Opinion
IP 00-1262-C-T/G.
January 8, 2001.
ENTRY ON PLAINTIFFS' MOTION TO REMAND
Though this entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this entry will govern the case presently before this court. See, e.g., Tr. of Pension, Welfare, Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority and, therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the entry or the subsequent citation of it in other proceedings.
Plaintiffs, James Mitchell Wethington and Mary R. Wethington, sued Defendant, State Farm Mutual Automobile Insurance Company ("State Farm"), in Marion County, Indiana, Superior Court alleging that State Farm breached its contract with Plaintiffs and acted in bad faith when State Farm refused to pay for certain medical treatments. State Farm removed this action from the state court pursuant to 28 U.S.C. § 1332, 1441 and 1446. Plaintiffs moved to remand this action to the state court. For the following reasons, Plaintiffs' motion is granted.
I. Background
This cause of action arises out of a 1998 automobile accident that involved State Farm insureds James Mitchell and Mary R. Wethington. Ms. Wethington was injured in the crash and sought medical treatment for back, neck and shoulder pain, first at Methodist Hospital and subsequently with a chiropractor. Ms. Wethington submitted a claim to State Farm for payment of her medical bills under her insurance policy. Ms. Wethington's insurance policy covered necessary medical expenses up to her policy limit of $5000.00. (See August 3, 1998, Letter from Rolando Haywood, State Farm Claim Specialist, to Ms. Wethington.) State Farm paid some of Ms. Wethington's medical bills and refused to pay others after determining that a portion of the treatment that Ms. Wethington received was not reasonable and necessary. State Farm's determination was a result of a utilization review conducted by an Illinois corporation. The reviewing chiropractor concluded that the maximum medical improvement for chiropractic treatments rendered was achieved on November 20, 1998. State Farm thus refused to pay for chiropractic treatment after November 20, 1998. State Farm has made total payments in the amount of $1552.00 for Ms. Wethington's medical expenses.
Ms. Wethington disagreed with State Farm's position concerning her having achieved maximum medical improvement and asked how she could proceed in resolving the dispute. She was informed by State Farm that she could request arbitration. She did so, and retained an attorney. Ms. Wethington's attorney believed that her policy did not contain a provision requiring arbitration, nor did it authorize utilization review. Ms. Wethington filed a suit for damages, and arbitration never occurred.
Ms. Wethington alleges that State Farm breached the insurance policy entered into by her and State Farm, that State Farm breached its duty of good faith and fair dealing and in so doing intentionally inflicted emotional distress and caused her to suffer personal injury, and that State Farm invaded her privacy. As a result, she seeks additional medical payment to be made by State Farm in the amount of $3448.00 and compensatory and punitive damages for State Farm's tortious conduct. Mr. Wethington also brought a claim against State Farm. He alleges that the acts and omissions of State Farm have caused him to lose the services, companionship and consortium of Ms. Wethington and seeks damages for such. Finally, Plaintiffs seek prejudgment interest and attorney's fees.
II. Discussion
A civil suit filed in state court may be removed to federal district court only if the district court has original federal subject matter jurisdiction over the suit such that the suit may have been originally filed in the district court. See Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993); Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). The party seeking removal bears the burden of establishing the elements of jurisdiction. See NLFC, Inc., v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995) (citations omitted). That party must support its jurisdictional allegations with "competent proof." Id. (quotation omitted). "This has been interpreted to mean a preponderance of the evidence or proof to a reasonable probability that jurisdiction exists." Id. (citing Shaw, 994 F.2d at 366 n. 2) (quotation omitted). The removal statute is to be interpreted narrowly and all doubts as to the propriety of removal must be resolved in favor of remand. See, e.g., Doe, 985 F.2d at 911 (citations omitted). Because State Farm removed this cause of action on the ground that federal diversity jurisdiction exists, it bears the burden of proving that the elements of diversity jurisdiction are satisfied. Thus, State Farm must prove by a reasonable probability that the amount in controversy is greater than $75,000.00 and that the parties are of diverse citizenship. See 28 U.S.C.A. § 1332 (West Supp. 2000).
A. Amount In Controversy
"Generally the amount in controversy claimed by a plaintiff in good faith will be determinative on the issue of jurisdictional amount[.]" NLFC, 45 F.3d at 237. However, in Indiana a plaintiff cannot demand a specific dollar amount or figure in a complaint "seeking damages for personal injury . . . or seeking punitive damages[.]" IND. R. TRIAL P. 8(A)(2). In compliance with Indiana Trial Rule 8(A)(2), Plaintiffs did not specify a value, above the $3448.00 they allege is owing under the insurance policy, for which they believe their claims in totality to be worth. While Trial Rule 8(A)(2) may frustrate State Farm's ability to determine the amount in controversy solely from the Complaint, this court "may look outside the pleadings to other evidence of jurisdictional amount in the record." Chase v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427-28 (7th Cir. 1997) (finding that evidence, including plaintiff's sole settlement offer of $120,000.00, plaintiff's refusal to respond to defendant's request to admit that the case was worth less than the jurisdictional amount, plaintiff's allegations of "serious, disabling physical and mental injuries that would result in loss of future earning potential[,]" and a previous order in the case denying remand on the same facts, proved to a reasonable probability that the amount in controversy exceeded the jurisdictional amount requirement). However, as discussed above, State Farm must come forward with competent proof that the amount in controversy is in excess of $75,000.00.
1. Breach Of Contract
The Complaint clearly states that State Farm owes $3448.00 under the medical coverage provision of the insurance policy. (See Complaint ¶ 16). State Farm argues, presumptively based on the allegations stated in Plaintiffs' Complaint, that Plaintiffs will argue to the jury that should the jury find in favor of Plaintiffs on their breach of contract claim, the jury should award the total amount owing under the insurance policy — $3448.00. The court agrees with State Farm and finds that Plaintiffs' Complaint is competent proof that Plaintiffs will seek the entire amount of $3448.00 as damages for State Farm's alleged breach of contract. Therefore, there can be little dispute that at least $3448.00 is in controversy.
2. Breach Of Duty Of Good Faith And Fair Dealing
Ms. Wethington claims that State Farm breached its duty to act in good faith in a number of ways. Ms. Wethington maintains that State Farm failed to advise her that arbitration was not required under her insurance policy and took unfair advantage of her in order to pressure her into settlement, that utilization review was not authorized by her insurance policy and that State Farm failed to gain her authorization prior to proceeding with such review, and that State Farm deceived her in the handling of her medical payments claims and caused unfounded delay in making payments.
State Farm concedes that under Indiana law the tort of bad faith insurance is a recognizable claim under which Ms. Wethington may be able to recover. See Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993). State Farm also concedes that should Ms. Wethington meet her burden and convince the jury that State Farm committed the tort of bad faith insurance, "Plaintiffs are arguably entitled to the damages flowing reasonably foreseeably from the tort[.]" Additionally, State Farm recognizes that the damages recoverable under the tort theory cannot be duplicative of the damages recoverable under the contract theory. (Def.'s Br. in Resp. at 15.)
Ms. Wethington submits two theories of recovery for her claim based on bad faith insurance: intentional infliction of emotional distress and pain and suffering.
a. Emotional Distress
Ms. Wethington, in the Complaint, alleges that as a result of State Farm's actions she suffered "great worry, anxiety, frustration and distress" which "caused her to be depressed, humiliated, and embarrassed, resulting in severe headaches and sleeplessness." (Complaint ¶ 27.) She further alleges that this "stress may have aggravated her physical condition" and "preyed on her psychologically, making her more vulnerable to mental suffering." (Id. at par; 28.) State Farm concedes the difficulty of evaluating the amount of damages a jury would award Ms. Wethington if it found in her favor on this claim. However, without presenting any evidence of the amount that Plaintiffs intend to request from the jury, State Farm states that it is "reasonably probable" that Ms. Wethington will ask the jury for $25,000.00 for these injuries. State Farm goes on to assert that if the jury finds in favor of Ms. Wethington, "it is not too much of a stretch to reasonably believe that the jury would award $6500 to her for those symptoms." (Def.'s Br. in Resp. at 17.)
State Farm cites four "cases" in support of its conclusion that $6500.00 is an appropriate figure for this court to use in determining the amount is controversy. One of those "cases", Scherr v. 20th Century Insurance Co., 1994 WL 1029103 (LRP Jury), is a jury verdict summary report and another, Landis v. Employee Plans, Inc., is merely a case summary that appeared in the February 18, 1998, issue of The Indiana Lawyer/Trial Reports Review. Scherr is totally unhelpful to this court. The entire body of text reads:
The court places "cases" in quotation marks because, as revealed below, the word is not used to refer to reported cases that a reader would normally associate with use of this term.
A male suffered emotional distress when the defendant insurance company denied a claim under his homeowners policy. The plaintiff contended that the defendant acted in bad faith and cancelled his policy without reason. The defendant contended that they [sic] were not liable for his claims because the policy was voided. The award was offset for prior payment to $173,154.
Scherr, 1994 WL 1029103. This certainly is not what the Seventh Circuit had in mind when it called for "competent proof."
Landis is equally unhelpful. Although the body of text describing that case is longer than the text describing Scherr, the text lacks factual specificity that would enable this court to determine whether any similarities between Landis and this case exist. Despite mentioning that the damages in that case were awarded for emotional distress, The Indiana Lawyer/Trial Report Review summary gives no description whatsoever of the emotional distress that Mr. Landis suffered.
The remaining two cases that State Farm relies upon for support are Schimizzi v. Illinois Farmers Insurance Co., 928 F. Supp. 760 (N.D. Ind. 1996), and Ace v. Aetna Life Insurance Co., 139 F.3d 1241 (9th Cir. 1998). In Schimizzi, 928 F. Supp. at 763, the plaintiff sued her insurer "for breach of contract and tortious breach of an insurer's duty to deal in good faith with its insured[.]" The jury awarded the plaintiff $100,000.00 in emotional distress damages. See id. at 776. However, in that case, "Dr. Schimizzi had seen her lifelong dream of practicing medicine shattered by her disability (though not by [her insurer's] wrongdoing), and the jury reasonably could have found that her chronic pain left her more vulnerable to mental suffering than otherwise healthy persons who suffered from discrimination in employment or housing." Id. at 781. That is hardly the situation here. In fact, from an emotional distress standpoint, Schimizzi and this case are very different. In this case, there is no indication that Ms. Wethington's life long dreams were shattered by the pain in her shoulder, back and neck and, as a result, she was more vulnerable to mental suffering. It is difficult, from a factual standpoint, to compare Dr. Schimizzi's vulnerability to mental suffering with Ms. Wethington's vulnerability. Schimizzi, thus, is not very persuasive evidence regarding the amount in controversy.
Incidently, the trial court, in vacating the jury's award, concluded, "A comparison between the proof adduced at this trial and other cases involving damage awards for emotional distress discloses that the jury's award of $100,000 is monstrously excessive." Id.
In Ace, 139 F.3d at 1242, the plaintiff sued her insurer alleging that it "acted in bad faith in denying her claim from long-term disability benefits." A jury awarded the plaintiff $100,000.00 for emotional distress. See id. Ace, however, is factually distinct from this case and adds very little weight to State Farm's argument that Ms. Wethinton's claim from emotional distress should be valued at $6500.00. While the court in that case did not discuss the plaintiff's emotional distress in detail, it does note that while the plaintiff and the insurance company argued over coverage, the plaintiff "had been forced to sell much of her personal property and her home. She sent her eldest son to live with another family and she lived in her car [for approximately one and one-half months.]" Id. at 1246. Moreover, an abundance of evidence existed from which a jury could have correctly concluded that the insurer acted in bad faith and with reckless indifference in denying the plaintiff's claim. See id. at 1247.
As an aside, the jury also awarded $16.5 million in punitive damages! See id. at 1242.
The evidence State Farm cites for support of its conclusion that Ms. Wethington's emotional distress should be valued at $6500.00 for the purpose of determining the amount in controversy is not persuasive, nor is it competent proof. From the evidence State Farm sets forth, this court cannot conclude to a reasonable probability the amount in controversy concerning this claim.
b. Pain And Suffering
State Farm has presented no evidence, absent recounting the allegations in the Complaint, of the amount in controversy regarding Ms. Wethington's personal injuries. It is therefore impossible for this court to estimate the amount of damages, if any, that Ms. Wethington may be able to recover as a result of her pain and suffering. Consequently, State Farm has not set forth competent proof of the amount in controversy for Ms. Wethington's pain and suffering.
3. Invasion Of Privacy
Ms. Wethington requests damages for State Farm's invasion of privacy. Ms. Wethington claims that State Farm invaded her privacy by sending her medical records to an independent chiropractor for a utilization review when her insurance policy did not permit such a review. State Farm again recognizes the difficultly in evaluating the value of Ms. Wethington's claim, but asserts that even if the claim is worth "only" $2500.00 the amount in controversy requirement would be satisfied.
State Farm again cites the court to a jury verdict summary report in support of its assigning a $2500.00 minimum value to Ms. Wethington's claim. This "case" is Gulden v. Hamra, 1993 WL 551909 (LRP Jury). The entire body of text reads:
A female suffered emotional distress when her medical records appeared in a magazine article about the male defendant physician. The defendant was holding the records in a photograph. The plaintiff contended breach of warranty, invasion of privacy, and wrongful disclosure of confidential information. The co-defendant publisher settled prior to trial.
Id. The total amount awarded in Gulden was $2500.00. From this jury verdict report summary, it is impossible for this court to determine whether any factual similarities exist between Gulden and this case. Moreover, it is difficult to discern how this case at all supports State Farm's position. At most, this verdict summary proves that it is possible for a plaintiff alleging emotional distress resulting from a doctor's breach of confidentiality to recover damages for the wrong doing. This, however, is not in dispute. State Farm has proven nothing in regards to the value of Ms. Wethington's invasion of privacy claim. At the absolute most, State Farm has demonstrated the obvious — that it is possible for a plaintiff to recover damages in an action for invasion of privacy. However, the possibility that Ms. Wethington may recover an amount equal to or in excess of $2500.00 is entirely too speculative to include this dollar figure in a calculation to determine the amount in controversy.
4. Punitive Damages
Ms. Wethington prays for punitive damages "because of the tortious breach of the duty of good faith which State Farm has completely disregarded." (Complaint ¶ 30.) The Seventh Circuit has held that punitive damages may be considered in determining the jurisdictional amount. See Anthony v. Sec. Pac. Fin. Servs., Inc., 75 F.3d 311, 315 (7th Cir. 1996) ("Where both actual and punitive damages are recoverable under a complaint each must be considered to the extent claimed in determining the jurisdictional amount.") (quotation omitted). However, as State Farms points out:
Punitive damages . . . are only allowable under Indiana law if there is clear and convincing evidence that a defendant acted with malice, fraud, gross negligence or oppressiveness which was not the result of mistake of fact or law, honest error in judgment, over zealousness, mere negligence, or human failing. Erie. A defendant must have subjected other persons to probable injury, with an awareness of such impending danger and with heedless indifference of the consequences. Samuel v. Home Run, Inc., 784 F. Supp. 548, 550 (S.D. Ind. 1992). Further, a defendant against whom punitive damages are sought in a tort action is cloaked with the presumption that his actions, though tortious, were nevertheless noniniquitous human failing. Budget Car Sales v. Stott, 656 N.E.2d 261,
266 (Ind.Ct.App. 1995), trans. den. Finally, Indiana law arguably caps punitive damages at the greater of three times compensatory damages or $50,000. I.C. 34-51-3-4.
(Def.'s Br. in Resp. at 19.) Thus, Plaintiffs, under Indiana law, have a difficult task in merely proving that they are entitled to punitive damages. Moreover, even if a jury was to award Plaintiffs punitive damages, such an award would be capped by section 34-51-3-4 of the Indiana Code.
State Farm cites as evidence four "cases" in which the plaintiffs were awarded punitive damages for an insurer's bad faith in denying a policy holder's claim. State Farm, however, does not bring to the court's attention any factual similarities between the "cases" State Farm cites and this case. These "cases" are unpersuasive and do not provide competent proof of a reasonable probability that this court has jurisdiction. At most, these "cases" prove that it is possible for a plaintiff to receive an award of punitive damages related to a claim of bad faith committed by an insurer.
Again, State Farm cites the court to a jury verdict summary report.
Additionally, State Farm sets forth the argument that it believes Plaintiffs will present to the jury in asking for punitive damages, and then concludes, "It is, therefore, reasonably probable that the Plaintiffs will request the highest possible award of punitive damages from the jury." (Def.'s Br. in Resp. at 21). This is not evidence. Nor is it competent proof of the amount in controversy. Cf. Hohn v. Volkswagen of Am., Inc., 837 F. Supp. 943, 945 (C.D. Ill. 1993) ("Although it may be tempting to simply assume that Plaintiffs will seek [punitive] amounts that, when combined with compensatory damages, will easily meet and exceed the $50,000 jurisdictional minimum, jurisdiction cannot be based upon probabilities, surmise, or guesswork.") (citation omitted).
5. Attorney's Fees
Plaintiffs request attorney's fees under section 34-1-32-1 (currently section 34-52-1-1) of the Indiana Code. That section provides in part:
(b) In any civil action, the court may award attorney's fees as part of the cost to the prevailing party, if the court finds that either party:
(1) brought the action or defense on a claim or defense that is frivolous, unreasonable, or groundless;
(2) continued to litigate the action or defense after the party's claim or defense clearly became frivolous, unreasonable, or groundless; or
(3) litigated the action in bad faith.
Ind. Code § 34-52-1-1 (Michie 1998). The Seventh Circuit has held that attorney's fees should be considered in determining the jurisdictional amount even when the state statute permitting attorney's fees labels the fees as costs. See Ross v. Inter-Ocean Ins. Co., 693 F.2d 659, 661 (7th Cir. 1982) ("[W]here a litigant has a right, based on contract, statute, or other legal authority, to an award of attorney's fees if he prevails in the litigation, a reasonable estimate of those fees may be included in determining whether the jurisdictional minimum is satisfied.") (citation omitted); Batts Rest., Inc. v. Commercial Ins. Co. of Newark, 406 F.2d 118, 120 (7th Cir. 1969) ("[I]t is well settled that the amount claimed for attorney fees must be added to the principal sum sued for in determining the amount in controversy, even though the state statute labels the fees as costs.") (citing Missouri State Life Ins. Co. v. Jones, 290 U.S. 199 (1933)). However, an award of attorney's fees for Plaintiffs in this case is speculative, to say the least.
Most importantly, State Farm has presented absolutely no evidence of the amount in controversy concerning attorney's fees. At most, State Farm has demonstrated that it may be possible for Plaintiffs to recover attorney's fees. But, a mere possibility of recovery is too speculative to satisfy the reasonable probability standard. See Reason v. Gen. Motors Corp., 896 F. Supp. 829, 835 (S.D. Ind. 1995) (holding that a mere possibility that the amount in controversy requirement may be satisfied is too speculative to meet the reasonable probability standard). As a result of State Farm's failure to come forward with competent proof, State Farm has failed to meet its burden.
6. Other Evidence
State Farm has pointed out that Plaintiffs, interestingly, have not argued that the value of their claim is less than $75,000.00; Plaintiffs merely argue that State Farm has not met its burden of proving that this court has original jurisdiction. While it might be inferred from Plaintiffs' argument — or more appropriately, lack thereof — that Plaintiffs believe that their claim is worth more than $75,000.00, it can also be inferred that Plaintiffs failed to argue that their claim is worth less than $75,000.00 because they need not make such an argument here. As stated above, State Farm bears the burden to prove by a reasonable probability that federal jurisdiction exists. Plaintiffs do not bear any burden to prove that jurisdiction does not exist.
This court agrees with Plaintiffs that State Farm did not meet its burden. State Farm did not present competent proof of a reasonable probability that this court has subject matter jurisdiction, as it must.
State Farm entitles a section of its brief "Designation of Evidence." This section and the evidence designated here bears comment. This section is a detailed account of the facts. A great deal of the section recounts the claims procedure through which State Farm took Ms. Wethington and describes State Farm's evaluative process. It then proceeds to outline the allegations in the Complaint. The evidence designated supports the facts stated in this section. A review of this evidence sheds light on the procedures State Farm undertook in evaluating Ms. Wethington's claims and its reasons for denying a portion of those claims. This evidence is not, however, competent proof of a reasonable probability that the amount in controversy here is $75,000.00. If anything, this evidence lends support to the opposite conclusion — that the amount in controversy is not in excess of $75,000.00.
Notably, State Farm has not cited any evidence that Plaintiffs believe their case to be worth more than $75,000.00. From the evidence in this court's possession, it does not appear that Plaintiffs denied or refused to answer a request to admit that they believed their case to be worth more than $75,000.00. Additionally, there is no tender of a settlement offer or demand that may have helped establish the amount in controversy.
Because it has been determined that the amount in controversy requirement has not been satisfied, a requirement for this court's exercise of diversity jurisdiction, it is not necessary for this court to address the diversity of citizenship requirement. Nor is it necessary to address the supplemental jurisdiction issue that would exist if this court concluded that the amount in controversy for Ms. Wethington's claims exceeded $75,000.00.
A supplemental jurisdiction issue would exist if the amount in controversy for Ms. Wethington's claims exceeded $75,000.00, but the amount in controversy for Mr. Wethington's claim did not exceed $75,000.00. It is not alleged by State Farm, nor is any evidence presented, that the amount in controversy for Mr. Wethington's claim exceeds the jurisdictional amount requirement.
B. Attorney's Fees Resulting From State Farm's Removal Action
Plaintiffs request this court to award them attorney's fees and costs arising from State Farm's removal action because the action was taken without proper foundation. This court has discretion to award attorney's fees and costs under 28 U.S.C. § 1447(c). Section 1447(c) "is not a sanctions rule; it is a fee-shifting statute, entitling the district court to make whole the victorious party." Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 410 (7th Cir. 2000).
State Farm, citing Hohenegger v. Northern Indiana Public Service. Co., 967 F. Supp. 350 (N.D. Ind. 1997), contends that such an award is typically not appropriate when the removal question is close. Moreover, State Farm submits that its removal action was perfected in good faith. The removal question presented here, however, is not close. As addressed in detail above, State Farm has come forward with very little evidence (and that may be an overstatement) that the amount in controversy requirement is anywhere close to being satisfied. This case does not belong in federal court. Additionally, it is not necessary that State Farm have acted in bad faith for attorney's fees to be warranted. See, e.g., Tenner v. Zurek, 168 F.3d 328, 330 (7th Cir. 1999) ("We agree with those courts that have held that § 1447(c), as amended, removed the need to show bad faith to receive attorney fees."). As result, in an effort to make Plaintiffs whole, an award of attorney's fees to Plaintiffs is appropriate here.
For the reasons stated above, James Mitchell and Mary R. Wethington's motion will be GRANTED and an ORDER OF REMAND to the Marion County Superior Court will be entered. Plaintiffs have seven days from the date of this order to file a statement of their attorney's fees for this remand action. Defendant has seven days from the date of Plaintiffs' statement to respond to Plaintiffs' request.
ALL OF WHICH IS ORDERED.