United States District Court, D. Kansas
LUCINDA W. DEROSA, Plaintiff,
AMERICAN MODERN SELECT INSURANCE COMPANY, Defendant.
MEMORANDUM AND ORDER
D. Crabtree United States District Judge.
the court is defendant American Modern Select Insurance
Company's (“American Modern”) “Motion
to Conduct Limited Discovery and Request for Stay of Ruling
on Subject Matter Jurisdiction” (Doc. 8). American
Modern seeks limited discovery to support its assertion that
the court has subject matter jurisdiction over this case.
American Modern also requests a stay of the deadline to
respond to the court's Order to Show Cause (Doc. 6). The
court grants American Modern's motion, permitting 30 days
for limited discovery and setting September 9, 2019, as the
new deadline for the parties to respond to the Order to Show
12, 2019, American Modern removed this action to federal
court. Doc. 1. On July 16, 2019, the court issued an Order to
Show Cause, giving the parties 14 days to file written
responses explaining why the court should not remand the case
to state court for lack of subject matter jurisdiction. Doc.
6. The Order to Show Cause questioned whether plaintiff
Lucinda W. Derosa's Complaint makes allegations
supporting damages in excess of the $75, 000 threshold
required for subject matter jurisdiction under 28 U.S.C.
§ 1332. Id.
Derosa's cause of action stems from alleged damage to her
home and property during a storm on June 16, 2017. Doc. 1-2
at 5 (Compl. ¶ 6). Pertinent to the amount in
controversy issue, Ms. Derosa (1) alleges $8276.16 in
uncovered damage to a roof; (2) asserts that she suffered an
unspecified amount of damage to drywall, a ceiling, a privacy
fence, and a deck; and (3) seeks attorneys' fees under
two Kansas statutes. Doc. 6 at 2; see also Doc. 1-2
at 4, 8 (Compl. ¶¶ 7, 22, 24, 34). American Modern
requests limited discovery on Ms. Derosa's anticipated
costs in repairing the drywall, ceiling, privacy fence, and
deck. Doc. 8 at 5-6. American Modern also asks for limited
discovery on Ms. Derosa's attorneys' fees.
court questions whether a removed action satisfies the amount
in controversy requirement under § 1332, “the
removing defendant, as proponent of federal jurisdiction,
must establish what the plaintiff stands to recover.”
McPhail v. Deere & Co., 529 F.3d 947, 954 (10th
Cir. 2008) (quoting Meridian Sec. Ins. Co. v.
Sadowski, 441 F.3d 536, 541 (7th Cir. 2006)). If, as is
the case here, a state court complaint does not identify a
specific amount in controversy, “the defendant must
affirmatively establish jurisdiction by proving
jurisdictional facts that ma[k]e it
possible that $75, 000 [is] in play.”
Id. at 955. The standard of proof for this showing
is the familiar “preponderance of the evidence”
standard. Id. at 954. And, “once th[e]se
underlying facts are proven, a defendant (like a plaintiff)
is entitled to stay in federal court unless it is
‘legally certain' that less than $75, 000 is at
burden placed on a removing defendant to prove jurisdictional
facts creates something of an anomaly because an out-of-state
defendant, a party intended to benefit from diversity
jurisdiction, is not able to shape the allegations
establishing federal jurisdiction. Id. at 952-53.
Nor does an out-of-state defendant, at the time of removal,
possess the evidence which plaintiff will use to establish
her damages. See Id. at 953 (observing that
discovery is unlikely to have occurred before a
defendant's 30-day window to remove action elapses). To
overcome this anomaly, a removing defendant, if confronted by
a challenge to whether an action meets the amount in
controversy requirement, may “rely on the federal
discovery process to produce this evidence” and
“may ask the court to wait to rule on the remand
[issue] until limited discovery has been completed.”
Id. at 954; see also Sizova v. Nat'l Inst.
of Standards & Tech., 282 F.3d 1320, 1326 (10th Cir.
2002) (“When a defendant moves to dismiss for lack of
jurisdiction, either party should be allowed discovery on the
factual issues raised by that motion.” (quoting
Budde v. Ling-Temco Vought, Inc., 511 F.2d 1033,
1035 (10th Cir. 1975))).
court concludes it is appropriate to permit limited discovery
on the amount of damage to Ms. Derosa's drywall, ceiling,
privacy fence, and deck. Although the storm damage underlying
Ms. Derosa's action occurred two years ago, the Complaint
states Ms. Derosa was “in the process of obtaining bids
to attempt repairs” when she commenced this action Doc.
1-2 at 7 (Compl. ¶ 24). The Complaint thus does not
reveal the monetary value of the damage to the drywall,
ceiling, privacy fence, and deck. And, because federal law
required American Modern to remove the action within 30 days
of Ms. Derosa filing her Complaint, see 42 U.S.C.
§ 1446(b), it did not have an opportunity to pursue
discovery in state court.
court also concludes it is appropriate to permit limited
discovery on Ms. Derosa's actual and anticipated
attorneys' fees. Ms. Derosa seeks attorneys' fees
under Sections 40-256 and 40-908 of the Kansas Statutes
Annotated. Doc. 1-2 at 8. Section 40-256 allows for the
recovery of attorneys' fees when “judgment is
rendered against an insurance company” and the
insurance company “refused without just cause or excuse
to pay the full amount of [the] loss.” Kan. Stat. Ann.
§ 40-256. And, § 40-908 provides:
in all actions . . . in which judgment is rendered against
any insurance company on any policy given to insure any
property in this state against loss by . . . lightning or
hail, the court . . . shall allow the plaintiff a reasonable
sum as an attorneys' fee for services in such action . .
. and collected as a part of the costs.
Kan. Stat. Ann. § 40-908.
state statute allows plaintiff to recover her attorneys'
fees, then the attorneys' fees count toward the amount in
controversy requirement of the jurisdictional standard
adopted by 42 U.S.C. § 1332. Mo. State Life Ins. Co.
v. Jones, 290 U.S. 199, 202 (1933). And, “when a
statute permits recovery of attorney's fees[, ] a
reasonable estimate may be used in calculating the necessary
jurisdictional amount in a removal proceeding based upon
diversity of citizenship.” Miera v. Dairyland Ins.
Co., 143 F.3d 1337, 1340 (10th Cir. 1998) (citing
Mo. State Life Ins. Co., 290 U.S. at 202). As Kansas
law may permit Ms. Derosa to recover her attorneys' fees,
it is appropriate to permit American Modern discovery on (1)
Ms. Derosa's attorneys' fees to date; and (2)
information that will allow the parties and the court to
estimate Ms. Derosa's anticipated attorneys' fees,
including Ms. Derosa's counsel's hourly rate. See
Helvey v. Am. Nat'l Life Ins. Co. of Tex., No.
12-1109-MLB, 2012 WL 2149676, at *3 (D. Kan. June 13, 2012)
(permitting limited discovery on attorneys' fees where
amount in controversy was in doubt).
IS THEREFORE ORDERED BY THE COURT THAT American
Modern's “Motion to Conduct Limited Discovery and
Request for Stay of Ruling on Subject Matter
Jurisdiction” (Doc. 8) is granted.
IS FURTHER ORDERED BY THE COURT THAT the parties
shall have 30 days from the date of this
Order to conduct limited discovery consistent with this
IS FURTHER ORDERED BY THE COURT THAT the deadline
for the parties to respond to the Order to Show Cause (Doc.
6) is amended, and ...