Opinion
Case Number 02-CV-10268-BC.
December 31, 2002
OPINION AND ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
On September 26, 2002, the plaintiff filed a complaint in the Iosco County, Michigan Circuit Court claiming that the defendant breached the terms of a disability insurance policy by discontinuing the payment of monthly benefits on October 7, 2001 after having paid them for the previous two years. The disability policy was issued by the defendant to the plaintiff's employer, Au Sable Valley Community Health Services Board. The complaint alleged that the amount in controversy exceeded $25,000, and sought payment of all sums due under the policy through the plaintiff's sixty-fifth birthday, costs of suit and attorney fees.
On October 22, 2002, the defendant filed a notice of removal, invoking only this Court's diversity jurisdiction under 28 U.S.C. § 1332. In the notice, the defendant alleges that the plaintiff is a citizen of Michigan, the defendant is an insurance company incorporated in Illinois with its principal place of business in Chicago, Illinois, and, in conclusory fashion, that the amount in controversy exceeds $75,000.
The plaintiff has now filed a motion to remand the case to state court, contending that the amount in controversy is, in fact, considerably less than $75,000, and therefore this Court has no jurisdiction over the dispute. The plaintiff also seeks attorney fees and expenses pursuant to 28 U.S.C. § 1447(c). In response, the defendant contends that since the plaintiff, born in 1954 according to the complaint, is seeking disability payments spanning eighteen years (i.e., from the cut-off date in 2001 through age 65), and, as alleged in the complaint, the previous monthly benefit was $966.16, the defendant's total exposure to damages exceeds $208,000. The plaintiff points out, however, that both the complaint and the disability policy terms note the requirement that the monthly benefit must be reduced "by deductible sources of income or disability earnings." Compl. ¶ 4; see also Compl. Ex. Addendum 2 ("The Monthly Benefit under this policy shall be reduced by . . . Disability benefits paid . . . under . . . The Social Security Act"). The plaintiff contends only that "Defendant is liable to Plaintiff for $966.16 per month from October 7, 2001, and continuously until the present, less adjustments as provided in the policy." Compl. ¶ 12 (emphasis added). The complaint also alleges that the plaintiff was found totally disabled by the Social Security Administration, Compl. ¶ 10, and although not specified in the complaint itself, she is receiving a net monthly Social Security disability payment of $788. That payment reduces the defendant's monthly obligation to $178.16, amounting to a total of approximately $38,500 over eighteen years.
The provisions of 28 U.S.C. § 1441 require a defendant seeking removal to demonstrate that a district court would have original jurisdiction over a civil action in order to invoke the Court's removal jurisdiction. Long v. Bando Mfg. of America, Inc., 201 F.3d 754, 757 (6th Cir. 2000); Conrad v. Robinson, 871 F.2d 612, 614 (6th Cir. 1989). "Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand." Brown v. Francis, 75 F.3d 860, 864-65 (3d Cir. 1996). See also, Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989).
The amount in controversy is assessed as of the time the complaint is filed, Rosen v. Chrysler Corp., 205 F.3d 918, 920-21 (6th Cir. 2000), or in the case of removal, at the time of the removal notice. Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). Generally, the amount claimed by the plaintiff in his or her complaint determines whether the jurisdictional amount is satisfied. Rosen, 205 F.3d at 920-21. If challenged by the defendant, the complaint will only be dismissed if "it appears to a legal certainty that the plaintiff in good faith cannot claim the jurisdictional amount." Massachusetts Cas. Ins. Co. v. Harmon, 88 F.3d 415, 416 (6th Cir. 1996).
The Sixth Circuit places the "burden on a defendant seeking to remove an action to federal court to show by a preponderance of the evidence that the amount in controversy requirement has been met." Hayes v. Equitable Energy Resources, Co., 266 F.3d 560, 572 (6th Cir 2001) (citing Gafford v. General Elec. Co., 997 F.2d 150, 158 (6th Cir. 1993)). This standard "does not place upon the defendant the daunting burden of proving, to a legal certainty, that the plaintiff's damages are not less than the amount-in-controversy requirement. Such a burden might well require the defendant to research, state and prove the plaintiff's claim for damages." Gafford, 997 F.2d at 158. On the other hand, the defendant seeking removal must show that it is more likely than not that the plaintiff is seeking damages in excess of the $75,000 limit. Hayes, 266 F.3d at 572.
The defendant has not made the requisite showing here. There is no dispute that the plaintiff is attempting to recover only what she is entitled to under the policy. The defendant has not rebutted the plaintiff's contention that she is receiving a substantial Social Security disability payment, nor does the defendant contest the plaintiff's allegation that the monthly benefit must account for "adjustments as provided in the policy," which would include a deduction for the Social Security disability payment. The defendant has not shown that it is more likely than not that there is more than $39,000 at stake. Consequently, the defendant has not satisfied the requirements of 28 U.S.C. § 1332, and the case is not removable, therefore, under § 1441(a).
The plaintiff has also requested an award of costs and attorney fees pursuant to 28 U.S.C. § 1447(c) which provides that "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." The defendant resists such an award contending that it filed its removal notice in good faith, but without all the pertinent information concerning the amount of the plaintiff's monthly Social Security disability payment. Both parties rely on Morris v. Bridgestone/Firestone, Inc., 985 F.2d 238, 240 (6th Cir. 1993), which holds that an award of costs is discretionary with the Court and often turns on whether the removal lacked merit. The plaintiff also cites General Electric Capitol Auto Lease, Inc., v. Mires, 788 F. Supp. 948, 951 (E.D.Mich. 1992), which holds that cases rejecting attorney fees involve novel questions of law that have not otherwise been fully addressed.
The Court finds that an award of attorney fees and expenses under § 1447(c) is not appropriate in this case. Although the defendant should have anticipated that it would deduct governmental benefits in the monthly benefit calculation, it did not know the amount of the payment and therefore could not have known at the time that it could not meet the amount-in-controversy requirement of § 1332. The removal notice, therefore, was not devoid of merit.
Next, the party seeking attorney fees has the burden to prove that its request for attorney fees is reasonable. To meet this burden, the fee petitioner must "submit evidence supporting the hours worked and rates claimed." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (deciding fee petition under 42 U.S.C. § 1988). "The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Id. See also Adcock-Ladd v. Secretary of Treasury, 227 F.3d 343, 349 (6th Cir. 2000).
Courts should exclude hours that are not reasonably expended. Hensley, 461 U.S. at 433. Hours are not reasonably expended if they are excessive, redundant, or otherwise unnecessary. Ibid. "A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee." Mich. R. Prof'l Conduct (MRPC) 1.5. In this case, however, the plaintiff has neither requested a specific amount of expense and fee reimbursement, nor has she offered any information whatsoever upon which this Court might base an award of attorney fees. Without any such submission, the Court can only speculate as to the amount of a reasonable fee, and the Court declines to do so.
Finally, although the defendant did not so specify in its removal notice, the case may have been removable under the Court's federal-question jurisdiction. See 28 U.S.C. § 1331, 1441(b). The plaintiff's disability policy was procured by her employer, presumably as a benefit of employment, and therefore would amount to an "employee welfare benefit plan" governed by Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. See 29 U.S.C. § 1002(1)(A); Pegram v. Herdrich, 530 U.S. 211, 222-23 (2000). As such, benefits disputes are authorized by Section 502(a)(1)(B) of ERISA. 29 U.S.C. § 1132(a)(1)(B) ("A civil action may be brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan."). Such claims may not be brought under state law, however, because of ERISA's preemption provisions. See 29 U.S.C. § 1144(a); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981) (Congress "establish[ed] pension plan regulation as exclusively a federal concern."). When an area is "completely preempted," then the state law claim is displaced by the federal cause of action, and the state law complaint is properly recharacterized as such. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987); Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995) (en banc). The rationale undergirding this rule is that where federal preemption is so complete that conflicting state law not only must yield but is effectively extinguished, the only theory of recovery remaining is the federal claim, which takes the place of the state law claim recited in the complaint. Warner, 46 F.3d at 534. The complaint itself is therefore deemed to state a federal cause of action. Although state courts have concurrent jurisdiction to adjudicate claims under 29 U.S.C. § 1132(a)(1)(B), those claims are likewise removable under 28 U.S.C. § 1441(b). See Warner, 46 F.3d at 534.
For reasons which the Court will not second-guess, however, the defendant chose not to invoke the Court's federal-question jurisdiction. Had it done so, the amount in controversy would not have been an obstacle to removal, and that issue could not have provoked a fee request under § 1447(c). Although the defendant cannot now seek removal on the basis of federal-question jurisdiction because more than thirty days have elapsed, the Court finds that it is not appropriate to award attorney fees and expenses when granting a motion to remand, when removal under a different theory may have been appropriate.
Accordingly, the plaintiff's motion to remand the case to state court [dkt # 7] is GRANTED.
It is further ORDERED that this case is REMANDED to the Iosco County (Michigan) Circuit Court for further proceedings in accordance with this opinion.
It is further ORDERED that the plaintiff's request for attorney fees and expenses under 28 U.S.C. § 1447(c) is DENIED.