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: CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005

All Claims Sought, Not Policy Limits, Determines the Amount in Controversy

Davis-Batiste v. American Sec. Ins. Co., No. CIV.A. 10-604 (E.D. La. Oct 01, 2010).

Watch out for the requests in the complaint! This one stays in federal court because it's not just the contract, it's the claims in the complaint, too. Pretty simple? Maybe not, watch out

Judge Carl J. Barbier, writing for the Eastern District of Louisiana, denied the defendant's motion to dismiss for lack of subject-matter jurisdiction holding that in a claim based on the violation of insurance policy, in addition to policy limits and potential attorney's fees, penalties, statutory damages, and punitive damages are considered in ascertaining the amount in controversy.

 

In this case, the plaintiff brought an individual action in the district court against the defendant—insurer-- alleging breach of contract and breach of the duty of good faith and fair dealing. Specifically, the plaintiff asserted that the defendant had improperly refused to adequately adjust the plaintiff's claims for property damage to the plaintiff's home following Hurricane Katrina and that the defendant had used dilatory tactics to avoid making proper payment of the plaintiff's claims. 

 

The defendant filed a motion to dismiss alleging that the plaintiff lacked subject matter jurisdiction because the plaintiff failed to meet the amount in controversy requirements for diversity jurisdiction because the value of the policy was capped at $63,000.00. 

 

The plaintiff argued that CAFA applied to the claims made at the time of filing and that at the time of filing, the complaint involved the claims of thousands of claimants and approximately seventy-two insurer defendants, with the aggregate value of the claims unarguably exceeding the $5 million threshold required under CAFA. 

 

Second, the plaintiff countered that her individual claim exceeded $75,000 because she sought damages to her property pursuant to the policy and extra-contractual damages and damages for pain and suffering. 

 

The Court stated that the amount in controversy is determined as of the filing of the complaint.

The parties, however, disagreed on whether the amount in controversy should be determined under the requirements for individual claims under §1332(a) or the requirements for class actions under CAFA, §1332(d). 

The defendant believed that the amount in controversy requirement should be determined from the time of the original complaint, which did not contain any class action allegations. The defendant argued that the amount in controversy should be determined by reference to the insurance policy limits, which was $63,000.00. 

The plaintiff argued that the amount in controversy requirement should be determined under §1332(d) because her claims were initially instituted by a mass action joinder that included class allegations, including claims for subject matter jurisdiction under §1332(d).

Putting aside the parties' arguments concerning CAFA, the Court found that the plaintiff had satisfied the jurisdictional amount of $75,000 under the individual claims standard in §1332(a). The Court noted that in addition to policy limits and potential attorney's fee; penalties, statutory damages, and punitive damages can be considered in ascertaining the amount in controversy. Here, in addition to a claim for proceeds due under the insurance policy, the plaintiff made claims for punitive damages and various compensatory damages such as emotional distress. Therefore, the Court found that the plaintiff asserted its jurisdictional amount in good faith and that that amount exceeded the jurisdictional minimum.

Full post as published by CAFA Law Blog - Information, cases and insights regarding the Class Action Fairness Act of 2005 on February 17, 2012 (boomark / email).