Opinion
Civil Action No. 04-5962 (DRD).
February 17, 2005
David C. Dixon, Esq., SCANGARELLA, FEENEY DIXON, L.L.P., Pompton Plains, NJ, Attorney for Plaintiff.
David R. Kott, Esq., Robert P. Lesko, Esq., McCARTER ENGLISH, LLP, Newark, NJ, Attorneys for Defendant.
OPINION
Presently before the court is the motion of Plaintiff Peter Critelli ("Plaintiff") to remand this action to the Superior Court of New Jersey, Law Division, Morris County. For the reasons set forth below, the court will deny the motion.
BACKGROUND
On or about October 26, 2004, Plaintiff commenced an action in the Superior Court of New Jersey, Law Division, in and for Morris County, bearing docket number MRS-L-2864-04. On or about November 4, 2004, Defendant's statutory agent for service of process, the New Jersey Department of Banking and Insurance, was served with a Summons and Complaint.
On or about December 3, 2004, Defendant removed the action from state court to this court pursuant to 28 U.S.C. § 1441 et seq. Defendant claims in its Notice of Removal that the district court has original jurisdiction under 28 U.S.C. § 1332 due to the diversity of citizenship of the parties and the amount in controversy exceeding $75,000. Plaintiff is a citizen and resident of New Jersey. Defendant is a corporation organized and existing under the laws of New York, with its principal place of business in New York, New York. On or about November 17, 1992, Defendant issued a Disability Income Policy of Insurance, Number G-721846 (the "Policy") to Plaintiff as owner and insured. The Complaint alleges that on or about July 3, 2003, and continuing thereafter, Plaintiff became totally disabled within the meaning set forth in the Policy . Plaintiff thereafter made application to Defendant for monthly disability indemnity payments pursuant to the Policy. Defendant admits that as of July 3, 2003, the Policy was in force. By letter dated March 18, 2004, Defendant, by its agent, servant, employee, administrator, and/or subsidiary Berkshire Life Insurance Company, allegedly gave notice to Plaintiff of its denial of the Plaintiff's claim. The Complaint alleges that pursuant to the Policy, Defendant is obligated to indemnify Plaintiff in the amount of $1,600.00 per month during each month that Plaintiff is disabled, from July 3, 2003 (the alleged date of onset of his alleged total disability) until August 7, 2006 (the date Plaintiff will turn 65 years old).
The First Count of the Complaint alleges that Defendant breached the Policy and seeks "[a] declaratory judgment . . . declaring the rights and obligations of the parties in accordance with Plaintiff's contentions as set forth in [the] Complaint, specifically requesting a finding that Defendant, GUARDIAN possess' [sic] a duty to provide coverage and make payment of monthly disability indemnity payments to Plaintiff, in accordance with the POLICY of Disability Income Insurance." The Second Count of the Complaint alleges that Defendant acted in bad faith and seeks punitive damages. Plaintiff also seeks an award of attorney's fees. On or about December 14, 2004, Plaintiff voluntarily dismissed the Second Count without prejudice. Plaintiff claims that, with his voluntary dismissal of his punitive damages claim, this court lacks subject matter jurisdiction because the amount in controversy no longer exceeds $75,000. Plaintiff requests that this action be remanded to the Superior Court of New Jersey.
At oral argument on February 14, 2005, Plaintiff argued for the first time that Count One merely seeks a declaratory judgment, not damages. Therefore, Plaintiff's argument concludes, the court lacks subject matter jurisdiction because there is no amount in controversy. The court rejects this argument for two reasons. First, Plaintiff admits that it seeks damages — the Certification of David Dixon, Esq. (Plaintiff's counsel) states in paragraph 3 that "[t]he complaint (First Count) is an action for damages, arising out of a claim for monthly benefits under a disability income policy of insurance." (Emphasis added.) Second, "[t]he amount in controversy in a declaratory judgment action is measured by the value of the object of the litigation or of the right for which protection is sought." State Farm Mut. Auto. Ins. Co. v. Ciccarella, Civil Action No. 01-1211, 2002 U.S. Dist. LEXIS 7698, at *7 (E.D. Pa. May 1, 2002) (rejecting an argument that is similar to Plaintiff's oral argument) (citingHunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977)). At issue here is whether Defendant is obligated to provide disability coverage pursuant to the Policy. The value of the object of this litigation is therefore the amount that Defendant may have to pay Plaintiff pursuant to the Policy, which, as set forth in this opinion, meets the amount in controversy requirement.
DISCUSSION
Defendant removed this action from state court pursuant to 28 U.S.C. § 1441, claiming that the court has original jurisdiction under 28 U.S.C. § 1332(a) because the parties are diverse in their citizenship and the amount in controversy exceeds $75,000. In its Notice of Removal, Defendant calculated the amount in controversy, as of the date of removal, to total at least $112,000, a figure arrived at by adding the following: compensatory damages of approximately $56,000 in monthly disability benefits, punitive damages of $56,000, and an undetermined amount in attorney's fees.
Defendant arrived at $56,000 based on Plaintiff's claim in his Complaint that he is entitled to $1,600 per month from the date of his disability (July 3, 2003) until he turns 65 years old, which Defendant estimates is a time period of 35 months.
Once a case is removed, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded" to the state court from which it was removed. See 28 U.S.C. § 1447(c). The propriety of removal depends on whether the case originally could have been filed in federal court. Meritcare Inc. v. St. Paul mercury Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999) (citing City of Chicago v. Int'l College of Surgeons, 522 U.S. 156 (1997)). Here, Defendant argues that removal was proper because this court has original diversity jurisdiction over this action. Plaintiff does not dispute that the diversity of citizenship prong has been met, but argues only that the amount in controversy requirement cannot be met after Plaintiff voluntarily dismissed the Second Count of his Complaint, which sought punitive damages. (Dixon Certification ¶ 7) ("With the withdrawal of the punitive damages claim, the amount in controversy herein no longer exceeds the sum of $75,000.00, and, therefore, the District Court lacks subject matter jurisdiction over the matter in controversy.") Defendant, on the other hand, first argues that the amount in controversy should be determined based upon the Complaint as of the time the matter was removed to federal court, without regard to Plaintiff's subsequent attempt to reduce the amount in controversy. Alternatively, Defendant argues that even if Plaintiff's voluntary dismissal of the Second Count were taken into consideration in determining the amount in controversy, the compensatory damages sought in the First Count are as much as $87,500. Because the court finds Defendant's first argument persuasive for the reasons set forth herein, the court will not reach Defendant's second argument.
The amount in controversy is measured as of the date of removal. Werwinski v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002) (citation omitted). "[T]he amount in controversy must be calculated based on a `reasonable reading' of the complaint, and a plaintiff's stipulation subsequent to removal as to the amount in controversy or the types of relief sought is of `no legal significance' to the court's determination." Id. at 667 (citingAngus v. Shiley Inc., 989 F.2d 142, 145 (3d Cir. 1993)). After removal to federal district court, a plaintiff cannot — by stipulation, affidavit, or amendment of his pleadings — deprive the district court of jurisdiction by reducing his claim below the amount in controversy. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292-93 (1938) ("events occurring subsequent to removal which reduce the amount recoverable, whether beyond the plaintiff's control or the result of his volition, do not oust the district court's jurisdiction once it has attached"). Otherwise, "the defendant's supposed statutory right of removal would be subject to the plaintiff's caprice" if a plaintiff were allowed to defeat federal jurisdiction simply by reducing the amount in controversy. St. Paul, 303 U.S. at 294 (noting that "the plaintiff ought not to be able to defeat that right and bring the cause back to the state court at his election"). Rather, the removed case should be remanded if it appears to a legal certainty that the plaintiff was never entitled to recover the minimum amount required in 28 U.S.C. § 1332. See Meritcare, 166 F.3d at 217 (emphasis added).
In this case, the amount in controversy measured as of the date of removal was sufficient to confer original jurisdiction upon the federal district court. Stated alternatively, it cannot be said to a legal certainty that Plaintiff cannot recover more than $75,000 on the face of the Complaint. Plaintiff admits as much by stating that only after he voluntarily and unilaterally dismissed the Second Count did "the amount in controversy herein no longer exceed the sum of $75,000.00." (Dixon Certification ¶ 7) (emphasis added). Plaintiff claims that the First Count alleges compensatory damages of $56,000. (Id. ¶ 3.) Defendant, however, claims that the total amount of compensatory damages at issue in the First Count may be as much as $87,500. The court need not decide which calculation of compensatory damages applies for purposes of deciding this motion, because the punitive damages claim in the Second Count prevents this court from finding that the amount in controversy to a legal certainty cannot be met. In his Second Count, Plaintiff alleges that punitive damages are warranted because Defendant allegedly acted in "bad faith" and "willfully and wantonly." (Compl., Second Count ¶¶ 2, 3.) At this early stage in the litigation, the court is not aware of any reason that would prevent a trier of fact from awarding punitive damages after hearing all the evidence to be proffered. As of the time of removal, this court was vested with original jurisdiction, which may not be divested upon Plaintiff's voluntary reduction of the amount in controversy after removal. Furthermore, even if Plaintiff's voluntary dismissal of the Second Count presently prevents him from seeking or being awarded punitive damages, his voluntary dismissal was without prejudice and therefore leaves the door open for Plaintiff to seek leave to re-plead a claim for punitive damages. Therefore, the court cannot say to a legal certainty that Plaintiff cannot recover more than $75,000.
Defendant's speculation that compensatory damages may be as much as $87,500 is due to a "Social Insurance Substitute" rider, which provides for payment of an additional $900 per month, provided that indemnity is payable under the Policy for disability and Plaintiff is not receiving any benefit for disability or retirement under the Social Security Act.
CONCLUSION
For the reasons set forth above, Plaintiff's motion to remand will be denied.