John Njoroge v. CNO Services, LLC

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. CV 20-2004 PSG (JEMx) Date May 22, 2020

Title John Njoroge v. CNO Services, LLC

Present: The Honorable Philip S. Gutierrez, United States District Judge

Wendy Hernandez Not Reported

Deputy Clerk Court Reporter

Attorneys Present for Plaintiff(s): Attorneys Present for Defendant(s):

Not Present Not Present

Proceedings (In Chambers): Order DENYING Plaintiff’s motion to remand

Before the Court is Plaintiff John Njoroge’s (“Plaintiff”) motion to remand. See Dkt. #

12 (“Mot.”). Defendant CNO Services, LLC opposes the motion, see Dkt. # 15 (“Opp.”), and

Plaintiff replied, see Dkt. # 16 (“Reply”). The Court finds the matter appropriate for decision

without oral argument. See Fed. R. Civ. P. 78(b); L.R. 7-15. After considering the moving,

opposing and reply papers, the Court DENIES the motion.

I. Background

This case involves the alleged bad faith breach of an annuity policy. Plaintiff, a citizen of

California, seeks to hold Defendant, a citizen of Indiana, liable for bad faith in its failure to

honor an annuity policy issued for Plaintiff’s father’s life, on which Plaintiff is the beneficiary.

See Notice of Removal, Dkt. # 1 (“NOR”), Ex. 1 (“Compl.”), ¶¶ 12–13. Plaintiff asserts causes

of action for bad faith breach of the implied obligation of good faith and fair dealing and bad

faith for failure to properly investigate claim. Id. ¶¶ 38–61. Plaintiff seeks the following: (1)

recovery of the value of the annuity at the time of his father’s death, estimated to be $50,000

plus interest since 2008; (2) punitive damages; (3) reasonable costs and attorneys’ fees; (4) any

other compensatory, general, special, and consequential damages. See Compl. at 6.

Defendant removed the action to this Court on February 28, 2020. See generally NOR.

Plaintiff now moves to remand, arguing that the case does not meet the amount in controversy

requirement. See generally Mot.

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. CV 20-2004 PSG (JEMx) Date May 22, 2020

Title John Njoroge v. CNO Services, LLC

II. Legal Standard

“Federal courts are courts of limited jurisdiction, possessing only that power authorized

by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 256 (2013) (internal quotation

marks omitted). Under 28 U.S.C. § 1441, a defendant may remove a civil action from state court

to federal district court only if the federal court has subject matter jurisdiction over the case. See

City of Chi. v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 (1997) (“The propriety of removal thus

depends on whether the case originally could have been filed in federal court.”). The case shall

be remanded to state court if at any time before final judgment it appears a removing court lacks

subject matter jurisdiction. See 28 U.S.C. § 1447(c); Int’l Primate Prot. League v. Adm’rs of

Tulane Educ. Fund, 500 U.S. 72, 87 (1991). Courts strictly construe the removal statute against

removal jurisdiction. See Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d 1083,

1087 (9th Cir. 2009); Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034

(9th Cir. 2008). “A defendant seeking removal has the burden to establish that removal is proper

and any doubt is resolved against removability.” Luther, 533 F.3d at 1034; see also Moore-

Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (“[A]ny doubt about the

right of removal requires resolution in favor of remand.”).

An action is removable on diversity jurisdiction grounds pursuant to 28 U.S.C. § 1332(a)

when there is (1) complete diversity of citizenship between the named plaintiff(s) and

defendant(s), and (2) the amount in controversy for at least one named plaintiff plausibly

exceeds $75,000, exclusive of interests and costs. 28 U.S.C. § 1332(a); see Snyder v. Harris,

394 U.S. 332, 340 (1969) (stating that only the citizenship of the named class representatives

must be diverse from that of the defendants); Exxon Mobile Corp. v. Allapattah Servs., Inc., 545

U.S. 546, 559 (2005) (“where the other elements of jurisdiction are present and at least one

named plaintiff in the action satisfies the amount-in-controversy requirement, [28 U.S.C.] § 1367

does authorize supplemental jurisdiction over the claims of other plaintiffs in the same Article III

case or controversy, even if those claims are for less than the jurisdictional amount specified in

the statute setting forth the requirements for diversity jurisdiction.”). In cases where a plaintiff’s

state court complaint does not specify an exact figure for damages or the amount in controversy

is not facially evident from the complaint, the defendant must establish, by a preponderance of

the evidence, that the amount in controversy exceeds the statutory minimum. See Sanchez v.

Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). A defendant must prove it is

“more likely than not” that the jurisdictional threshold is met. Id. Defendants are not obligated

to “research, state, and prove the plaintiffs’ claims for damages.” Behrazfar v. Unisys Corp.,

687 F. Supp. 2d 999, 1004 (C.D. Cal.) (quoting Korn v. Polo Ralph Lauren Corp., 536 F. Supp.

2d 1199, 1205 (E.D. Cal. 2008)). However, a defendant “cannot establish removal jurisdiction

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. CV 20-2004 PSG (JEMx) Date May 22, 2020

Title John Njoroge v. CNO Services, LLC

by mere speculation and conjecture, with unreasonable assumptions.” Ibarra v. Manheim

Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015).

III. Discussion

The parties agree that diversity of citizenship is not at issue. See Mot. 4; Opp. 2. Instead,

they dispute whether the amount in controversy exceeds $75,000. See generally Mot.; Opp.

Plaintiff’s primary argument is that because his complaint specifically alleges that $50,000 is in

controversy, that figure controls the amount in controversy analysis and makes remand

appropriate. See Mot. 3–5. Defendant responds that Plaintiff put more than $50,000 into

controversy because the policy’s current value is $63,864.55, and Plaintiff also seeks punitive

damages, attorneys’ fees, and any other applicable damages. See Opp. 3–6 (citing Compl. at 6).

As an initial matter, Plaintiff puts more than $50,000 in controversy. In his complaint,

Plaintiff does not limit his relief to $50,000 given that he also seeks punitive damages, attorneys’

fees, and “any other compensatory, general, special, and consequential damages against

Defendant.” See Compl. at 6. Although “the sum claimed by the plaintiff controls if the claim is

apparently made in good faith,” Plaintiff’s complaint does not include a definite sum. See

Ibarra, 775 F.3d at 1197. Therefore, the Court does not accept Plaintiff’s contention that

“Defendant had no reasonable basis to remove this matter” based on the amount in controversy

because Plaintiff explicitly seeks more than $50,000 in his complaint. See Mot. 3:4–5.

The Court next calculates the amount in controversy, examining the current value of the

annuity and then evaluating Plaintiff’s other claimed damages in turn.

A. Value of the Annuity

To calculate the amount in controversy, the Court starts with the claimed amount under

the annuity. Plaintiff claims that the value of the annuity at the time of Mr. Kirnondo’s death is

estimated at $50,000, plus interest since 2008. See Compl. at 6. The Court notes that for

purposes of establishing jurisdiction, the diversity statute generally prohibits inclusion of the

“interest and costs” in calculating the amount in controversy. 28 U.S.C. § 1332(a). However,

the Supreme Court has held that courts may include interest when determining the amount in

controversy if the interest is calculated “as an instrumentality in arriving at the amount of

damages to be awarded on the principal demand.” Brown v. Webster, 156 U.S. 328, 329

(1895); see also Xerox Corp. v. CBG Legal, Inc., No. CV 14-08948 SJO MRW, 2015 WL

13309101, at *3 (C.D. Cal. Apr. 16, 2015) (citing Brown, 156 U.S. at 329).

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. CV 20-2004 PSG (JEMx) Date May 22, 2020

Title John Njoroge v. CNO Services, LLC

In this case, the interest sought is an instrumentality of the annuity because the annuity

provided for a guaranteed rate of return both while the owner was still alive, and even after the

owner’s death. See Declaration of David Rikkers, Dkt. # 1-4 (“Rickkers Decl.”), ¶ 6. Therefore,

because it is not interest that accrued due to a delay in payment, it falls within the Brown

exception. See id.; Xerox Corp., 2015 WL 13309101, at *3. Defendant submits undisputed

evidence that the current value of the policy, including this interest, totals $63,864.55. See

Rikkers Decl. ¶ 6. As such, the Court calculates the value of the policy at $63,864.55 for

purposes of the amount in controversy.

B. Attorneys’ Fees, Punitive Damages, and Other Claimed Damages

The annuity’s value leaves a $11,136.45 gap to meet the $75,000 threshold. Plaintiff

seeks attorneys’ fees and punitive damages, which are also included in the amount in

controversy for establishing diversity jurisdiction. See Gibson v. Chrysler Corp., 261 F.3d 927,

945 (9th Cir. 2001) (“It is well established that punitive damages are part of the amount in

controversy in a civil action.”); James Dickey, Inc. v. Alterra Am. Ins. Co., No. 2-15-CV-00963

ODW DTB, 2015 WL 4537732, at *3 (C.D. Cal. July 27, 2015) (holding that California courts

may consider attorneys’ fees as part of the amount in controversy when they are expended to

obtain benefits due under an insurance policy) (citing Brandt v. Super. Ct., 37 Cal. 3d 813, 815

(1985)).

The Court concludes that a combination of attorneys’ fees and punitive damages fill the

gap to meet the $75,000 threshold. For example, Defendant provides evidence that Plaintiff’s

attorneys’ fees alone would close the gap if he bills a mere thirty-two hours on this matter at his

$350 per hour rate.1 See Declaration of Peter Borenstein, Dkt. # 12-2 (“Borenstein Decl.”), ¶ 9.

Plaintiff does not offer evidence to the contrary, nor does he establish that his request for

attorneys’ fees, punitive damages, and “any other compensatory, general, special, and

consequential damages” will not exceed $11,136.45, or $75,000 in the aggregate. See Cal. Spine

& Neurosurgery Inst. v. Health Care Serv. Corp., No. CV-19-04506 DSF SKX, 2019 WL

3219136, at *2 (C.D. Cal. July 16, 2019) (assuming that the plaintiff’s request for attorneys’

fees, punitive damages, and other damages would bridge an $8,388.15 gap in the amount in

controversy).

Accordingly, the Court DENIES the motion to remand.

1 Alternatively, viewed on a contingency basis, the $11,136.45 gap is also about 17.5% of

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No. CV 20-2004 PSG (JEMx) Date May 22, 2020

Title John Njoroge v. CNO Services, LLC

IV. Conclusion

For the foregoing reasons, the Court DENIES the motion to remand.

IT IS SO ORDERED.