Opinion
CIVIL ACTION NO. 3:01-CV-0448-G.
August 9, 2001.
MEMORANDUM ORDER
Before the court is the motion of the plaintiff Michael L. Wald ("Wald") to remand this action to a state district court from which it was previously removed. For the reasons stated, the motion is granted.
I. BACKGROUND
On November 1, 1995, Wald, a Texas resident, purchased Disability Overhead Expense Policy Number S649,961 ("Policy") from SMA Life Assurance Company ("SMA"). Notice of Removal, Plaintiff's Original Petition ("Petition") ¶¶ 4, 8. The defendant Allmerica Financial Life Insurance and Annuity Company ("Allmerica"), a Delaware corporation doing business in Texas, was formerly known as SMA. Id. ¶¶ 5, 7.
The Policy provided for annual premium payments of $2,807.50. Id. ¶ 9. The Policy states that "[w]ith our consent premiums may be paid in advance for 6 months, 3 months or 1 month." Id. Wald, who paid his premium monthly, contends that Allmerica charged him $241.45 per month for a total annual premium of $2,897.40, resulting in a $89.90 overcharge per year. Id.
On December February 2, 2001, Wald filed this case in the 134th Judicial District of Dallas County, Texas. See generally Petition. He sued as a putative class representative "on behalf of policyholder consumers who purchased from [Allmerica] life insurance and disability policies and paid premiums on a non-annual basis." Id. ¶ 2. There are approximately 30,000 eligible class members. Brief in Support of Plaintiff's Motion to Remand ("Motion") at 12.
On March 7, 2001, Allmerica timely removed the case to this court, alleging diversity of citizenship as the basis for removal. Notice of Removal ¶¶ 4-6. On March 22, 2001, Wald filed the instant motion to remand, arguing that Allmerica has not demonstrated that the amount in controversy exceeds $75,000.
II. ANALYSIS A. Removal Jurisdiction
Title 28 U.S.C. § 1441 (a) permits removal of "any civil action brought in a State Court of which the district courts of the United States have original jurisdiction." Under this statute, "[a] defendant may remove a state court action to federal court only if the action could have originally been filed in the federal court." Aaron v. National Union Fire Insurance Company of Pittsburg, Pennsylvania, 876 F.2d 1157, 1160 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990) (citations omitted). Removal jurisdiction must be strictly construed, however, because it "implicates important federalism concerns." Frank v. Bear Stearns Co., 128 F.3d 919, 922 (5th Cir. 1997); see also Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Furthermore, "any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court." Cross v. Bankers Multiple Line Insurance Company, 810 F. Supp. 748, 750 (N.D. Tex. 1992); see also Shamrock Oil Gas Corporation v. Sheets, 313 U.S. 100, 108-09 (1941); Healy v. Ratta, 292 U.S. 263, 270 (1934). The burden of establishing federal jurisdiction is on the party seeking removal. Frank, 128 F.3d at 921-22; Willy, 855 F.2d at 1164.
There are two principal bases upon which a district court may exercise removal jurisdiction: (1) the existence of a federal question and (2) complete diversity of citizenship among the parties. See 28 U.S.C. § 1331, 1332. The court cannot exercise jurisdiction over this case on the basis of a federal question because the case does not present any issues "arising under the Constitution, laws, or treaties of the United States." See 28 U.S.C. § 1331. However, the court can properly exercise jurisdiction on the basis of diversity of citizenship if the plaintiff does not share citizenship with the defendant, and the case involves an amount in controversy of at least $75,000. See 28 U.S.C. § 1332(a).
There is no dispute that complete diversity of citizenship exists. Notice of Removal ¶ 5; Motion at 2. Wald argues, however, that this court lacks subject matter jurisdiction because Allmerica has not established that the case involves an amount in controversy of at least $75,000. Motion at 2.
B. Amount in Controversy
To establish jurisdiction when the plaintiff's state court petition does not allege a specific amount of damages, as in the instant case, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. See Allen v. R H Oil Gas Company, 63 F.3d 1326, 1335 (5th Cir. 1995) (citing DeAguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993)). A court may determine that removal is proper if it is facially apparent from the state court petition that the claims are likely above $75,000. See id. If the amount in controversy is not apparent from the face of the petition, the court may rely on facts asserted in the removal notice or in an affidavit submitted by the removing defendant to support a finding of the requisite amount. See id.
In his petition, Wald asserts claims for breach of contract and violations of Article 21.21 of the Texas Insurance Code. Petition at 6-7. He seeks declaratory, injunctive, and monetary relief, the latter including actual damages, punitive damages, prejudgment and post judgment interest, costs, and attorneys' fees but no specific dollar amount. Id. at 8.
Allmerica asserts that the court should consider the amount of the plaintiff's attorneys' fees and the value of the injunctive relief sought by Wald when determining the amount in controversy. Allmerica Financial Life Insurance and Annuity Company's Response to Motion to Remand ("Response") at 2. Wald disagrees.
1. Injunctive Relief
In an action for injunctive relief, the amount in controversy is "the value of the right to be protected or the extent of the injury to be prevented." St. Paul Reinsurance Company, Ltd. v. Greenberg, 134 F.3d 1250, 1252-53 (5th Cir. 1998) (quoting Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983)). Allmerica argues that the court should consider the "pecuniary consequence to all involved in the litigation" when determining the amount in controversy. Response at 6.
As evidence of the cost of complying with injunctive relief, Allmerica has submitted a declaration from Lee W. Erickson ("Erickson"), Manager, Financial Life Reporting for Allmerica. See Notice of Removal, Declaration of Lee W. Erickson. Erickson states the following:
I have reviewed Plaintiff's Original Petition (the "Petition"), and in particular, the proposed definition of Class Members in Paragraph 14 of the Petition. Based on such definition, I estimate that there are potentially more than 30,000 policyholders who could be included in the definition of Class Members as set forth in the Petition, if such a class were certified. If Allmerica were required to comply with the injunctive relief requested in the Petition, it would cost Allmerica greatly in excess of $75,000.00, given the potential number of Class Members to which such relief could apply.Id.
Erickson subsequently amended his declaration and asserted the following:
If Allmerica were required to comply with the injunctive relief requested in the Petition by calculating non-annual premiums in the way argued for by the Plaintiff, it would cost greatly in excess of $75,000.00, given the potential number of Class Members to which such relief could apply. Specifically, the plaintiff alleges that the current calculation overcharged him approximately $90.00 a year. On average, the differential amount for other potential class members is certainly greater than $3.00 per policy per year.
Response, Exhibit A, Supplemental Declaration of Lee W. Erickson.
The general rule is that each plaintiff who invokes diversity jurisdiction must allege damages that meet the amount in controversy requirement of 28 U.S.C. § 1332. Allen, 63 F.3d at 1330. However, aggregation of each plaintiff's claim is permitted where "`two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.'" Id. (quoting Snyder v. Harris, 394 U.S. 332, 335 (1969)). Plaintiffs have a common and undivided interest if their claims arise from the same source and they have one right of recovery. Id. at 1331.
The claims in the instant case are not common and undivided. Rather, they are based on separate contracts and dealings with Allmerica, entitling each class member to a separate recovery. See More v. Intelcom Support Services, Inc., 960 F.2d 466, 472-73 (5th Cir. 1992) (plaintiffs' claims were not common and undivided where they sought relief on the basis of their separate employment contracts); Eagle Star Insurance Company v. Maltes, 313 F.2d 778, 781 (5th Cir. 1963) (even though plaintiffs-beneficiaries brought suit pursuant to a single insurance contract, plaintiffs' claims were not common and undivided because of the defendant's separate obligation to each of the plaintiffs); see also Morrison v. Allstate Indemnity Company 228 F.3d 1255, 1264 (11th Cir. 2000) ("[W]hen multiple plaintiffs assert rights arising from individual insurance policies, their claims are separate and distinct, and accordingly, may not be aggregated."). The claims for injunctive relief in the instant case should not be aggregated, as the plaintiffs' claims are separate and distinct. See id. at 1271; Campbell v. General Motors Corporation, 19 F. Supp.2d 1260, 1267 and n. 8 (N.D. Ala. 1998). See Appendix of Unreported Decisions in Support of Brief on Motion to Remand, Exhibit 1, Buscema v. Allstate Life Insurance Company, No. 991379 BB/DJS, slip op. (N.M. June 1, 2000); id., Exhibit 2, McNabb v. New York Life Insurance Company, No. 99-1410 MV/DJS, slip op. (N.M. May 22, 2000); id., Exhibit 3, Friesner v. North American Company for Life and Health Insurance, No. 00-0028 WWD/LFG, slip op. (N.M. March 8, 2000); id., Exhibit 4, Azar v. Prudential Insurance Company of America, No. 99-1037 BB/DJS, slip op. (N.M. March 6, 2000); id., Exhibit 5, Cadigan v. Transamerica Occidental Life Insurance Company, No. 99-1406 LFG/KBM, slip op. (N.M. February 24, 2000); id., Exhibit 6, Kollecas v. State Farm Life Insurance Company, No. 99-1428, WWD/LFG, slip op. (N.M. February 16, 2000).
2. Attorneys' Fees
Allmerica argues that, pursuant to In re Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995), the court should attribute the total amount of attorneys' fees to Wald — thus satisfying the amount in controversy requirement with respect to Wald — and exercise supplemental jurisdiction over the potential class members' claims. Response at 5.
The amount in controversy includes attorneys' fees if a plaintiff sues under a statute which entitles him to such fees. HD Tire and Automotive-Hardware, Inc. v. Pitney Bowes Inc., 227 F.3d 326, 330 (5th Cir. 2000) (citing Graham v. Henegar, 640 F.2d 732, 736 (5th Cir. 1981)). The Texas Insurance Code prescribes the proper distribution of attorneys' fees in class action suits. Under the Texas Insurance Code,
(b) A plaintiff who prevails in a class action under this section may recover:
(1) court costs and attorneys' fees reasonable in relation to the amount of work expended in addition to actual damages;
(2) an order enjoining the act or failure to act;
(3) any other relief which the court deems proper.
TEX. INS. CODE ANN. ART. 21.21 § 17(b) (Vernon 1981).
The statute does not indicate that the "plaintiff" must be the representative or named plaintiff. The Fifth Circuit has stated that "[i]f the statute awards attorneys' fees to the named plaintiffs in a class action, the fees are attributed solely to the class representatives." HD Tire, 227 F.3d at 330 (emphasis added); see also In re Abbott Laboratories, 51 F.3d at 526. Under other circumstances, however, attorneys' fees could be charged to the entire class and apportioned pro rata among the class for purposes of determining the amount in controversy. HD Tire, 227 F.3d at 330-31; see also Quebe v. Ford Motor Company, 908 F. Supp. 446, 449-50 (W.D. Tex. 1995) ("When a plaintiff seeks damages for himself and unnamed class members, he may not aggregate the separate and distinct claims to satisfy the minimum jurisdictional prerequisites for federal jurisdiction. The `matter in controversy' language contained in § 1332 prohibits the aggregation of such claims, and this has long been the rule. . . . Thus, in class actions, the general rule has been that attorneys' fees should be distributed to the class members, both named and unnamed, on a pro rata basis.") (quotations and citations omitted). Because the statute does not specifically provide that attorneys' fees are awarded to the class representatives, the attorneys' fees cannot be attributed solely to Wald in order to determine whether the amount in controversy is sufficient. See HD Tire, 227 F.3d at 331; see also Johnson v. Directv, Inc., 63 F. Supp.2d 768, 770 (S.D. Tex. 1999).
III. CONCLUSION
All doubts are resolved against removal. Acuna v. Brown Root, Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229 (2000); Blackmore v. Rock-Tenn Company, Mill Division, Inc., 756 F. Supp. 288, 289 (N.D. Tex. 1991) (citations omitted). Because Allmerica has not met its burden of establishing federal subject matter jurisdiction, see Carpenter v. Wichita Falls Independent School District, 44 F.3d 362, 365 (5th Cir. 1995), Wald's motion to remand is GRANTED. This case is REMANDED to the 134th Judicial District Court of Dallas County, Texas. The clerk shall mail a certified copy of this memorandum order to the district clerk of Dallas County, Texas. 28 U.S.C. § 1447(c).