Opinion
No. 98C3647
August 28, 1998
MEMORANDUM OPINION AND ORDER
This matter is before the court on plaintiff James Smania's ("Smania") motion to remand. For the reasons set forth below, Smania's motion is granted.
BACKGROUND
Smania filed a one count complaint in the Circuit Court of Cook County, alleging that defendant Paul Revere Life Insurance Company ("Paul Revere") breached its disability insurance contract by failing to pay disability payments allegedly owed Smania under the insurance contract. On its face, Smania's complaint seeks $57,600 in damages, plus pre-judgment interest and reimbursement of attorneys' fees incurred in prosecuting the breach of contract claim.
Paul Revere subsequently removed the matter to this court and Smania has filed a motion to remand. Smania argues that this court does not have diversity jurisdiction because his complaint seeks only $57,600, less than the $75,000 jurisdictional minimum for a diversity action. 28 U.S.C. § 1332(a). Smania also argues that this matter should be remanded because Paul Revere failed to comply with Local Civil Rule 3.
Paul Revere counters by arguing that § 155 of the Illinois Insurance Code ( 215 ILCS 5/155) authorizes punitive damages of up to $25,000 if Smania proves bad faith or unreasonable and vexatious conduct by Paul Revere and, when combined with the $57,600 sought on the face of Smania's complaint, the $75,000 jurisdictional threshold is satisfied. In support of its argument, Paul Revere states that it properly assumed that Smania's complaint sought punitive damages of at least $25,000 based upon allegations in Smania's complaint that Paul Revere failed to act in good faith and engaged in unreasonable and vexatious. Paul Revere relies upon a March 1998 opinion of Judge William T. Hart, United States District Judge for the Northern District of Illinois, for the argument that it was required to make such an assumption.
DISCUSSION
A. JURISDICTIONAL THRESHOLD
A plaintiff is generally in the best position to know how much his or her claim is worth and a plaintiff's request for damages is deemed to be made in good faith. Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993). Courts have recognized that a plaintiff may evade the federal court system by simply seeking less than the jurisdictional minimum amount, so long as the plaintiff is not legally certain to recover more should he prevail on his claim. Id. (citations omitted).
In removal actions, the burden rests with the defendant to prove that the amount in controversy satisfies the statutory minimum. Id. The Seventh Circuit has held that a defendant in a removal action must show to a reasonable probability that the jurisdictional minimum has been met. Id.
In the present matter, Paul Revere has failed to carry its burden of establishing that the $75,000 jurisdictional minimum has been met. On its face, Smania's complaint seeks only $57,600 in damages, plus pre-judgment interest and reimbursement of attorneys' fees incurred in prosecuting the breach of contract claim. Although Smania's complaint does contain allegations of a lack of good faith and unreasonable or vexatious conduct by Paul Revere, it does not seek punitive damages under § 155 of the Illinois Insurance Code.
Neither Smania nor Paul Revere has presented facts that establish to a reasonable probability that the $75,000 jurisdictional minimum has been satisfied. At present, there is no legal certainty that Smania will be entitled to punitive damages under § 155 of the Illinois Insurance Code. This court cannot and will not rely upon the supposition that Smania will or may be entitled to over $75,000 in damages to find that the jurisdictional requirements have been met.
Paul Revere's argument that it is required to assume that Smania seeks up to $25,0000 in punitive damages must also fail. In support of its argument, Paul Revere relies upon a March 17, 1998 Memorandum Opinion and Order entered by Judge Hart in Weigand v. Paul Revere Life Insurance Company, 97 C 8880.
In Weigand, Paul Revere removed a state court action to federal court and Weigand filed a motion to remand. Weigand's complaint contained three counts, none of which contained an express ad damnum seeking over $75,000. Count III of Weigand's complaint, however, did specifically request punitive damages pursuant to § 155 of the Illinois Insurance Code.
On October 15, 1997, pursuant to Local Civil Rule 3, Paul Revere served Weigand with a request to admit that plaintiff's damages or other monetary relief awarded to plaintiff would in no event exceed $75,000. On November 12, 1997, in a timely fashion, Weigand denied that the monetary relief awarded to him would in no event exceed $75,000. Under 28 U.S.C. § 1446(b) and Local Civil Rule 3, Paul Revere had thirty days to file its notice of removal. Paul Revere, however, failed to file its notice of removal until December 23, 1997. For that reason, Judge Hart held that Paul Revere's notice of removal was untimely and remanded the case back to state court.
Contrary to Paul Revere's position in the present matter, Judge Hart did not hold that Paul Revere was required to assume that Weigand's punitive damages would exceed $25,000. Judge Hart, faced with a complaint that explicitly requested punitive damages, simply stated that in those instances where the face of the complaint makes clear that claimed attorneys fees and punitive damages "should have been assumed to be at least $25,000," then a defendant need not serve the plaintiff with an interrogatory or request to admit that the jurisdictional minimum has been met (pursuant to Local Civil Rule 3) prior to seeking removal of the action.
Smania's complaint seeks only compensatory damages, pre-judgment interest and attorneys' fees. Smania makes no request for punitive damages. Paul Revere cannot assume that Smania will be entitled to over $25,000 in punitive damages as the basis for its argument that the $75,000 jurisdictional minimum has been satisfied.
Although it would appear that Smania's complaint was drafted in a manner to avert this court's jurisdiction, the Seventh Circuit has recognized such a right. Paul Revere has failed to carry its burden of establishing, to a reasonable probability, that more than $75,000 is in controversy. For this reason, this matter is remanded to the Circuit Court of Cook County.
B. FAILURE TO COMPLY WITH LOCAL CIVIL RULE 3
In the alternative, Smania argues that this court should remand this matter based upon Paul Revere's failure to comply with Local Civil Rule 3. Local Civil Rule 3 requires, inter alia, that where a defendant seeks to remove an action from an Illinois court based solely on diversity, and where the complaint does not contain an express ad damnum in excess of $75,000, a defendant's notice of removal must:
1. include a statement that it is the defendant's good faith belief that the amount in controversy exceeds $75,000, and
2. include (a) a response from at least one plaintiff to either an interrogatory or request to admit that the damages plaintiff actually seeks exceed $75,000 or (b) plaintiff's refusal to agree that plaintiff's damage award will in no event exceed $75,000.
In the present matter, Smania argues that Paul Revere failed to comply with Local Civil Rule 3 because its notice of removal failed to include a response from Smania to either a damages interrogatory or request to admit. For this reason, Smania argues, this matter must be remanded.
Local Civil Rule 3 applies in the present matter: the sole basis for Paul Revere's removal of this action is diversity of citizenship and Smania's complaint does not contain an express ad damnum seeking in excess of $75,000. It is undisputed that Paul Revere's notice of removal did not include a response from Smania to either an interrogatory or request to admit, as the rule requires. For this additional reason, this matter must be remanded to the Circuit Court of Illinois.
Furthermore, Smania' s request for costs and fees associated with this motion for remand is denied.
CONCLUSION
For all the foregoing reasons, plaintiff's motion for remand is granted.