United States District Court, D. Nevada
THE ESTATE OF EGON KLEMENTI BY AND THROUGH THE SPECIAL ADMINISTRATOR ELFRIEDE KLEMENTI and ELFRIEDGE KLEMENTI, individually Plaintiff,
HARTFORD UNDERWRITERS INSURANCE COMPANY, A CONNECTICUT CORPORATION; JEFFREY SPENCER; Does I-XXX; and ABC CORPORATIONS A-Z; inclusive, Defendants.
ORDER (ECF 7, 10, 17)
MIRANDA M. DU UNITED STATES DISTRICT JUDGE
case comes before the Court through Defendant Hartford
Underwriters Insurance Company's (“Hartford”)
petition to remove (“Petition”). (ECF No. 1.) The
Estate of Egon Klementi and Elfriedge Klementi's
(collectively, “the Klementis”) filed the action
in the Second Judicial District Court of the State of Nevada
in and for the County of Washoe. (ECF No. 1-1.) Defendant
removed on the basis of diversity jurisdiction under 28
U.S.C. § 1332(a). In turn, the Klementis moved to remand
(“Remand Motion”) (ECF No. 10), Hartford filed an
opposition to the Remand Motion (ECF No. 16), and Plaintiff
replied (ECF No. 19). Hartford also filed a motion to realign
the parties (ECF No. 17), as an alternative to remand.
Additionally before the Court is Hartford's partial
motion to dismiss (ECF No. 7), the Klementis response to that
motion (ECF No. 9) and Hartford's reply (ECF No. 15).
reasons set out below, the Remand Motion (ECF No. 10) is
denied, the motion to realign (ECF No. 17) is denied as moot,
and the partial motion to dismiss (ECF No. 7) is granted in
part and denied in part.
following facts are taken from the Complaint unless otherwise
noted. The Klementis assert that, contrary to its obligation
under a homeowner's insurance policy and an umbrella
policy, Hartford refused to comply with its duty to defend a
separate lawsuit filed against them by Defendant Jeffrey
Spencer (“Spencer”) in 2014 (“Spencer
Lawsuit”). (ECF No. 1-1.) As a result, the Klementis
were forced to retain counsel at their own costs as well as
separate coverage counsel to determine whether Hartford
should provide a defense under the applicable policies.
(Id. at 4.) The Klementis allege that subsequently,
in September 2017, Hartford determined coverage was
available, and agreed to provide a defense. (Id. at
7.) Hartford, however, insisted on substituting counsel
selected by Hartford, and refused to provide for
Cumis counsel after the Klementis insisted on
proceeding with existing counsel. (Id. at 7-9.)
Complaint states one claim for declaratory relief against
Hartford and Spencer, and three other claims against only
Hartford-breach of contract, breach of the implied covenant
of good faith and fair dealing, and breach of
“Nevada's Unfair Trade
Practices”. (ECF No. 1-1.) The Klementis claim that
as of mid-October 2017 their counsel had jointly billed $42,
476.30 in legal fees and costs in defending the Spencer
Lawuit and in pursuing coverage under the applicable policy.
(Id. at 8.) Hartford's alleged failure to defend
and to pay these fees and costs is associated with the
Klementis' breach of contract claim. (Id. at 10;
ECF No. 19 at 4, 6 (asserting the breach of contract damages
were $49, 666, at the time of removal).) The Complaint
otherwise seeks “damages in excess of $10, 000, ”
attorneys' fees, special and consequential damages,
punitive damages, and interest. (ECF No. 1-1 at 9, 13.)
removed the case on April 23, 2018 (ECF No. 1). Spencer did
not join in the removal, and did not appear in this
litigation until June 29, 2018 (ECF No. 25). The Klementis
claim they were unable to effectuate service on Spencer until
May 9, 2018, because Spencer had been avoiding service (ECF
No. 10 at 9).
courts are courts of limited jurisdiction, having subject
matter jurisdiction only over matters authorized by the
Constitution and Congress. U.S. Const. art. III, § 2,
cl. 1; e.g., Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). A suit filed in state
court may be removed to federal court if the federal court
would have had original jurisdiction over the suit. 28 U.S.C.
§ 1441(a). However, courts strictly construe the removal
statute against removal jurisdiction, and “[f]ederal
jurisdiction must be rejected if there is any doubt
as to the right of removal in the first instance.”
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.
1992) (emphasis added). The party seeking removal bears the
burden of establishing federal jurisdiction. Durham v.
Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir.
establish subject matter jurisdiction pursuant to diversity
of citizenship under section 1332(a), the party asserting
jurisdiction must show: (1) complete diversity of citizenship
among opposing parties and (2) an amount in controversy
exceeding $75, 000. 28 U.S.C. § 1332(a). Where it is not
facially evident from the complaint that $75, 000 was in
controversy at the time of removal, a defendant seeking
removal must prove, by a preponderance of the evidence, that
the amount in controversy requirement is met. Valdez v.
Allstate Ins. Co., 372 F.3d 1115 (9th Cir. 2004).
preponderance of the evidence standard, a removing defendant
must “provide evidence establishing that it is
‘more likely than not' that the amount in ///
controversy exceeds” the jurisdictional minimum.
Id. at 1117 (citations omitted). As to the kind of
evidence that may be considered, the Ninth Circuit has
adopted the “practice of considering facts presented in
the removal petition as well as any
‘summary-judgment-type evidence relevant to the amount
in controversy at the time of removal.'”
Matheson v. Progressive Specialty Ins. Co., 319 F.3d
1089, 1090 (9th Cir. 2003) (quoting Singer v. State Farm
Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)).
Conclusory allegations are insufficient. Matheson,
319 F.3d at 1090 (citation omitted).
removed based on diversity jurisdiction, contending that the
jurisdictional amount has been met and relying on the
fraudulent joinder and misjoinder doctrines to argue that the
parties are diverse. (ECF No. 1.) The Klementis challenge
jurisdiction on both grounds. (ECF No. 10.) The Court agrees
that both requirements for diversity jurisdiction are met.
Amount in Controversy
Klementis argue that the damages as pleaded and existing at
the time of removal did not exceed the jurisdictional $75,
000 requirement. (ECF No. 10 at 4; ECF No. 19 at 3-4, 6.) In
light of a recent decision by the Ninth Circuit, the Court
finds the Klementis' argument is misguided.
the Klementis' position is that for purposes of removal,
the amount in controversy is determined at the time of
removal, and therefore the Court may only consider damages
incurred by that time. (Id.) They are wrong. The
Ninth Circuit clarified this point in Chavez v. JPMorgan
Chase & Co., 888 F.3d 414 (9th Cir. 2018). In
Chavez, the Ninth Circuit noted its
“oft-repeated statement that the amount in controversy
is assessed as of the ‘time of removal'.”
Id. at 417. There, like the Klementis, the plaintiff
argued that this statement “means that the amount in
controversy does not include any damages incurred after the
time of removal.” Id. The Ninth Circuit
explained that the amount in controvery means “the
amount at stake in the underlying ...