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.
matter comes before the court following the court's Order
to Show Cause. That order required defendant American Modern
Select Insurance Company and plaintiff Lucinda W. Derosa to
file responses explaining why the court should not remand
this case to state court for lack of subject matter
jurisdiction. Doc. 6. After considering the parties'
arguments, the court remands this action to the Johnson
County, Kansas District Court.
filed this breach of contract action in the Johnson County,
Kansas District Court on June 14, 2019. Doc. 1-2. Defendant
removed the action to this court on July 12, 2019, claiming
this court has diversity jurisdiction under 28 U.S.C. §
1332. Doc. 1. Plaintiff's state court complaint sought
$8, 276.16 for the replacement of plaintiff's roof plus
costs to repair damage to her drywall, ceiling, privacy
fence, and deck. See Doc. 1-2 at 5-7. The state
court complaint did not specify the cost to repair all of the
damage but requested “damages in amount exceeding $25,
000, plus costs, pre-judgment interest, attorney's fees .
. ., and all other relief [that is] just and proper.”
Id. at 8. And, as Kansas law may permit plaintiff to
recover her attorneys' fees, a reasonable estimate of
attorneys' fees may count toward the amount in
controversy. See Mo. State Life Ins. Co. v. Jones,
290 U.S. 199, 202 (1933); Miera v. Dairyland Ins.
Co., 143 F.3d 1337, 1340 (10th Cir. 1998). Because
plaintiff did not make a specific monetary demand but alleged
major damage to her property, defendant asserted that
plaintiff's damages, together with attorneys' fees,
would reach the jurisdictional prerequisite for federal court
of an amount in controversy exceeding $75, 000. Doc. 1 at
the court questioned whether the amount in controversy
actually exceeds $75, 000. On July 16, 2019, the court
ordered the parties to file responses explaining why the
court should not remand this case to state court for lack of
subject matter jurisdiction. Doc. 6. The court permitted
defendant to conduct limited discovery about: (1)
plaintiff's attorneys' fees to date, (2) information
that will allow the parties and the court to estimate
plaintiff's anticipated attorneys' fees, including
plaintiff's counsel's hourly rate, and (3)
plaintiff's anticipated costs in repairing the drywall,
ceiling, privacy fence, and deck. Doc. 10.
courts are courts of limited jurisdiction and, as such, must
have a statutory basis to exercise jurisdiction.”
Montoya v. Chao, 296 F.3d 952, 955 (10th Cir. 2002)
(citation omitted). Federal district courts have original
jurisdiction over all civil actions arising under the
constitution, laws, or treaties of the United States or where
there is diversity of citizenship. 28 U.S.C. §§
1331-32. “A court lacking jurisdiction cannot render
judgment but must dismiss the cause at any stage of the
proceedings in which it becomes apparent that jurisdiction is
lacking.” Basso v. Utah Power & Light Co.,
495 F.2d 906, 909 (10th Cir. 1974) (citation omitted). Since
federal courts are courts of limited jurisdiction, the party
invoking federal jurisdiction bears the burden to prove it
exists. Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994).
invokes the court's subject matter jurisdiction under the
federal diversity statute. Under that provision, 28 U.S.C.
§ 1332, federal jurisdiction is proper when “the
matter in controversy exceeds the sum or value of $75, 000 .
. . and is between . . . citizens of different states.”
Here, the Notice of Removal adequately alleges the parties
are citizens of different states. But, the amount in
controversy is in question.
28 U.S.C. § 1446(c)(2), the general rule is that the
amount in controversy is the “sum demanded in good
faith in the initial pleading.” If the
“allegations of the complaint. . . are not dispositive,
the allegations in the petition for removal” may be
used to determine the amount in controversy. Lonnquist v.
J. C. Penney Co., 421 F.2d 597, 599 (10th Cir. 1970).
“[A] defendant's notice of removal need include
only a plausible allegation that the amount in controversy
exceeds the jurisdictional threshold.” Dart
Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 135
S.Ct. 547, 554 (2014). But, if a court questions whether a
removed action satisfies the amount in controversy
requirement under § 1332, “evidence establishing
the amount is required.” Id.
such a case, both sides submit proof and the court decides,
by a preponderance of the evidence, whether the
amount-in-controversy requirement has been satisfied.”
Id. at 554; see also 28 U.S.C. §
1446(c)(2)(B) (“[R]emoval of the action is proper on
the basis of an amount in controversy asserted [in a notice
of removal] if the district court finds, by a preponderance
of the evidence, that the amount in controversy exceeds [$75,
000]”); Knight v. Allstate Ins. Co., No.
15-9103-KHV, 2016 WL 74402, at *2 (D. Kan. Jan. 5, 2016)
(“To remain in federal court, defendant must prove by a
preponderance of the evidence facts sufficient to establish
that the amount in controversy may exceed $75, 000).
“To satisfy the preponderance standard, a party must
show a reasonable probability that the [amount in]
controversy exceeds” $75, 000. Owens v.
Dart Cherokee Basin Operating Co., No. 12-4157-JAR-JPO,
2015 WL 7853939, at *3 (D. Kan. Dec. 3, 2015) (internal
quotations and citations omitted). The proponent of federal
jurisdiction can establish “jurisdictional facts”
to meet this standard by, among other alternatives,
“interrogatories[, ] . . . calculation from the
complaint's allegations[, ] referenc[ing] . . . the
plaintiff's informal estimates or settlement demands[, ]
or [ ] introducing evidence, in the form of affidavits from
the defendant's employees or experts, about how much it
would cost to satisfy the plaintiff's demands.”
McPhail v. Deere & Co., 529 F.3d 947, 954 (10th
Cir. 2008) (internal quotations and citations omitted).
proponent of subject matter jurisdiction has
“establish[ed] jurisdiction by proving jurisdictional
facts that ma[k]e it possible that $75, 000
[is] in play” by a preponderance of the evidence, then
it “is entitled to stay in federal court unless it is
‘legally certain' that less than $75, 000 is at
stake.” Id. at 954-55; see also Hammond v.
Stamps.com, Inc., 844 F.3d 909, 911- 12 (10th Cir. 2016)
(explaining that (i) “the term ‘in
controversy' has never required a party seeking to invoke
federal jurisdiction to show that damages ‘are
greater' or will likely prove greater
‘than the requisite amount' specified by
statute” but instead must “show only and much
more modestly that ‘a fact finder might
legally conclude' that damages exceed the statutory
amount” (quoting Hartis v. Chi. Title Ins.
Co., 694 F.3d 935, 944 (8th Cir. 2012)) and (ii)
“to justify dismissal under this standard ‘it
must appear to a legal certainty that the claim is really for
less than the jurisdictional amount'” (quoting
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S.
283, 289 (1938))). Stated another way, “[o]nce the
proponent of federal jurisdiction has explained plausibly how
the stakes exceed [$75, 000] . . . the case belongs in
federal court unless it is legally impossible for the
plaintiff to recover that much.” Hammond, 844
F.3d at 914 (internal citations and quotations omitted).
court thus considers below, under the preponderance of the
evidence standard, whether defendant plausibly has
established the requisite amount in controversy exceeding
contends that “the facts are sufficient to establish
that the amount in controversy may exceed $75, 000.”
Doc. 14 at 1. Limited discovery here revealed that
plaintiff's total alleged damages based on repair bids
are $19, 540.83, exclusive of attorneys' fees. Doc. 14-1
at 2. And, plaintiff's attorneys' fees as of August
29, 2019 were just $3, 785. Docs. 14 at 1-2, 14-1 at 2. So,
“to reach the $75, 000.01 threshold” defendant
argues plaintiff could “reasonably incur an additional
$51, 674.17 in attorney's fees.” Doc. 14 at 2. This
argument is based on plaintiff's attorney's rate of
$300/hour and an assumption that plaintiff's attorney
would work at least an additional 172 hours on this matter.
Id.; Doc. 14-1 at 2. Defendant asserts another 172
hours is “not an unreasonable estimate”
considering the early stage of the litigation and “the
fact that extensive depositions will be needed.” Doc.
14 at 2-3; see also Doc. 1 ...