-PAL Quon v. State Farm Fire and Casualty Company, No. 2:2011cv00967 - Document 24 (D. Nev. 2011)
Court Description: ORDER Granting 9 Motion to Remand to State Court. Signed by Judge Gloria M. Navarro on 7/14/2011. (Copies have been distributed pursuant to the NEF, certified copies sent to Eight Judicial District Court - SLR)
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-PAL Quon v. State Farm Fire and Casualty Company Doc. 24 UNITED STATES DISTRICT COURT 1 DISTRICT OF NEVADA 2 3 4 5 6 7 8 NANCY QUON, ) ) Plaintiff, ) vs. ) ) STATE FARM FIRE AND CASUALTY ) COMPANY, ) ) Defendant. ) ) Case No.: 2:11-cv-00967-GMN-PAL ORDER 9 10 Before the Court is Plaintiff Nancy Quon’s Motion to Remand (ECF No. 9). Defendant 11 State Farm Fire and Casualty Company filed a Response on June 29, 2011 (ECF No. 14) and 12 Plaintiff filed a Reply on July 11, 2011 (ECF No. 19). 13 14 15 For the following reasons the Court GRANTS Plaintiff’s Motion to Remand (ECF No. 9). FACTS AND BACKGROUND Plaintiff filed her Complaint in the Eighth Judicial District Court for the State of Nevada 16 on June 2, 2011. Defendant removed this case to the United States District Court on June 13, 17 2011. (ECF No. 1). Defendant claimed diversity of citizenship as the basis for its removal. (Id.) 18 Defendant later filed an Amended Petition for Removal claiming a federal question as an 19 additional basis for subject matter jurisdiction. (ECF No. 13). 20 Plaintiff’s Complaint seeks declaratory relief asking the Court to determine if Defendant 21 is entitled to unlimited examinations under oath (EUOs) and if so whether Defendant is 22 required to provide information to its insured why such additional EUOs are appropriate. 23 Plaintiff’s entire prayer for relief only requests a declaratory judgment finding that (1) Plaintiff 24 has fulfilled her obligation under the contract to submit to an EUO, (2) Plaintiff has no further 25 obligation to submit to any additional EUOs and (3) Plaintiff is entitled to Defendant’s Page 1 of 7 Dockets.Justia.com 1 investigative materials and evidence supporting Defendant’s reservation of rights. DISCUSSION 2 3 A. Legal Standard A party may make a motion to remand “on the basis of any defect other than lack of 4 5 subject matter jurisdiction ... within 30 days after the filing of the notice of removal under 6 section 1446(a).” However, Section 1447 states: “[i]f at any time before final judgment it 7 appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 8 U.S.C. § 1447(c). There is no discretion with the Court to hear matters over which the Court 9 has no jurisdiction. District courts have original jurisdiction over civil actions where no plaintiff is a citizen 10 11 of the same state as a defendant and the amount in controversy exceeds $75,000. 28 U.S.C. § 12 1332(a). Further, federal district courts have original jurisdiction founded on claims or rights 13 that arise under the Constitution, treaties or laws of the United States. 28 U.S.C. § 1331. A 14 civil action brought in state court may be removed by the defendants to a federal district court if 15 the district courts have original jurisdiction over the matter. 28 U.S.C. § 1441(a). The party 16 seeking removal bears the burden of showing that removal is proper. Emrich v. Touche Ross & 17 Co., 846 F.2d 1190, 1195 (9th Cir.1988). Additionally, there is a strong presumption against 18 removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992). 19 B. Analysis 20 1. Diversity of Citizenship 21 Defendant removed this suit claiming Plaintiff is a Nevada citizen, Defendant is an 22 Illinois citizen and the amount of the fire insurance policy covering Plaintiff’s home exceeds 23 $75,000.00. Defendant argues that Plaintiff’s claims for declaratory relief are with respect to 24 whether she has satisfied her obligations under the insurance policy. The proceeds of the 25 insurance policy to which Plaintiff may be entitled exceeds $300,000.00. Thus, Defendant Page 2 of 7 1 argues that the amount in controversy is satisfied. Plaintiff argues that her complaint does not request any monetary amount and as such 2 3 the amount in controversy is not facially apparent. Plaintiff is not seeking declaratory relief 4 that she is entitled to the proceeds under the policy nor is she making any claims against the 5 proceeds under the policy. Plaintiff is only seeking to determine if she has fulfilled her 6 obligations under the policy. Defendant argues that Plaintiff’s admission that the instant action was necessary to 7 8 “facilitate an effective resolution of her claim under the policy” demonstrates that the object of 9 this litigation is the insurance policy which has a limit of $300,000. In a declaratory judgment 10 action regarding an insurance contract, “the amount in controversy is determined by assessing 11 the value of the underlying legal claims for which insurance coverage is sought.” State Farm 12 Fire & Casualty Company v. Corry, 324 F.Supp. 2d 666,670 (E.D.Pa. 2004) (citations 13 omitted). See also Travelers Ins. Co. v. Young, 18 F.Supp. 450 (D.NJ. 1937)(the test of 14 jurisdiction is the maximum amount for which the insurer may be liable under the policy); New 15 Century Casualty Co. v. Chase, 39 F. Supp. 768, 771 (S.D.W.V. 1941)(“The amount in 16 controversy in proceedings for declaratory judgment, where an automobile liability insurance 17 policy is involved, the general rule, is the maximum amount per which the company could be 18 held liable under the terms of the policy.”). However, the cases cited by the Defendant are 19 distinguishable from the facts of this case. In the other cases, there already existed an 20 underlying suit filed against the insurance policy. In this case, Plaintiff has not filed a suit 21 against State Farm for any proceeds from the policy. 22 As it appears there are no Ninth Circuit cases that support Defendant’s arguments, 23 Defendant only cites to other jurisdictions for its arguments. However, they are either factually 24 /// 25 /// Page 3 of 7 1 distinguishable or are not consistent with Ninth Circuit precedent.1 In the Ninth Circuit “[i]n actions seeking declaratory or injunctive relief, it is well 2 3 established that the amount in controversy is measured by the value of the object of the 4 litigation.” Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). The amount must be 5 established by “the value of the particular and limited thing sought to be accomplished by the 6 action.” Ridder Bros., Inc. v. Blethen, 142 F.2d 395, 399 (9th Cir.1944); see also Hunt v. 7 Washington State Apple Advertising Comm’n, 432 U.S. 333, 347, 97 S.Ct. 2434, 2443 (1977). 8 In this case the particular thing to be sought is a determination of whether or not submitting to 9 another EUO is reasonable. Plaintiff is not asking the Court for a determination of whether or 10 not she is entitled to the proceeds of the insurance policy. Thus, the Court finds that the 11 insurance policy limit of $300,000.00 is not the measure of the controversy in this case and 12 therefore the amount in controversy requirement is not satisfied. 13 2. Federal Question 14 Defendant next argues that that the Court has jurisdiction under 28 U.S.C. § 1331 as 15 there is an issue “arising under the Constitution, laws or treaties of the United States.” Without 16 requesting leave to amend, Defendant amended its Petition for Removal to include a claim that 17 this Court has federal question subject matter jurisdiction over Plaintiff because she is choosing 18 to invoke her Fifth Amendment right by avoiding another EUO. Plaintiff does allege in both 19 her Complaint and the TRO that she has a Fifth Amendment right not to participate in any 20 further examinations under oath. Thus, Defendant argues that determining whether or not 21 Plaintiff must submit to further EUOs necessarily hinges on the Court’s “construction of the 22 Constitution.” Starin v. New York, 115 U.S. 248, 257 (1885). The presence or absence of federal-question jurisdiction is generally governed by the 23 24 25 1 Likewise, Defendant argues that since Plaintiff has sought injunctive relief, that amount in controversy is the policy limits. For similar reasons given here, the Court is not persuaded by Defendant’s arguments. Page 4 of 7 1 “well-pleaded complaint rule,” which provides that “federal jurisdiction exists only when a 2 federal question is presented on the face of the plaintiff’s properly pleaded complaint.” 3 Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). This rule makes the plaintiff the master 4 of his complaint and permits him to avoid federal jurisdiction by relying exclusively on state 5 law. Id. Thus, federal question jurisdiction is ordinarily determined from the face of the 6 plaintiff’s complaint. Easton v. Crossland Mortg. Corp., 114 F.3d 979, 982 (9th Cir. 1997). 7 The “artful pleading doctrine” provides a narrow corollary to the well-pleaded complaint 8 rule. Under this doctrine, a plaintiff may not avoid federal jurisdiction by omitting from the 9 complaint allegations of federal law that are essential to the establishment of his claim. Lippitt 10 v. Raymond James Financial Services, Inc., 340 F.3d 1033, 1041 (9th Cir. 2003). The artful 11 pleading doctrine permits courts to “delve beyond the face of the state court complaint” and 12 find federal question jurisdiction by recharacterizing a state-law claim as a federal claim. Id. 13 The Ninth Circuit has cautioned, however, that courts should invoke the artful pleading 14 doctrine “only in limited circumstances.” Id. (quoting Sullivan v. First Affiliated Securities, 15 Inc., 813 F.2d 1368, 1373 (9th Cir. 1987)). Accordingly, application of the artful pleading 16 doctrine is normally limited to two types of cases: (1) those involving complete preemption; 17 and (2) cases in which “a substantial, disputed question of federal law is a necessary element 18 of…the well-pleaded state claim,” or where the right to relief depends upon resolution of a 19 substantial, disputed federal question. Lippitt, 340 F.3d at 1042-43. 20 Plaintiff’s well-pleaded complaint does not establish federal question jurisdiction. At 21 one point in the complaint, Plaintiff alleges that she requested a delay of the EUO until after the 22 criminal investigation of Plaintiff was concluded, such that she would not need to choose 23 between her Fifth Amendment rights and coverage under the policy. Under the two causes of 24 action, Plaintiff does not ask the Court to determine whether or not she must submit to an EUO 25 in violation of her Fifth Amendment rights. Plaintiff instead asks for a determination of the Page 5 of 7 1 “reasonableness” of submitting to another EUO and to declare that she has already fulfilled her 2 obligations under the policy by submitting to an EUO. Thus, under the well-pleaded complaint 3 rule, Plaintiff has not invoked federal question jurisdiction. 4 Likewise, the artful pleading doctrine does not bring this into the realm of federal 5 question jurisdiction. Plaintiff has not sought to avoid federal jurisdiction by omitting from the 6 complaint allegations of federal law that are essential to the establishment of her claim. 7 Plaintiff’s unequivocal right to invoke the Fifth Amendment against self-incrimination is not in 8 issue and will not determine whether the circumstances surrounding the request for a second 9 EUO is reasonable. At best, the invocation of the Fifth Amendment as a reason to delay the 10 EUO is a corollary issue to be looked at with the remaining facts contributing to the actual 11 issue: the reasonableness of the request for a second EUO. 12 3. Judicial Estoppel 13 Finally, Defendant argues that Plaintiff is judicially estopped from making the argument 14 that her claims are for less than $300,000. Judicial Estoppel applies when: (1) the same party 15 has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative 16 proceedings; (3) the party was successful in asserting the first position ... ; (4) the two positions 17 are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, 18 or mistake. S. Cal. Edison v. First Judicial Dist. Court, 127 Nev. Adv. Rep. 22 at 18 (2011) 19 citing NOLM, LLC v. County of Clark, 120 Nev. 736, 743, 100 P.3d 658,663 (2004)(additional 20 citations omitted). 21 In her Motion for TRO, Plaintiff claimed the TRO was necessary to protect “her rights 22 to the proceeds of her insurance policy.” The claimed proceeds of the policy exceed $300,000. 23 The Motion and oral argument before the state court judge qualify as judicial proceedings. 24 Plaintiff was successful in arguing this position since the TRO was issued and stated 25 “Defendant is unreasonably forcing Plaintiff to submit to an additional Examination Under Page 6 of 7 1 Oath ... thereby forcing Plaintiff to choose between her Fifth Amendment right and her 2 insurance benefits.” 3 Defendant argues that since Plaintiff took the position at the TRO hearing that the TRO 4 was necessary to protect her rights to the insurance proceeds, it is totally inconsistent with her 5 Motion for Remand. However, the Court does not find that it is inconsistent. Plaintiff’s 6 objective in this litigation is a determination of the reasonableness of the EUO. The 7 determination of the reasonableness of the second additional EUO in turn has repercussions to 8 both parties, including whether or not it will be necessary for the Plaintiff to choose to invoke 9 the Fifth Amendment or if submitting to the first EUO satisfied Plaintiff’s duty under the 10 policy. Further, regardless of the result of the determination. Plaintiff’s right to the proceeds 11 under the policy will not be established. Whether Plaintiff has fulfilled all her duties under the 12 policy or not will not establish whether she has a right to the proceeds. Accordingly, Plaintiff is 13 not judicially estopped from making the argument that her claims are for less than $300,000. CONCLUSION 14 15 The party seeking removal bears the burden of showing that removal is proper and there 16 is a strong presumption against removal jurisdiction. Defendant has failed in its burden of 17 showing that there is either a federal question or diversity of citizenship with an amount in 18 controversy of more than $75,000 which would give this court jurisdiction. 19 20 21 IT IS HERBY ORDERED that Plaintiff Nancy Quon’s Motion to Remand (ECF No. 9) is GRANTED. DATED this 14th day of July, 2011. 22 23 24 ________________________________ Gloria M. Navarro United States District Judge 25 Page 7 of 7
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