FEDERAL COURT REMANDS UIM DISPUTE DESPITE PLEADING AMOUNT IN CONTROVERSY ABOVE FEDERAL THRESHOLD

Last week, a San Antonio federal judge granted a motion to remand in favor of an insured, holding the amount in controversy was less than $75,0000, despite the claim for damages on the face of the original pleadings. In Boardman v. Allstate Fire and Casualty Insurance Company, 5:19-CV-01399, 2020 WL 487225 (W.D. Tex. Jan. 29, 2020), Plaintiff Boardman filed a lawsuit in state court against Allstate.  Pursuant to Texas Rule of Civil Procedure 47, Boardman sought monetary relief between $200,000 and $1,000,000 for “contractual damages, penalty interest under Chapter 542 of the Texas Insurance Code, and attorney’s fees.”  Allstate removed the case. After removal, Boardman requested and was granted leave to file an amended complaint wherein she clarified her damages based on $30,000 in policy limits.  

Boardman argued that remand was necessary because the value of her claim was less than $75,000. Allstate argued it was facially apparent in the operative pleading at the time of removal that the amount in controversy exceeded $75,000 because the petition sought monetary relief between $200,000 and $1,000,000. 

The court began its analysis by noting that the removal statute must be strictly construed against the party seeking removal. The court then noted that ordinarily the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy.  However, where a demand is “made in bad faith or when state practice does not permit demand for a specific sum of damages,” the pleading does not control.  In Texas, the court found it is not clear if Rule 47 permits a plaintiff to state a specific sum.  The court then found that given the $30,000 policy limit, it did not appear that the claims will exceed $75,000 should Boardman receive an award of $30,000 and prevail on her Texas Insurance Code prompt payment claim and be awarded attorney fees and costs.  Consequently, Allstate failed to meet its burden to show that the amount in controversy exceeds the threshold. The court granted the motion and remanded the case.