In Freeman’s 66 v. Scottsdale Ins.
Co., 2012 WL 1747973 (N.D. Ala. May 15, 2012)(Coogler), after Freeman’s
66’s gasoline station sustained some structural damages in a vehicle accident,
its insurer failed to pay a claim. Freeman’s 66 sued Scottsdale for
breach of contract and bad faith, and sought $12,400 to replace a metal awning,
$12,600 for replacing three gas pumps and unspecified punitive damages.
After the removal, Freeman’s 66 moved for remand contending a failure to
satisfy the amount-in-controversy requirement. Obviously, Freeman’s 66
specifically demanded just $25,000 in compensatory damages. Referencing
three earlier opinions, Scottsdale unsuccessfully argued that the request for
punitive damages was for at least $50,000. Correctly, Coogler
differentiated the three opinions and noted that the range of possible
punitive-damages awards was far less than $50,000 to some figure in excess of
$50,000.
In Lambeth v. Peterbilt Motors Co.,
2012 WL 1712692 (N.D. Ala. May 15, 2012)(Steele), as he was attempting to enter
the cab of his Peterbilt truck, a step collapsed, causing Lambeth to fall to
the ground and hurt his back. He brought a products-liability lawsuit in
which he alleged that he suffered a “serious injury to his back” and included
the typical “boilerplate” language in his complaint.
In removing the matter, the defendants
relied solely on the complaint and, more particularly, on the allegation of a
“serious injury” and asked the federal court to find that Lambeth must be
seeking more than $75,000. Judge Steele found that using the word
“serious” does not make it “facially apparent” from the complaint that Lambeth
was seeking more than $75,000 – “While the back injury is characterized as ‘serious,’
nothing in the Complaint elaborates on the nature or severity of that injury,
or otherwise lends substance or meaning to it. We simply do not know – or
have any basis for inferring from the pleadings – anything about how severe,
permanent, debilitating or painful the injury might be; how extensive, costly,
or traumatic the course of treatment was, is or might be; or whether and to
what extent the injury did, does or will constrain Lambeth’s work or life
activities.”
Judge Steele essentially chastised the
defendants for relying merely on the complaint and not proffering evidence as
to the true nature of Lambeth’s injury, that is, he truly suffered a severe
injury that resulted in high medical costs, a lot of pain, significant
disability, etc., as opposed to Lambeth’s attorney merely overhyping the
injury.
When the defendants argued that
Lambeth’s attorney was “playing a game” by not being more specific in the
complaint, Judge Steele wrote: “These sentiments are an oft-heard refrain
voiced by members of the defense bar who feel aggrieved by the manner in which
Eleventh Circuit amount-in-controversy jurisprudence has developed in recent
years. Their lament is understandable. It is true enough that
defendants who wish to remove an action to federal court on diversity grounds
may face daunting proof obstacles and difficult strategic choices, particularly
as to whether to remove the case right away or to develop additional evidence
on damages via discovery before pulling the removal trigger. Contrary to
defendants’ insinuation, however, Lambeth neither created this state of affairs
nor engaged in impropriety, trickery or skullduggery in proceeding as he
has. For better or worse, the harrowing Scylla-and-Charybdis scenario
described by PACCAR is a natural, inevitable consequence of the interaction
among liberal pleading rules that do not require a plaintiff to plead injuries
and damages with specificity, strict removal statutes that place both the
burden of proof and temporal constraints on removing defendants, and appellate
evolution of a substantial, subjective gray area in which defense counsel
cannot discern for sure whether the “facially apparent” criterion will be
deemed to be satisfied in a particular case. … A perception of
unfairness or hardship is not a valid reason to excuse removing defendants from
their strict jurisdictional burden of proving by a preponderance of the
evidence that the amount in controversy exceeds $75,000.”
The Freeman’s 66 opinion will be
useful in situations where there was just property damage to a business and/or
where the insurance claim was for significantly less than $75,000.
The Lambeth opinion is a good
counter to those opinions where a federal judge uses the “facial apparent”
approach and holds that alleging a “serious injury” equates to seeking more
than $75,000. Chief Judge Steele correctly notes that more should be
required when the complaint is so general in his description of the injury and
its consequences.
