Opinion
5-22-CV-01060-FB-RBF
03-17-2023
MAGDALENA PEREZ, Plaintiff, v. ROOT INSURANCE COMPANY, Defendant.
To the Honorable Fred Biery, United States District Judge:
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
RICHARD B. FARRER, UNITED STATES MAGISTRATE JUDGE.
This Report and Recommendation concerns Plaintiff Magdalena Perez's Motion to Remand. See Dkt. No. 18. All pretrial matters have been referred for resolution pursuant to Rules CV-72 and 1 of Appendix C to the Local Rules for the United States District Court for the Western District of Texas. See Dkt. No. 11. Authority to enter this recommendation stems from 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, the Motion to Remand, Dkt. No. 18, should be DENIED.
Additionally, the parties are ORDERED to file joint proposed scheduling recommendations within fourteen (14) days from the date of this Report and Recommendation. Defendant Root Insurance Company is further ORDERED to file an advisory clearly stating both its state of incorporation and its principal place of business within fourteen (14) days of the date of the Report and Recommendation.
Factual and Procedural Background
This insurance dispute arose from damage to Plaintiff Magdalena Perez's car, which allegedly occurred on July 6, 2021. Perez claims her car was damaged when it was struck by lightning. Defendant Root Insurance Company insured the car but denied Perez's claim under her Root policy. Perez sent a demand letter to Root alleging the following damages: (1) loss of use valued at $50 per day, (2) cost to repair the vehicle valued at $15,406.40, and (3) mental anguish of $5,000. See Dkt. No. 19-3 (demand letter). Perez later filed an action in state court, alleging (1) breach of contract, (2) violations of § 17.46 and § 17.50 of the Texas Deceptive Trade Practices Act (“DTPA”), and (3) violations of Chapter 541 of the Texas Insurance Code. The petition alleged the cost to repair the vehicle would be around $15,000, and also sought attorney's fees pursuant to Texas Civil Practices & Remedies Code § 38.001, the DTPA, and the Texas Insurance Code. See Dkt. No. 1-1, ¶¶ 15, 30 (“Orig. Pet.”). Consistent with state law, the petition did not state a specific amount of damages but instead requested damages within the jurisdictional limits of the court. See id. at ¶ 29. The petition also listed “economic damages, incidental damages, consequential damages, loss of use damages, additional damages, punitive damages, exemplary damages, [and] reasonable and necessary attorney's fees.” Id. at ¶¶ 29, 32. The petition did not specifically reference mental-anguish damages.
Defendant Root filed a Notice of Removal on September 27, 2022, alleging diversity jurisdiction under 28 U.S.C. § 1332. And there is no disagreement between the parties concerning the complete diversity of citizenship of the parties. See Dkt. No. 14 (Rule 26(f) Report). The parties disagree, however, regarding the amount in controversy. Following the initial pretrial conference, the Court stayed and administratively closed the case pending resolution of the jurisdictional dispute. See Dkt. No. 17. Perez then filed the present Motion to Remand, arguing the Court lacks subject matter jurisdiction because the amount in controversy does not exceed the $75,000 threshold.
While the parties do not disagree on this point, the Court notes neither Root's Notice of Removal, Dkt. No. 1, nor the Rule 26(f) Report states Root's principal place of business. This matter is discussed further below.
Analysis
At issue is whether Root has carried its burden to show an amount in controversy in excess of $75,000. See 28 U.S.C. § 1332(a). For the reasons discussed below, Root has met the amount-in-controversy requirement, notwithstanding the fact that “any doubt as to the propriety of removal should be resolved in favor of remand.” See In re Hot-HedInc., 477 F.3d 320, 323 (5th Cir. 2007); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Perez has shown both that (1) it is facially apparent from the state court petition that the claims likely exceed $75,000 and (2) evidence properly considered at this juncture of the case supports the requisite finding. Manguno, 276 F.3d at 723 (providing that a removing party need only show one or the other and permitting use of “summary judgment type evidence” to establish amount in controversy).
According to Perez's Original Petition, the cost to repair the damaged car would be $15,000. See Orig. Pet. ¶ 15. In addition to this repair cost, Perez claims an unspecified amount in damages for attorneys' fees. The petition also makes claims pursuant to § 17.50 of the DTPA. That provision permits recovery for mental anguish. It also permits up to three times the economic damages if the trier of fact finds a knowing violation or up to three times both mentalanguish and economic damages for an intentional violation. See Tex. Bus. & Com. Code § 17.50(b)(1); Orig. Pet. ¶ 27. Prevailing consumers under the DTPA also can recover reasonable and necessary attorney's fees. See Tex. Bus. & Com. Code § 17.50(d). Finally, the last paragraph of the Original Petition lists unspecified loss-of-use damages, incidental damages, consequential damages, punitive damages, and exemplary damages. See Orig. Pet. ¶ 32. All of these amounts, including attorney fees, are included in the amount-in-controversy calculation and reflect that in this case the requisite amount in controversy is reached by the required preponderance of the evidence.
See St. Paul Reinsurance Company, Ltd. v. Greenberg, 134 F.3d 1250, 1255 (5th Cir. 1998) (holding that statutory damages, punitive damages, and potential attorneys' fees must be included in calculating the amount in controversy in a diversity case); Manguno, 276 F.3d at 723 (finding statutory attorney fees are included in amount in controversy); Knowles Pub. v. Am. Motorists Ins. Co., 248 F.3d 1139, 2001 WL 85914, at *3 (5th Cir. Jan. 25, 2001) (potential attorney fees and treble damages under the DTPA included in the amount in controversy).
Some quick math confirms that the threshold is met here. Trebling Perez's repair costs yields damages of $45,000. The Original Petition makes claims under § 17.50 of the DTPA, which permits recovery for mental anguish, and Perez's demand letter included $5,000 in mental-anguish damages. Perez's motion is therefore unpersuasive when urging that she did not plead mental-anguish damages because her current counsel determined she does not have the requisite evidence. The amount in controversy, after all, is calculated based on the state court petition at the time of removal. Manguno, 276 F.3d at 723. Attempts to limit damages postremoval are generally not credited. De Los Reyes v. State Farm Lloyds, No. 1:22-CV-071, 2022 WL 10676596, at *3 (S.D. Tex. Sept. 26, 2022), report and recommendation adopted sub nom. Reyes v. State Farm Lloyds, No. 1:22-CV-000071, 2022 WL 10656385 (S.D. Tex. Oct. 18, 2022) (not considering post-removal stipulation to limit recovery and citing authority). Thus, if the trier of fact were to find a knowing violation of the DTPA, damages could reach $50,000. If the trier of fact found an intentional violation, damages could reach $60,000. The motion for remand asserts that the maximum damages under the DTPA would be $60,000.
The motion for remand reaches the conceded $60,000 figure by adding the trebled damages of $45,000 to the actual damages of $15,000 and alludes to a split in Texas courts as to whether a plaintiff can recover up to three or four times the economic damages. Root seems to reach $60,000 by adding the actual damages under the breach of contract claim to the treble damages under the DTPA claim. It appears to this Court that under Texas law, the maximum award under.
Additionally, the pre-suit demand letter listed loss-of-use damages at $50 per day, and the Original Petition referenced, albeit vaguely, both incidental and consequential damages. See Orig. Pet. ¶ 32; Dkt. No. 19-3. Four hundred forty-eight days elapsed between the lightning strike that allegedly damaged Perez's car and the date of the notice of removal. See Dkt. No. 1. Fifty dollars multiplied by 448 days amounts to $22,400. Adding this figure to $50,000 results in a total of $72,400, while adding it to $60,000 exceeds $75,000. Even assuming the lower figure, or for that matter even excluding mental-anguish damages, a minimal attorney fee award would still result in damages in excess of $75,000.
Root calculates loss-of-use damages as $20,406.40 plus $50 per day (with the $50 multiplied by 472, about the number of days between the lightning strike and the filing of the response to the motion to remand). The damages from loss of use should be calculated as of the time of removal. Additionally, it is not clear to the Court where the $20,406.40 number was derived from - it may be the $5,000 mental anguish damages plus the $15,406.40 cost of repair alleged in the demand letter - but there is no explanation why that should be added to the $50 per diem calculation to determine the loss of use damages.
Root estimated attorney fees at $20,000 with no explanation or evidence to support that claim. But the lack of explanation is not fatal because even a minor award would suffice here.
While Root's calculations estimating damages totaling $171,706.40 are not entirely convincing to the Court and seem to rely on counting the base repair cost of $15,000 multiple times for each category of damages, Root only need show by a preponderance of evidence that the amount in controversy is likely to exceed $75,000 based on the face of the petition and any appropriate supporting evidence. Here, based on the nature of the claims and the types of damages sought in the Original Petition, the allegations made in the pre-suit demand letter, and the DTPA is up to treble damages, not treble damages plus actual damages (which effectively results in quadruple damages). See Metro Sols. Tex., LLC v. Smith, No. 02-20-00176-CV, 2021 WL 5742078, at *4 (Tex. App.-Fort Worth Dec. 2, 2021, no pet.) (noting confusion surrounding calculation of damages under DTPA and rejecting quadruple damages approach) (citing Dal-Chrome Co. v. Brenntag Sw., Inc., 183 S.W.3d 133, 144 (Tex. App.-Dallas 2006, no pet.) (rejecting quadruple damages) and Reyelts v. Cross, 968 F.Supp.2d 835, 844 n.3 (N.D. Tex. 2013), aff'd, 566 Fed.Appx. 316 (5th Cir. 2014) (discussing confusion, concluding Texas Supreme Court did not intend to endorse quadruple damages, and finding only triple multiplier permitted)). applying common-sense and experience, it is apparent that the jurisdictional threshold has been met. The motion to remand therefore should be denied.
See, e.g., Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995) (recognizing that the Court may use “common sense” in determining the amount in controversy); KWM Assocs., Inc. v. Int'l Catastrophe Ins. Managers, LLC, No. 1:09-CV-1010, 2010 WL 11632870, at *5 (E.D. Tex. Aug. 3, 2010), report and recommendation adopted, 2010 WL 11632869 (E.D. Tex. Aug. 24, 2010) (noting, “[g]iven the nature of the damages alleged under an insurance contract, and the fact that plaintiff is seeking treble damages and statutory interest, requested recovery in the amount of $75,000 could reasonably be expected”); Johnson v. Carmax Auto Superstore, Inc., No. SA-08-CA-820-FB, 2008 WL 5686083, at *3 (W.D. Tex. Dec. 22, 2008) (noting that courts have relied on the causes of action and types of damages claimed by the plaintiff in calculating the amount in controversy).
Finally, Root's Notice of Removal states it is a Delaware corporation but does not state its principal place of business. The Rule 26(f) Report also does not state Root's principal place of business. Accordingly, in order to satisfy the Court that complete diversity exists among the parties, Root is directed to file an advisory with the Court within fourteen (14) days of the date of this Report and Recommendation clearly stating (1) its state of incorporation, and (2) its principal place of business. The parties are additionally directed to submit joint proposed scheduling recommendations consistent with the form attached to the Court's initial Order regarding pretrial matters, and they should do so within fourteen (14) days of the date of the Report and Recommendation. See Dkt. No. 12.
Conclusion and Recommendation
For the reasons discussed above, it is recommended that Plaintiff's Motion to Remand, Dkt. No. 18, be DENIED.
Defendant is further ORDERED to submit an advisory clearly stating its principal place of business and state of incorporation within fourteen (14) days of the date of the Report and Recommendation.
The parties are ORDERED to file joint proposed scheduling recommendations within fourteen (14) days of the date of this Report and Recommendation.
Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this report and recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt requested, to those not registered. Written objections to this report and recommendation must be filed within fourteen (14) days after being served with a copy of same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Objections, responses, and replies must comply with the same page limits as other filings, unless otherwise excused by the district court's standing orders. See Rule CV-7. The objecting party shall file the objections with the clerk of the court, and serve the objections on all other parties. A party filing objections must specifically identify those findings, conclusions, or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to timely file written objections to the proposed findings, conclusions, and recommendations contained in this report and recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
IT IS SO ORDERED.