Opinion
Civil Action Nos. 01-608 SECTION "N" 01-863 SECTION "N"
July 23, 2001
ORDER AND REASONS
Before the Court is defendant Standard Fire Insurance Company's Motion for Reconsideration. For the following reasons, the defendant's motion is GRANTED, the order remanding Civil Action No. 01-863 is VACATED, and the case is restored to the Court's docket.
BACKGROUND
On January 23, 2000, a severe hail storm struck the New Orleans metropolitan area, pelting thousands of homes and vehicles with golf ball-sized hail. Over 20,000 residents filed insurance claims for hail damage to their cars and rooftops, and the total cost of the damage was estimated to be over $65 million. In January 2001, several groups of plaintiffs in St. Bernard, Jefferson and Orleans Parishes filed nine separate class action lawsuits against more than seventy-five insurance carriers. Each petition alleges that the insurers intentionally or negligently failed to adequately compensate their policy holders for legitimate hail damage claims.
In March 2001, the defendants removed the nine hail damage cases to federal court on the grounds of diversity jurisdiction. These cases have been consolidated into the instant proceeding. On May 31, 2001, the Court entered an order remanding all nine cases on the grounds that several non-diverse defendants destroyed diversity jurisdiction.
Defendant Standard Fire Insurance Company ("Standard Fire") has filed a motion for reconsideration on the grounds that defendant James Christian was erroneously described in the plaintiffs' petition as a Louisiana resident, when Christian is in fact a Texas domiciliary. Standard Fire now argues that the order remanding the case should be vacated because both complete diversity and the requisite amount in controversy exist.
LAW AND ANALYSIS
The plaintiffs do not dispute that the parties are completely diverse. Accordingly, the only issue the Court must consider is whether the requisite amount in controversy exists for diversity jurisdiction. The removing defendant must prove by a preponderance of the evidence that the jurisdictional amount is satisfied either (1) by demonstrating that it is apparene from the face of the petition that the claims are likely to exceed $75,000 or (2) by setting forth facts in controversy that support a finding of the requisite amount. See Simon v. Wal-Mart Stores. Inc., 193 F.3d 848, 850 (5th Cir. 1999); Luckett v. Delta Airlines, Inc., 171 F.3d 295 (5th Cir. 1999).
The defendants assert that the plaintiffs' potential entitlement to attorney's fees raises the amount in controversy well above the jurisdictional threshold. In In re: Abbott Laboratories, 51 F.3d 524 (5th Cir. 1995), the Fifth Circuit held that, for purposes of determining the amount in controversy in a class action, attorney's fees may be attributed to the representative plaintiffs. The Fifth Circuit noted that the distribution of attorney's fees in Abbott centered on two Louisiana statutes: Article 595 of the Louisiana Code of Civil Procedure, which provides that attorney's fees may be awarded to the named class representative, and Section 51:137 of the Louisiana Revised Statutes, which mandates a separate award of attorney's fees for antitrust violations.
Because the Abbott court described the presence of Section 51:137 as "key" to its decision, see 51 F.3d at 526, this Court and other courts in the Eastern District of Louisiana have interpreted Abbott as requiring the existence of a separate attorney's fee statute in addition to Article 595 before attorney's fees can be considered. Such a statute exists in the instant case. La. Rev. Stat. § 22:658(B)(1) provides that when an insurance company's failure to make timely payment on a claim "is found to be arbitrary, capricious, or without probable cause," the insurer "shall" be subjected to a penalty of, among other things, "all reasonable attorney fees for the prosecution and collection" of the claim. Because the instant plaintiffs have alleged that the defendants acted in bad faith by arbitrarily failing to pay their claims, the Court finds that the plaintiffs have placed the right to recover attorney's fees in controversy.
See, e.g., Ace Pest Control Co. v. K-Mart Corp., 979 F. Supp. 443 (E.D.La. 1997) (Porteous, J.); Ryder v. Gilbert S. Corp., 2000 WL 1499274 (E.D.La. Sept. 21, 2000) (Sear, J.); Johnson v. Cytec Indus., Inc., 1999 WL 212753 (E.D.La. Apr. 13, 1999) (Vance, I.); Cooper v. Koch Pipeline, 1995 WL 931091 (E.D.La. Dec. 11, 1995) (Fallon, J.).
Alternatively, if attorney's fees are available under La. Rev. Stat. § 22:658(B)(1), the plaintiffs suggest that they have waived their right to recovery under that statute. However, such a waiver cannot bind the unnamed class members because it would not be in the best interest of the class as a whole. See, e.g., DeAguilar v. Boeing Co., 47 F.3d 1404, (5th Cir. 1995) (holding that attorney who did not represent all the class members could not limit the amount of damages recoverable by the class); Pendleton v. Parke-Davis, 2000 WL 1808500, *5 (E.D.La. Dec. 7, 2000) (holding that class representative's waiver of right to recover attorney's fees was invalid and could not be used to bind class members). Accordingly, the Court does not find that the purported waiver of attorney's fees defeats diversity jurisdiction. Because the hail damage plaintiffs are entitled to attorney's fees if they prevail on their allegations that the defendants acted in bad faith by arbitrarily failing to pay their claims, the Court finds that the plaintiffs have placed the right to recover attorney's fees in controversy.
Having concluded that attorney's fees may be attributed to the representative plaintiff for jurisdictional purposes, the Court must consider whether the fees will exceed the jurisdictional threshold. The Court first notes that the plaintiff does not contend that the attorney's fees will not exceed $75,000. He simply asks that they not be taken into consideration for jurisdictional purposes. The defendants contend that it is "absolutely clear" that the attorney's fees will "far exceed" the jurisdictional limit. Rec. Doc. No. 160 at 15. In support of this allegation, the defendants offer affidavits attesting to the large number of policies they issued in the area affected by the hail storm and to the costliness of defending document-intensive class actions, but they offer no detailed evidence regarding the cost of defending the case at bar. The Court does not find the defendants' evidence to be particularly persuasive. However, in light of the plaintiff's apparent concession that the attorney's fees will exceed $75,000, the Court reluctantly finds that the requisite amount in controversy has been established.
Because the parties are completely diverse and the requisite amount in controversy exists, the Court finds that it has diversity jurisdiction over the instant case. Accordingly, the May 31, 2001 order remanding Civil Action No. 01-863 is VACATED and the case is restored to this Court's docket. IT IS FURTHER ORDERED that Civil Action No. 01-863 is no longer consolidated with Civil Action No. 01-608.