December 16, 2014
LEE R. TURNER, Plaintiffs,
THE PAUL REVERE LIFE INSURANCE COMPANY, et al., Defendants.
Presently before the court is plaintiff Lee R. Turner’s motion to remand. (Doc. # 8). Defendants UNUM Group and Paul Revere Life Insurance Company (“Paul Revere”) filed a response (doc. # 15), and plaintiff filed a reply (doc. # 16).
This action arises from an insurance dispute between two out-of-state insurers and a Nevada resident. (See doc. # 1, Exh. A ¶¶ 1-3). Plaintiff has alleged that the amount in controversy exceeds the jurisdictional amount. (See doc. # 1, Exh. E, p. 5). The only question in this case is whether defendants’ removal was timely.
On or around April 24, 2014, plaintiff filed the summons and complaint in this action in the Eighth Judicial District Court for Clark County, Nevada. (See doc. # 15). It is undisputed that defendant UNUM Group was properly served on April 28, 2014, and defendant The Paul Revere was properly served on April 30, 2014. (See docs. ## 8, 15).
In the complaint, the prayer for relief sought an award of general and special damages “in an amount in excess of $10, 000.00.” (See doc. # 1, Exh. A). The prayer for relief also sought an award of “compensatory, consequential, statutory, exemplary and punitive damages in an amount in excess of $10, 000.00.” (See id.). The complaint sought costs and attorneys’ fees in an unspecified amount. (See id.). Defendants answered the complaint on June 6, 2014. (See doc. # 15).
On June 26, 2014, plaintiff filed and served its request for exemption from arbitration. (See docs. ## 8, 15). In this request, plaintiff claimed special damages totaling $2, 946, 184.74 and future medical expenses and punitive damages in an amount to be determined. (See doc. # 15). Defendants removed the case on July 24, 2014, twenty-eight days after receipt of plaintiff’s request for exemption from arbitration. Defendants removed eighty-five days after serving the last defendant with its complaint, fifty-five days past the deadline established in 28 U.S.C. § 1446(b)(1).
II. Legal Standard
In deciding whether removal is proper, courts strictly construe the removal statute against finding jurisdiction, and the party invoking federal jurisdiction bears the burden of establishing the removal was appropriate. Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009); see also California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004) (“The removal statute is strictly construed against removal jurisdiction, and the burden of establishing federal jurisdiction falls to the party invoking the statute”). “Where doubt regarding the right to removal exists, a case should be remanded to state court.” Matheson v. Progressive Specialty Ins, Co., 319 F.3d 1089, 1090 (9th Cir. 2003); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
A. Timely Removal
Plaintiff argues that the court should remand this matter based on the defendants’ untimely petition for removal. Two clauses from the removal statutes govern the analysis of timeliness.
Title 28 U.S.C § 1446(b)(1) states:
The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
Title 28 U.S.C. § 1446(b)(3) states:
Except as provided in subsection (c), if the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.
If, following removal, a federal court determines there was a defect in the removal procedure or an absence of subject matter jurisdiction, it may remand the action to state court sua sponte or on motion of a party. Emrich v. Touche Ross & Co., 846 F.2d 1190 (9th Cir. 1988). The timing requirement of Section 1446(b) is “mandatory, ” but it is not jurisdictional. See Hones v. Young, 2013 WL 593401, No. 2:12-cv-1951-JCM-PAL, at *2 (D. Nev. Feb. 13, 2013) quoting Lewis v. City of Fresno, 627 F.Supp.2d 1179, 1182 (E.D. Cal. 2008); see also Dial–In, Inc. v. Aro Corp., 620 F.Supp. 27, 29 (N.D. Ill. 1985) (“The thirty-day period set forth in § 1446(b) is mandatory and cannot be extended by consent of the parties or by court orders.”).
Under § 1446(b), two separate thirty-day windows exist for when a case may be removed: (1) after the defendant receives the initial pleading; and (2) after the defendant receives a paper “from which it may first be ascertained that the case is one which is or has become removable” if “the case stated by the initial pleading is not removable.” Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 692 (9th Cir. 2005). “[N]otice of removability under § 1446(b) is determined through examination of the four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry.” Id. at 694.
As § 1446(b)(1) states, the defendant had thirty days to file its petition for removal. Plaintiff served defendants on April 28, 2014 and April 30, 2014, allowing for a timely petition for removal if filed on or before May 30, 2014. The defendants filed the petition for removal on July 24, 2014. This filing occurred eighty-five days after service of the last defendant, and fifty- five days past the deadline established in 28 U.S.C. § 1446(b)(1). Thus for removal to be procedurally proper, the court must look to 28 U.S.C. § 1446(b)(3).
Under 28 U.S.C. § 1446(b)(3), the second thirty-day window for removal begins “after the defendant receives a paper ‘from which it may first be ascertained that the case is one which is or has become removable’ if ‘the case stated by the initial pleading is not removable.’” Harris, 425 F.3d at 692.
Plaintiff argues that the complaint adequately pled the amount in controversy to trigger the timeline for removal under 28 U.S.C. § 1446(b)(1), thirty days from service of the complaint on the final defendant. To support this assertion, plaintiff points to the first page of his complaint, which states “Arbitration Exemption: 1. Damages in Excess of $50, 000.” (See doc. # 16). Plaintiff believes this statement, combined with plaintiff’s three claims for relief: (1) breach of contract, (2) breach of covenant of good faith and fair-dealing – bad faith under common law, and (3) a violation of the Nevada Unfair Practices Act, clearly put defendants on notice that the amount in controversy requirement had been satisfied. (See id.).
Further, plaintiff argues he factually put defendants on notice that his damages exceeded $75, 000 based on allegations in the complaint including:
- Defendants have engaged in a pattern and practice of bad faith conduct in an effort to maximize their own financial gains.
- As a result of defendants’ breach of contract, Dr. Turner suffered from consequential damages due to his inability to meet his own financial obligations.
- Defendants placed their own pecuniary interests above their insured’s interests even though they knew, or should have known, that Plaintiff was totally disabled under the policy.
- In breaching the covenant of good faith and fair dealing, Defendants acted without a reasonable basis in handling Dr. Turner’s claim under his Policy and/or in terminating his claims for benefits.
(See doc. # 8 quoting doc. # 1, Exh. 1 at ¶¶ 65, 83, 93, 95).
Finally, plaintiff alleges that defendants completely ignore plaintiff’s punitive damages claim in excess of $10, 000, which is included in the amount in controversy requirement. Therefore, plaintiff argues that defendant could tell the $75, 000 jurisdictional threshold had been met based on the plain face of the complaint. Accordingly, 28 U.S.C. § 1446(b)(1) applies and defendants had thirty days after receipt by or service of the initial pleading or summons – until May 30, 2014 – to file the notice of removal. (See doc. # 8). Defendants did not remove until July 24, 2014. (See doc. # 8). Therefore, plaintiff argues that removal was not timely as it was filed eighty-five days after service. (See id.).
Defendants counter that plaintiff’s complaint was not immediately removable, because the complaint did not clearly allege an amount in controversy exceeding the jurisdictional requirement of $75, 000. Accordingly, the thirty-day time limit for removal did not begin to run until defendants received the paper from which it could first ascertain that the case was removable – the exemption from arbitration form alleging $2, 946, 184.74 in special damages. Because plaintiff’s exemption from arbitration document, filed on June 26, 2014, was the first document alleging that the amount in controversy exceeded $75, 000, defendants assert that the July 24, 2014 removal of this action was timely. (See doc. # 15). Defendants removed this action on July 24, 2014, twenty-eight days after they allegedly first became aware that the amount in controversy standard had been met. (See id.).
The court finds that plaintiff’s initial complaint did not affirmatively reveal information to trigger removal based on diversity jurisdiction. The clues of “Arbitration Exemption: 1. Damages in Excess of $50, 000, ” claims for relief “in excess of $10, 000” for three claims, and factual allegations highlighted by plaintiff were not concrete enough, separately or together, to inform defendants that the jurisdictional standard had been met on the face of the complaint. Defendants could only conclude by certainty that plaintiff was seeking damages in excess of $50, 000, and could not be sure that the $75, 000 threshold requirement was met.
Because the court does not recognize a duty to make further inquiry, see Harris, 425 F.3d at 694, 696-98, the defendant’s removal after receipt of plaintiff’s exemption from arbitration document was proper under 28 U.S.C. § 1446(b)(3). Though Nevada state courts require that demand be made only for damages “in excess of $10, 000” without further specification of amount where a claimant seeks damages of more than $10, 000, there are ways for a plaintiff to put a defendant on notice of the specific amount in controversy alleged, such as with an exhibit demonstrating the breakdown of claimed damages. See Nev. R. Civ. P. 8(a). As of the date of the petition for removal, no amended pleading, motion, order or other paper was filed stating that the alleged amount in controversy exceeded $75, 000. The first paper from which defendants were on notice that the alleged amount in controversy did in fact exceed $75, 000 was the exemption from arbitration form filed on June 26, 2014. Therefore, the defendant’s July 24, 2014 petition for removal was timely.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiff Lee R. Turner’s motion to remand (doc. # 8) be, and the same hereby is, DENIED.