Opinion
1:23-CV-1532-DII
02-26-2024
SILVESTRE GARCIA JR, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE:
Before the court is Plaintiff Silvestre Garcia, Jr.'s Opposed Motion to Remand (Dkt. 3).After reviewing the pleadings, the relevant case law, as well as the entire case file, and determining that a hearing is not necessary, the undersigned issues the following Report and Recommendation to the District Court.
United States District Judge Robert Pitman referred the Motion to Remand to the undersigned for Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b)(1)(B), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Text Order, Jan. 2, 2024.
I. Background
Plaintiff Silvestre Garcia, Jr. (Garcia) alleges he was in a motor vehicle accident with third-party Edward Gonzales. Dkt. 1-5 ¶6. Garcia suffered damages, including $43,892.06 in medical bills and estimates over $115,000 for a future surgery. Dkt. 3 at 1. Gonzales's insurer paid policy limits. Id. Garcia has an uninsured motorist policy with State Farm; the policy limit is $50,000. Id. He requested State Farm tender the policy, contending his damages exceed the two policies. Id. Garcia asserts claims under the Texas Uniform Declaratory Judgments Act and for attorney's fees under the same statute. Dkt. 1-5 ¶¶15-16.
Page numbers correspond to those in the CM/ECF header.
Further examination of the alleged facts is unnecessary to resolve the Motion.
II. Plaintiff'S Motion to Remand
A. Standard of Review
A case may be removed to federal court if the action is one over which the federal court possesses subject matter jurisdiction. 28 U.S.C. § 1441(a). When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins., 276 F.3d 720, 723 (5th Cir. 2002); accord DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006).
“A federal court must affirmatively ascertain subject-matter jurisdiction before adjudicating a suit.” Bank of La. v. FDIC, 919 F.3d 916, 922 (5th Cir. 2019). Generally, a federal court has jurisdiction over a case in two circumstances. The first, known as federal question jurisdiction, exists if a case “arises under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1331; see Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988). The second circumstance in which a federal court has jurisdiction is often termed diversity jurisdiction. See generally 28 U.S.C. § 1332 (setting out the elements required for jurisdiction based on “diversity of citizenship”). “Diversity jurisdiction under 28 U.S.C. § 1332 only exists where the parties are citizens of different states and the amount in controversy exceeds $ 75,000.” White v. FCI USA, Inc., 319 F.3d 672, 674-75 (5th Cir. 2003).
The amount in controversy is determined at the time of removal. Gebbia v. Wal-Mart Stores, 233 F.3d 880, 883 (5th Cir. 2000). In St. Paul Mercury Indem. Company v. Red Cab Co., the Supreme Court delineated the general rule for determining the amount in controversy: “unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.” 303 U.S. 283, 288 (1938) (footnotes omitted); accord De Aguilar v. Boeing, 47 F.3d 1404, 1408 (5th Cir. 1995). But “[i]n an action for declaratory relief, the amount in controversy is the value of the right to be protected or the extent of the injury to be prevented.” Hartford Ins. Group v. Lou-Con, Inc., 293 F.3d 908, 910 (5th Cir. 2002) (per curiam) (quotation omitted). If a plaintiff's demand exceeds the jurisdictional threshold amount, a federal court may not decline jurisdiction unless it “appear[s] to a legal certainty that the claim is really for less than the jurisdictional amount ....” Red Cab Co., 303 U.S. at 289.
“[T]he value of the right to be protected or the extent of the injury to be prevented” is a “broad and flexible standard ....” Villarreal v. Allstate Fire & Cas. Co., Civil Action No. DR- 20-CV-069-AM/VRG, 2021 U.S. Dist. LEXIS 252087, at *5 (W.D. Tex. 2021) (Moses, J.) (quoting Pershing, v. Kiebach, 819 F.3d 179, 190 (5th Cir. 2016) (Mills, D.J., concurring). “The Fifth Circuit ‘has frequently relied upon the amount of the plaintiff's demand in assessing the amount in controversy in declaratory judgment actions, [but] has adopted no categorical rule in this regard.'” Id. (quoting Pershing, F.3d at 190). “[U]nder certain circumstances the policy limits will establish the amount in controversy.” Lou-Con, Inc., 293 F.3d at 911.
“[P]olicy limits are controlling in a declaratory action as to the validity of the entire contract between the parties.” Id. (cleaned up). “However, in declaratory judgment cases that involve the applicability of an insurance policy to a particular occurrence, the jurisdictional amount in controversy is measured by the value of the underlying claim-not the face amount of the policy.” Id. (quotation omitted). “In such circumstances, courts consider ‘policy limits, potential attorney's fees, . . . penalties, statutory damages, and punitive damages' to determine whether the $75,000 exclusive of interest and costs is in controversy.” Villarreal, 2021 U.S. Dist. LEXIS 252087 at *6 (quoting St. Paul Reins. Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998)). “But if the value of the underlying claim exceeds policy limits, then the policy limits are the measure of the maximum amount in controversy.” Id. (citing Lou-Con, 293 F.3d at 911; Payne v. State Farm Mut. Auto. Ins., 266 F.2d 63, 64-65 (5th Cir. 1959). Thus, “if an insurance policy limits the insurer's liability to a sum below the jurisdictional threshold, the fact that a claimant wants more money does not increase the amount in controversy.” Lou-Con, 293 F.3d at 911.
At bottom, “[w]hen a plaintiff seeks to recover payments under an insurance policy, the amount in controversy, for purposes of establishing diversity jurisdiction, is governed by the lesser of the value of the claim under the policy or the value of the policy limit.” Allstate Fire v. Love, 71 F.4th 348, 352 (5th Cir. 2023) (quoting Henderson v. Allstate Fire & Cas. Ins., 154 F.Supp.3d 428, 431 (E.D. La. 2015)).
B. Analysis
Garcia's suit for declaratory relief involves the applicability of his underinsured motorist coverage to his accident with Gonzales. Thus, this action falls into the category of suits that involve a particular occurrence rather than the validity of the insurance contract in general. In his petition, Garcia alleges damages of $250,000 or less and requests attorney's fees under the Uniform Declaratory Judgments Act of the Texas Civil Practice and Remedies Code. Dkt. 4-1 ¶15. At first glance, it appears that Garcia's claim may exceed the $75,000 jurisdictional threshold.
But Garcia has established to a legal certainty that his claim is for less than $75,000. The insurance policy at issue contains a $50,000 limit. Dkt. 3 at 1. And State Farm does not contest that the policy limit is $50,000. See generally Dkt. 4. The $50,000 policy limit caps State Farm's potential liability for the underinsured motorist benefits claim and provides the measure of the Garcia's maximum possible recovery in this suit.
The parties agree they are diverse. Dkt. 1 at 3; Dkt. 5 at 1. But the $75,000 threshold for federal jurisdiction is not met and thus diversity jurisdiction is lacking. Accordingly, the undersigned will recommend that the District Court grant the motion to remand.
III. Recommendations
For the reasons stated, the undersigned RECOMMENDS that the District Court GRANT Plaintiff's Opposed Motion to Remand (Dkt. 3).
In light of this Report and Recommendation, the referral to the magistrate should be ended.
IV. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within 14 days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).