court on the Motion to Remand filed by Plaintiffs Los Amigos Five, Inc. ("Los Amigos") and Manuel Balcarel-Veliz (collectively, "Plaintiffs"). (ECF No. 4.) Plaintiffs move to remand this case to the Circuit Court for the City of Richmond (the "Richmond Circuit Court") for lack of subject matter jurisdiction. Defendant Canopius U.S. Insurance, Inc. ("Canopius") opposes the remand. (Resp., ECF No. 7.) Plaintiffs did not file a Reply and the time to do so has expired. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. The matter is ripe for disposition. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1332(a).[1] For the reasons that follow, the Court will deny the Motion to Remand.[2]

         I. Procedural and Factual Background

         The Motion to Remand involves a suit that Plaintiffs filed in the Richmond Circuit Court on April 2, 2018 against Canopius. The Complaint seeks a declaratory judgment of Canopius' contractual obligation under Policy Number OUS010004545 (the "Insurance Policy") to defend and to indemnify Los Amigos in a separate personal injury case between Balcarel-Veliz and Los Amigos (the "Underlying Litigation"), filed June 17, 2017.[3](Compl. 2-3, ECF No. 1-1.) Although the instant Complaint does not articulate an amount of indemnification sought, the Underlying Litigation complaint "demands judgment against [Los Amigos], in the sum of [$75, 000]." (Underlying Litigation Compl. 1-2.) Plaintiffs also seek an award of Plaintiffs' costs and all other relief to which they may be entitled. (Compl. 3.)

         Canopius timely removed the declaratory judgment action from the Richmond Circuit Court, asserting diversity jurisdiction under 28 U.S.C. § 1332(a). (Notice Removal ¶¶ 5-14, ECF No. 1.) Plaintiffs petition this Court to remand the case to the Richmond Circuit Court for lack of subject matter jurisdiction, and request costs and attorneys' fees under 28 U.S.C. § 1447(c). Plaintiffs' Motion to Remand makes no reference to fees or other costs related to Canopius' obligation to defend Los Amigos in the Underlying Litigation. Instead, Plaintiffs solely contend that because Balcarel-Veliz seeks exactly $75, 000 in the Underlying Litigation, the amount in controversy in this suit does not exceed $75, 000 as required for diversity jurisdiction under 28 U.S.C. § 1332(a).[4] (Mem. Supp. Mot. Remand 1, ECF No. 4-1.) Plaintiffs posit that "[t]he amount in controversy is $75, 000[J as determined by the prayer for relief in the Underlying Litigation." (Id. 3.)

         Canopius opposes the Motion to Remand, arguing that in this suit, in addition to the $75, 000 indemnification, Los Amigos seeks to enforce Canopius' contractual duty to defend it against covered losses under the Insurance Policy.[5] Specifically, this suit seeks "a declaration that Defendant Canopius is obligated to defend and to indemnify Plaintiff Los Amigos in the Underlying Litigation." (Compl. 3.) Plaintiffs' assertion that the value of the suit is $75, 000, according to Canopius, "does not account for the fees and costs that [Canopius] would incur to defend Los Amigos against the Underlying Action." (Resp. ¶ 5, ECF No. 7.) Combined, Canopius argues, the value of the indemnification and defense would exceed $75, 000.

         Plaintiffs did not file a Reply, leaving Canopius' argument about fees unaddressed.

         II. Legal Standard for Removal and Remand

         Under 28 U.S.C. § 1441(a), [6] a defendant may remove a civil action to a federal district court if the plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). Section 1446 delineates the procedure for removal, including the requirement that the defendant file a notice of removal in the federal district court and the state court. See 28 U.S.C. §§ 1446(a), (d). The state court loses jurisdiction upon the removal of an action to federal court. 28 U.S.C. § 1446(d) ("[T]he State court shall proceed no further unless and until the case is remanded."). The removability of a case "depends upon the state of the pleadings and the record at the time of the application for removal" Ala. Great S. Ry. Co. v. Thompson, 200 U.S. 206, 216 (1906); see also Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939) ("the right to remove ... [is] determined according to the plaintiffs' pleading at the time of the petition for removal.").

         "The party seeking removal bears the initial burden of establishing federal jurisdiction." Abraham v. Cracker Barrel Old Country Store, Inc., No. 3:11 cvl 82, 2011 WL 1790168, at * 1 (E.D. Va. May 9, 2011) (citing Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148, 151 (4th Cir. 1994)). No. presumption favoring the existence of federal subject matter jurisdiction exists because federal courts have limited, not general, jurisdiction. Id. (citing Pinkley Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999)). In deference to federalism concerns, courts must construe removal jurisdiction strictly. Id. (citing Mulcahey, 29 F.3d at 151). "If federal jurisdiction is doubtful, a remand is necessary." Id. (quoting Mulcahey, 29 F.3d at 151).

         A federal district court has diversity jurisdiction over "all civil actions where the matter in controversy exceeds ... $75, 000 ... and is between ... [c]itizens of different states." 28 U.S.C. § 1332(a)(1). When diversity of citizenship provides the grounds for removal, then "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy" 28 U.S.C. § 1446(c)(2). "The notice of removal may assert the amount in controversy if the initial pleading seeks ... nonmonetary relief." 28 U.S.C. § 1446(c)(2)(A). When the notice of removal, as here, asserts the amount in controversy, "removal of the action is proper... if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds [$75, 000]." 28 U.S.C. § 1446(c)(2)(B); accord Francis v. Allstate Ins. Co., 709 F.3d 362, 367 (4th Cir. 2013) ("If a complaint 'does not allege a specific amount of damages, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds [$75, 000].'" (quoting DeAguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993))).

         "In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977); see McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178, 181 (1936) (noting the "principle that jurisdiction is to be tested by the value of the object or right to be protected against interference"); Francis, 709 F.3d at 367; Liberty Mut. Fire Ins. Co. v. KB Home, Inc., No. 4:13CV98, 2013 WL 5739799, at * 1 (E.D. Va. Oct. 22, 2013). Although the amount-in-controversy calculation does not generally include attorneys' fees, "courts have created two exceptions to this rule: '(1) if the fees are provided for by contract; or (2) if a statute mandates or allows payment of [attorneys'] fees."' Francis, 709 F.3d at 368 (quoting 15-102 Moore's Federal Practice, Civil § 102.106(6)(a)).

         III. Analysis: Diversity Jurisdiction Exists Because the Plaintiffs Seek Both Indemnification and Legal Defense, a Combined Value Exceeding $75, 000

         The parties' jurisdictional disagreement pertains exclusively to whether the amount in controversy exceeds $75, 000 because Plaintiffs concede diversity of citizenship. For the reasons that follow, the Court concludes that the amount in controversy exceeds $75, 000. Because diversity of citizenship and the amount in controversy meet jurisdictional ...

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