MCALLEN FEDERAL JUDGE REFUSES TO REMAND RESIDENTIAL HAIL SUIT ON AMOUNT-IN-CONTROVERSY ISSUE

The plaintiffs in a hail suit may have pleaded that “[p]laintiffs seek damages, inclusive of attorney fees, in an amount not exceeding $75,000[,]” but that was insufficient to defeat federal diversity jurisdiction based on the amount in controversy requirement, and their motion to remand was denied.  In Gqrcia v. Geovera Specialty Ins. Co., Civ. No. 7:13-CV-114 (S.D. Tex. May 10, 2013),Judge Micaela Alvarez of the McAllen Division of the Southern District of Texas ruled last Thursday the insurer’s removal on diversity grounds.  The plaintiffs argued in their motion that the amount in controversy was insufficient to confer jurisdiction on the federal court, relying on their representation in their petition that their damages were less than the diversity threshold. 

Judge Alvarez ruled that the level of specificity in the pleading — “an amount not exceeding $75,000” — was contrary to the Texas Rules of Civil Procedure in effect at the time suit was filed.  (The rules have since been revised to allow greater specificity, and Judge Alvarez did not express an opinion as to whether the outcome would be different under the current rules.)  The court therefore concluded that the pleading of a specific amount of damages was an illegitimate attempt to avoid federal jurisdiction.  The court therefore considered both the operative policy limits and the fact that the plaintiffs’ discovery implicated bad faith and other extra-contractual claims to determine that the amount in controversy likely exceeded $75,000.  The court also observed the absence of a demand letter or estimate from the plaintiffs that would establish that the amount in controversy was as alleged. 

In the absence of anything valid on which to pin the plaintiffs’ valuation of the case, the Court denied the plaintiffs’ motion to remand.