Opinion
Case No.: 5:22-cv-02066-MEMF (PDx)
2023-05-11
John WOOLSEY, an individual; and Christy Woolsey, an individual, Plaintiffs, v. STATE FARM GENERAL INSURANCE COMPANY, an Illinois Corporation; and Does 1 through 100; et al., Defendants.
Elan Jason Dunaev, EJD Law Group APC, Newport Beach, CA, for Plaintiffs. Angela N. Martin, WFBM, LLP, Irvine, CA, Christy Gargalis, Jean M. Daly, WFBM LLP, Los Angeles, CA, for Defendant State Farm General Insurance Company.
Elan Jason Dunaev, EJD Law Group APC, Newport Beach, CA, for Plaintiffs. Angela N. Martin, WFBM, LLP, Irvine, CA, Christy Gargalis, Jean M. Daly, WFBM LLP, Los Angeles, CA, for Defendant State Farm General Insurance Company.
ORDER GRANTING MOTION TO REMAND [ECF NO. 11]
MAAME EWUSI-MENSAH FRIMPONG, United States District Judge
Before the Court is the Motion to Remand filed by Plaintiffs John and Christy Woolsey. ECF No. 11. The Court finds that it lacks subject matter jurisdiction over this matter to proceed. Accordingly, for the reasons stated herein, the Court hereby GRANTS the Motion to Remand.
I. Background
A. Factual Background
Unless otherwise indicated, the following factual background is derived from the Complaint. Complaint, ECF No. 1-1 ("Compl.").
Plaintiffs John and Christy Woolsey (the "Woolseys") are owners of a single-family residence in Murrieta, California. Compl. ¶ 5. On or about January 29, 2022, the Woolseys discovered a water leak from a plumbing line that caused "significant" damage to their property. Id. ¶ 6. At the time of the incident, the Woolseys were insured for property damage and loss under homeowners' insurance policy number 75-E7-Y888-0 (the "Policy") issued by Defendant State Farm General Insurance Company ("State Farm"). Id. ¶ 7. The Policy provided coverage with a limit of up to $238,950.00 for personal property and up to $381,600.00 for the dwelling. Id., Ex. 1.
The Woolseys notified State Farm of the damage and received the loss claim number 75-30C3-47B (the "Claim"). Id. ¶ 8. State Farm did not inspect the property but instead relied upon statements by the Woolseys and the Woolseys' contractors to make a coverage determination. Id. ¶¶ 8-9, 12. State Farm ultimately denied the claim. Id. ¶ 11.
B. Procedural History
On October 7, 2022, the Woolseys filed a Complaint against State Farm, alleging three causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; and (3) violations of CAL. BUS. & PROF. CODE §§ 17200, et seq. See generally Compl. The Woolseys have not specified an exact amount of damages, but they seek to recover (1) special damages, (2) general damages, (3) contract benefits under the policy, (4) attorneys' fees and costs, (5) punitive and exemplary damages, (6) injunctive relief, (7) costs and expenses of the suit, and (8) other and further relief as the Court deems just and proper. See generally Compl at Prayer.
On November 22, 2022, State Farm removed the state action to federal court on the basis of diversity jurisdiction. ECF No. 1. ("Removal"). On October 6, 2022, the Woolseys filed the instant Motion to Remand. ECF No. 11. ("Motion" or "Mot."); see also Memorandum to Support Motion, ECF No. 11-1 ("Remand Memo"). In conjunction with the Motion, the Woolseys submitted a Declaration estimating $8,960.00 in attorneys' fees for litigation related to removal. ECF No. 11-2 ("Remand Decl."). On December 22, 2022, State Farm submitted an Opposition to the Motion to Remand. ECF No. 13 ("Opp'n"). In conjunction with its Opposition, State Farm submitted a pre-litigation demand letter from the Woolseys asking for $38,545.86 in contract damages. ECF No. 13-1, Decl. Exhibit 1 ("Demand Letter"). The Woolseys submitted their Reply on April 27, 2023. ECF No. 17 ("Reply"). The Court held oral argument on this matter on May 11, 2023.
II. Applicable Law
A. Motion to Remand and Diversity Jurisdiction
The "[f]ederal courts are courts of limited jurisdiction." Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 773 (9th Cir. 2017) (internal quotation marks omitted). Civil actions may be removed from state court if the federal court has original jurisdiction. See Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 33, 123 S.Ct. 366, 154 L.Ed.2d 368 (2002) ("Under the plain terms of § 1441(a), in order properly to remove [an] action pursuant to that provision, . . . original subject-matter jurisdiction [must] lie[ ] in the federal courts."). When doubt regarding the right to removal exists, a case should be remanded to state court. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090-91 (9th Cir. 2003) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). Further, a removed case must be remanded "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c).
Removal of state action may be based on either diversity or federal question jurisdiction. City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997); Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Diversity jurisdiction under 28 U.S.C. § 1332(a) requires that (1) all plaintiffs be of different citizenship than all defendants, and (2) the amount in controversy exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The defendant seeking removal of an action from state court bears the burden of establishing grounds for federal jurisdiction. Geographic Expeditions, Inc. v. Est. of Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010). "[A] defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold." Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).
B. Determining the Amount in Controversy
For diversity jurisdiction, the district court first considers whether it is "facially apparent" from the complaint that at least $75,000 is in controversy. Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). When this is not apparent from the complaint, the amount in controversy alleged by the defendant is normally accepted. Jauregui v. Roadrunner Transportation Servs., Inc., 28 F.4th 989, 992 (9th Cir. 2022). However, if the plaintiff contests the amount in controversy, "both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount in controversy requirement has been satisfied." Id. (quoting Dart Cherokee, 574 U.S. at 88, 135 S.Ct. 547).
Under the preponderance of the evidence standard, the removing party must be able to rely on "a chain of reasoning that includes assumptions" so long as "the reasoning and underlying assumptions are reasonable." Id. at 993 (quoting LaCross v. Knight Transp. Inc., 775 F.3d 1200, 1201 (9th Cir. 2015)). These assumptions may also be reasonable if they are grounded in the allegations of the complaint. Arias v. Residence Inn by Marriott, 936 F.3d 920, 925 (9th Cir. 2019).
In order to determine the types of evidence that satisfy the preponderance of the evidence test, the Ninth Circuit has endorsed the Fifth Circuit's approach. See Singer, 116 F.3d at 377. In addition to considering the facts presented in the removal petition, defendants can submit any "summary-judgment-type evidence relevant to the amount in controversy at the time of removal." Id. (quoting Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335-36 (5th Cir. 1995)).
III. Discussion
The parties' dispute in this case concerns whether the amount in controversy alleged exceeds the jurisdictional amount. State Farm contends that it has satisfied its burden of demonstrating by a preponderance of the evidence that the amount in controversy meets the jurisdictional threshold and that the Court should therefore deny the Motion to Remand. See Opp'n at 1-2.
The Woolseys argue that State Farm has failed to meet its burden and claim that they are entitled to attorneys' fees as a result of State Farm's improper removal. See Remand Memo at 6-7. Under 28 U.S.C. § 1447(c), the Court has discretion to award attorneys' fees when removal is improper. 28 U.S.C. § 1447(c); see id.
A. State Farm has not shown by a preponderance of the evidence that the amount in controversy meets the jurisdictional threshold required for removal.
State Farm alleges that the sum of the following results in an amount in controversy that exceeds $75,000: (1) "significant" damage to the residence caused by the plumbing leak; (2) the Woolseys' Demand Letter for $38,545.86 in contract damages; (3) the Woolseys' request for attorneys' fees, including an amount of $8,960.00 for the Motion to Remand and an unspecified amount referenced in the Prayer for Relief including attorneys' fees; (4) punitive and exemplary damages referenced in the Prayer for Relief; and (5) the Policy's coverage limit of up to $238,950.00 for personal property and up to $381,600.00 for the dwelling. See generally Opp'n at 2-4.
Before calculating the amount in controversy, however, the Court must determine whether each measure of damages can be considered "summary-judgment-type evidence" that is plausible and "relevant to the amount in controversy at the time of removal." Singer, 116 F.3d at 377. If so, then the Court will determine whether the total damages yield an amount in controversy in excess of $75,000.
Ultimately, as discussed below, the Court finds that State Farm has not shown by a preponderance of the evidence that the damages alleged by the Woolseys exceed $75,000. The damages resulting from the Demand Letter and the attorneys' fees for the Motion to Remand—the only two measures that the Court finds it can consider—do not meet the jurisdictional threshold. All other measures of damages argued by State Farm are too speculative and conclusory to be used as a basis for calculating the amount in controversy.
i. The "significant" plumbing leak damages may not be used to calculate the amount in controversy.
State Farm contends that the Woolseys' economic damages should be used to calculate the amount in controversy. Opp'n at 1. Although the Woolseys did not allege a specific figure for damages in their Complaint, State Farm contends that the Woolseys indicated that they nonetheless suffered economic damages by alleging that the water leak caused "significant" damage and that they retained contractors as a result. Id. at 1-2; see generally Compl. The Woolseys argue that the term "significant" is vague and cannot be used to show that the jurisdictional threshold has been met. Remand Memo at 4.
The Court finds that the "significant" damage alleged in the Complaint is neither specific nor quantifiable enough to be used to calculate the amount in controversy. Removal "cannot be based simply upon conclusory allegations" when the Complaint is silent as to the amount of damages sought. Singer, 116 F.3d at 377 (quoting Allen, 63 F.3d at 1335). The term "significant" cannot serve as a replacement for "summary-judgment-type evidence," such as the hourly rate of the contractors, the number of hours worked, or the cost of materials. Although the Woolseys do allege that they retained contractors, the actual cost associated with contractors is widely variable. Assigning a damages value to contracting work in order to determine whether the jurisdictional threshold has been met would be speculative. As such, the Court declines to consider the "significant" damage alleged in the Complaint for purposes of calculating the amount in controversy.
ii. The Woolseys' Demand Letter may be used to calculate the amount in controversy.
State Farm contends that the Woolseys' Demand Letter may be used to calculate the amount in controversy. Opp'n at 2; see also Demand Letter. The Woolseys claim in their Demand Letter that contract damages alone were $40,545.86 due to costs of restoration and mitigation, plumbing, and dining out while the kitchen was inoperable. Demand Letter at 3; Opp'n at 2. Although the Woolseys confirm the legitimacy of the Demand Letter, they argue that because the Complaint is silent on the specific amount of damages requested, State Farm cannot introduce new information not included in the Complaint or in its Notice of Removal. Reply at 2-3.
However, the Court finds that it may consider the damages in the Demand Letter in order to determine whether the jurisdictional threshold has been met. When determining the amount in controversy, district courts are allowed to considered evidence submitted subsequent to the notice of removal, including evidence submitted in conjunction with an opposition to a motion to remand. See Willingham v. Morgan, 395 U.S. 402, 407 n.3, 89 S.Ct. 1813, 23 L.Ed.2d 396 (1969) ("[I]t is proper to treat the removal petition as if it had been amended to include the relevant information contained in the later-filed affidavits."); Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002) ("The district court did not err in construing [defendant's] opposition as an amendment to its notice of removal.").
The Demand Letter provides detailed calculations that support the Woolseys' alleged damages. Specifically, the Woolseys provided an estimate from a restoration company in the amount of $4,177.77 for mitigation, an estimate in the amount of $26,623.63 for restoration, and invoices from a plumbing company in the amount of $7,450.00. See Demand Letter at 3. They also provided a spreadsheet of their food costs, including various restaurants and delivery service, totaling $2,294.46. Id. By introducing the Demand Letter, State Farm has provided "summary-judgment-type evidence" that the Court may consider when determining whether the jurisdictional threshold has been met. As such, the Court will consider the $40,545.86 in estimated costs from the Woolseys' Demand Letter when calculating the amount in controversy. iii. The attorneys' fees for the Motion to Remand may be used to calculate the amount in controversy, but the Court declines to consider the unspecified attorneys' fees amount referenced in the Prayer for Relief.
State Farm contends that the Court should also factor into its amount in controversy calculation the Woolseys' requested attorneys' fees, including an amount of $8,960.00 for the Motion to Remand and an unspecified amount referenced in the Prayer for Relief. Opp'n at 1, 3.
1. Attorneys' fees for the Motion to Remand may be used to calculate the amount in controversy.
State Farm argues that the Woolseys' request for $8,960 in attorneys' fees in connection with the Motion to Remand should be factored into the Court's amount in controversy calculation. Id. When the Woolseys submitted their Motion to Remand, they also included a Declaration from the attorney of record detailing the costs of the work already incurred and anticipated future costs. See generally Remand Decl. The Declaration states that the attorney had already spent 13.4 hours to bring the Motion and anticipates 9 more hours of work. Id. at 2. With a rate of $400/hour, this totals $5,360 in accrued attorneys' fees and $3,600 in future fees. Id.
When determining the amount in controversy, attorneys' fees may be considered if they are recoverable by the plaintiff by statute or contract. Fritsch v. Swift Transportation Co. of Arizona, LLC, 899 F.3d 785, 794 (9th Cir. 2018); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). 28 U.S.C. § 1447(c) allows for payment of attorneys' fees in an order remanding the case if removal is found to be improper. 28 U.S.C. § 1447(c). Determining whether to award attorneys' fees turns on the reasonableness of the removal. Gardner v. UICI, 508 F.3d 559, 562 (9th Cir. 2007).
As an initial matter, it is clear that attorneys' fees are recoverable under 28 U.S.C. § 1447(c). Moreover, the Court finds that State Farm has presented detailed, "summary-judgment-type" evidence relating to the amount in controversy in the form of the Remand Declaration. See generally Remand Decl. Accordingly, the Court finds that the estimated attorneys' fees for the Motion to Remand in the amount of $8,960 can be considered in determining whether the jurisdictional threshold has been met. 2. The unspecified amount of attorneys' fees referenced in the Prayer for Relief may not be used to calculate the amount in controversy.
State Farm argues that the unspecified amount of attorneys' fees the Woolseys are seeking based on their claims in the Complaint should also be used to calculate the amount in controversy. Opp'n at 3. The Woolseys request attorneys' fees in the Complaint's Prayer for Relief and as part of their claim for breach of the implied covenant of good faith and fair dealing. Compl. ¶ 5, at Prayer. The Woolseys allege in their Complaint that, because they were required to retain legal counsel due to State Farm's conduct, they are entitled to recover attorneys' fees. Id. ¶ 5. Attorneys' fees are recoverable "[w]hen an insurer's tortious conduct reasonably compels the insured to retain an attorney to obtain the benefits due under a policy." Brandt v. Superior Court, 37 Cal.3d 813, 210 Cal.Rptr. 211, 693 P.2d 796, 798 (1985); see also Compl. ¶ 5.
The Woolseys argue that although they may be entitled to attorneys' fees if State Farm's conduct is found to be in bad faith, these damages are "merely speculative at this juncture." Reply at 3. However, the Ninth Circuit has recognized that future attorneys' fees are still "at stake" in the litigation. Fritsch, 899 F.3d at 794. As a result, when assessing the amount in controversy at the time of removal, the Court must consider all relief that a plaintiff is entitled to if the action succeeds—including potential attorneys' fees. See id. ("Accordingly, if the law entitles the plaintiff to future attorneys' fees if the action succeeds . . . the defendant may attempt to prove that future attorneys' fees should be included in the amount in controversy.").
State Farm alleges that based on the Woolseys' calculation of $8,960 in attorney fees for the Motion to Remand, litigating their bad faith claim will result in far greater attorneys' fees that, following written discovery and depositions, will exceed $75,000. Opp'n at 4.
This Court finds that as a matter of law, it must consider future attorneys' fees for the Woolseys' bad faith claim when determining the amount in controversy. However, this Court also finds that State Farm has failed to meet the preponderance of the evidence standard for determining the amount in controversy. Although the hourly rate of the Woolseys' counsel of record is "summary-judgment-type evidence," neither the Woolseys nor State Form set forth any other argument by which the Court could assess attorneys' fees. Extrapolating from "written discovery" and "depositions" is neither specific nor quantifiable enough to assess whether the jurisdictional threshold has been met. As such, the Court declines to consider an unspecified amount of attorneys' fees when calculating the amount in controversy. iv. The punitive and exemplary damages as alleged in the Woolseys' Complaint may not be used to calculate the amount in controversy.
State Farm contends that the Woolseys' request for punitive and exemplary damages based on the claims in their Complaint should be used to calculate the amount in controversy. Opp'n at 5. The Woolseys' request for these damages is stated in the Complaint's Prayer for Relief and as part of their claim for breach of the implied covenant of good faith and fair dealing. Compl. ¶ 32, at Prayer. The Woolseys argue that their punitive and exemplary damages should equal an amount sufficient to punish and deter State Farm from engaging in similar future conduct. Id. ¶ 32. Under California Civil Code § 3294, such damages are recoverable when "the defendant has been guilty of oppression, fraud, or malice." CAL. CIV. CODE § 3294.
As with attorneys' fees, punitive damages may be considered when determining the amount in controversy if they are recoverable as a matter of state law. Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001). When the punitive damages are unspecified, courts may look to jury verdicts in cases with analogous facts.
See Campbell v. Hartford Life Ins. Co., 825 F. Supp. 2d 1005, 1008 (E.D. Cal. 2011); Faulkner v. Astro-Med, Inc., 1999 WL 820198, at *4 (N.D. Cal. Oct. 4, 1999); Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002).
State Farm argues that California verdicts support its conclusion that the amount in controversy exceeds $75,000. Opp'n at 5-7. In support of its argument, State Farm cites to several cases including jury verdicts for bad faith claims that the company asserts are analogous. Id. In doing so, State Farm attempts to illustrate that awards for emotional distress and punitive damages are often many times the value of those for economic damages. Id. at 5. However, while courts may look to analogous cases for punitive damages, emotional distress damages are distinguishable. Accordingly, the Court will only consider the punitive damages awards in State Farm's cited cases. No punitive damages claim was alleged in one of State Farm's cited cases, and the plaintiffs were unsuccessful in receiving punitive damages in two other cases.
Berg v. Liberty Mutual Ins. Co., 2019 WL 2091411 (Cal. Super. Ct. Mar. 11, 2019) (regarding mold and moisture damage in rental property).
Dunlop v. Government Employees, 2017 WL 10702196 (Cal. Super. Ct. June 26, 2017) (regarding an insurance company that refused further payment under motorist coverage); White v. GEICO Indemnity Company, 2014 WL 1394317 (Cal. Super. Ct. Mar. 18, 2014) (regarding an insurance company that alleged vehicle owners made misrepresentations in reporting the accident).
Regarding the other cases that State Farm provides, the Court similarly finds that they are not sufficiently analogous to the instant case. In Lopez v. National General Insurance Company, an investigator first reported that a fire was the result of an electrical issue and then made a second report that the cause was arson. 2019 WL 7592192 (Cal. Super. Ct. Nov. 25, 2019). Despite the insurance company's allegations that the claimant concealed and misrepresented material facts, the jury rendered a punitive damages verdict of $8,000,000. Id. Here, however, the issue in the present case relates to State Farm allegedly failing to investigate property damage, rather than questions as to the veracity of a report. In Lopez v. IDS Property Casualty Insurance Company, the plaintiff received $1,000,000 in punitive damages after an insurance company denied water damage and then plaintiff's son had increased medical issues from unresolved water damage. 2017 WL 2773398 (Cal. Super. Ct. Mar. 23, 2017) The Woolseys have not alleged a medical issue in relationship to a claim denial.
Lastly, in Cassim, the jury originally awarded the claimants $5,000,000 in punitive damages. Cassim v. Allstate Ins. Co., 33 Cal.4th 780, 16 Cal.Rptr.3d 374, 94 P.3d 513 (2004). However, the bad faith claim in that case was based on the insurance company's deliberate efforts to minimize coverage. Id., 16 Cal.Rptr.3d 374, 94 P.3d at 516. This included a statement under oath by an insurance company representative that the residence was sparsely furnished and then later admitting adequate furnishings and claiming that there were no signs of forced entry despite broken glass indicating that someone had broken in from outside. Id. While the Woolseys allege that State Farm improperly denied coverage, they have not alleged a similar type of misconduct in order to minimize coverage.
Although analogous cases may satisfy the preponderance of the evidence requirement for punitive damages, here, State Farm failed to present a sufficiently analogous case to satisfy its burden. Accordingly, these cases cannot be used to calculate the amount in controversy. v. The Policy coverage limit may not be used to calculate the amount in controversy because the Woolseys represented that they would not claim the full amount.
State Farm claims that because the Policy has a coverage limit that is far greater than the jurisdictional threshold, it satisfies the amount in controversy requirement. Removal at 3. The Woolseys attached a copy of the Policy to the Complaint, which indicates that the total dwelling limit is $381,600.00 and the total personal property limit is $238,950.00. Id.; Compl., Ex. 1 The Complaint also states that the Woolseys would be seeking unpaid benefits under its breach of contract and bad faith claims, as well as in their Prayer for Relief. Compl. ¶¶ 17, 25, Prayer ¶ 3. However, the Woolseys argue that they were not seeking to recover the limit of the Policy by attaching it to the Complaint; rather, they contend that they attached the Policy in support of their breach of contract cause of action. Remand Memo at 4; Reply at 2. The Woolseys argue that the Policy limits merely show the maximum amount of coverage, but that nothing in their Complaint indicates that they are seeking that full value. Id.
In order to avoid removal to federal court, plaintiffs are permitted to stipulate to amounts at issue that fall below the federal jurisdictional requirement. Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 595, 133 S.Ct. 1345, 185 L.Ed.2d 439 (2013); see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294, 58 S.Ct. 586, 82 L.Ed. 845 (1938) ("If [Plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove."). The plaintiff is "the master . . . of his claim." Martinez v. Epic Games, Inc., No. CV1910878CJCPJWX, 2020 WL 1164951, at *2 (C.D. Cal. Mar. 10, 2020) (quoting 14A Fed. Prac. & Proc. Juris. § 3702 (4th ed.)). Additionally, a plaintiff may still be able to remand their case even without filing a formal stipulation prior to removal. Id. ("The Court is not convinced that . . . such formality is required for [plaintiff] to obtain remand based on those averments [in his Complaint] under the circumstances here.").
Here, the Woolseys have represented that they are not seeking the limits of the Policy. The Policy generally states the maximum coverage limits available rather than specifying the damages by State Farm for denying the Woolseys' Claim. See Remand Memo at 4 ("[The Policy] state[s] the limits available. However, by no means are . . . [Plaintiffs] seeking the limits of the policy merely by attaching [it]."). Since the Policy limits do not indicate the amount of damages that the Woolseys are actually seeking, the Court declines to consider the Policy limits when calculating the amount in controversy.
B. The Woolseys are not entitled to attorneys' fees because State Farm's removal was not unreasonable.
The Court notes that the section of State Farm's Opposition concerning the Woolseys' request for attorneys' fees and costs references a removal by a party named Hartford. The Court finds that this is likely a clerical error and was meant to refer to the Woolseys.
The Woolseys argue that under 28 U.S.C. § 1447(c), they should be awarded "payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c); see also Remand Memo at 4; Reply at 4, They argue that State Farm's decision to remove the case was improper because the Complaint did not show that the amount in controversy was in excess of $75,000. Remand Memo at 4; Reply at 4. Specifically, the Woolseys allege that State Farm relied on assumptions and hypotheticals, rather than facts, regarding its arguments for "significant" water leak damage, the Policy limits, and the Complaint's statement for seeking attorneys' fees and punitive damages. See Remand Memo at 6. State Farm argues that awarding attorneys' fees under section 1147(c) is improper because the company had a legitimate basis for believing that the Court had jurisdiction. Opp'n at 9.
"The standard for awarding fees . . . turn[s] on the reasonableness of the removal." Gardner, 508 F.3d at 562. However, awarding attorneys' fees pursuant to section 1447(c) "is within the discretion of the district court, and bad faith need not be demonstrated." Moore v. Permanente Med. Grp., Inc., 981 F.2d 443, 446 (9th Cir. 1992). The appropriate test for applying section 1447(c) should balance "the desire to deter removals sought for the purpose of prolonging litigation and imposing costs on the opposing party" with "not undermining Congress' basic decision to afford defendants a right to remove." Martin v. Franklin Capital Corp., 546 U.S. 132, 140, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005).
The Court finds that State Farm had a reasonable basis for believing that the amount in controversy was over $75,000. The Policy limits and the later-submitted Demand Letter, combined with the Woolseys' request for attorneys' fees and punitive damages as stated in the Complaint, provided State Farm with, at the very least, a reasonable basis for believing that removal was proper, even if the Court ultimately concludes that no jurisdiction exists. Accordingly, the Woolseys' request for attorneys' fees is DENIED.
IV. Conclusion
For the foregoing reasons, the Court hereby GRANTS the Motion to Remand.
IT IS SO ORDERED.