Schwartzben v. National Fire & Marine Insurance Company

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

MIAMI DIVISION

Case Number: 22-20755-CIV-MARTINEZ-BECERRA

DOV SCHWARTZBEN,

Plaintiff,

v.

NATIONAL FIRE & MARINE

INSURANCE COMPANY,

Defendant.

_____________________________/

ORDER ON MOTION TO REMAND

THIS CAUSE came before the Court on Plaintiff Dov Schwartzben’s Motion for Remand

to State Court. (ECF No. 5). The Court, having reviewed the Motion for Remand, Response,

(ECF No. 7), Reply, (ECF No. 10), the pertinent portions of the record, and being otherwise fully

advised in the premises, DENIES the Motion to Remand.

I. Background

This case concerns a dispute over insurance coverage between an insured and his insurer.

Plaintiff Dov Schwartzben owns a residence in Florida. (Compl. ¶ 4, ECF No. 1-2). Defendant

National Fire & Marine Insurance Company (“NFM”) and Plaintiff contracted for a policy to

insure Plaintiff’s Florida residence (the “Policy”). (Id. ¶ 8). On or around November 19, 2019,

Plaintiff alleges he sustained damages to his property. (Id. ¶ 7). Plaintiff filed a claim under the

Policy to obtain payment for the damages allegedly sustained by his residence. (Id. ¶ 9). The

parties disagree as to the amount of loss and Plaintiff alleges that NFM has failed to full pay his

covered claim. (Id. ¶¶ 13, 21).

On January 27, 2021, Plaintiff’s counsel mailed a letter to NFM stating that Plaintiff’s

counsel had been retained in connection with the insurance dispute at issue in this case. (ECF No.

1-62). The letter also stated that Plaintiff “has stipulated that the contractual damages owed do not

exceed $75,000. As such contractual damages owed do not exceed the Federal Jurisdictional

minimum of $75,000.00, precluding removal, and we trust that the insurer will take note of this

good-faith stipulation, and work with our office to resolve this matter forthwith.” (Id. at 3).

On February 10, 2021, Plaintiff filed a complaint against NFM in the Eleventh Judicial

Circuit in and for Miami-Dade County, Florida. (ECF No. 1-2). Plaintiff asserted five counts

against NFM for (1) breach of contract, (2) fraudulent inducement, (3) bad faith under section

624.155, Florida Statutes, (4) declaratory relief, and (5) petition for mediation. (Id. at 6–14).

Defendant moved to dismiss counts two through five. (ECF No. 1-17). The state court dismissed

those counts. (ECF No. 1-38). Accordingly, the only pending claim against NFM is for breach of

contract.

Less than two months after Plaintiff filed the complaint, NFM served its First Set of

Interrogatories (“First INT”). (See ECF No. 1-32). Interrogatory No. 1 in the First INT asked

Plaintiff to

“State the total amount of damages you are seeking in the above-styled lawsuit,

including but not limited to any damages that you contend arose from the Subject

Loss. If the total amount of damages you are seeking includes, interest, costs, and/or

attorney’s fees, please specifically state the amount of any such interest, costs,

and/or attorney’s fees you are seeking.”

(Id. at 2–3). Plaintiff responded to Interrogatory No. 1 as follows:

“Objection. Interrogatory is unduly burdensome and Interrogatory seeks

information irrelevant to the instant action, premature to the instant litigation and

not reasonably calculated to lead to the discovery of admissible evidence.

Interrogatory is unduly burdensome as Interrogatory seeks information that may be

protected from disclosure under the work-product and attorney-client privileges.”

Interrogatory No. 2 in the First INT asked Plaintiff to “[i]dentify, by bates numbers, all documents

on which you rely for you[r] Answer to Interrogatory No. 1.” (Id. at 3). Plaintiff’s responded to

Interrogatory No. 2 as follows: “Objection. Interrogatory is improper as I have no obligation to list

responsive documents. I will produce relevant nonprivileged documents in response to a property

[sic] Request for Production pursuant to rule 1.350.” (Id.).

When Plaintiff failed to amend its answers to the First INT, NFM moved to compel better

responses to Interrogatories Nos. 1 & 2. (ECF No. 1-32). As to Interrogatory No. 1, the state court

sustained Plaintiff’s objection as to attorney’s fees, but overruled Plaintiff’s objection, in part, as

to the compensatory damages Plaintiff seeks. (ECF No. 1-39). As to Interrogatory No. 2, the court

sustained, in part, Plaintiff’s objection as to the request to identify documents by bates number.

(Id. at 1). The court also overruled Plaintiff’s objection, in part, and required Plaintiff to identify

any documents he relied on to support his answer to Interrogatory No. 1. (Id.). The court ordered

Plaintiff provide amended interrogatory answers within twenty days of the order, dated September

24, 2021. (Id.).

Plaintiff’s amended response to Interrogatory No. 1 specifically responded that “[w]ithout

waiving objection or attorney-client privilege, I am not a professional or expert qualified to opine

as to damages, and the damages, type, and amount were learned through my attorneys.” (ECF No.

1-44 at 24). Plaintiff’s amended response to Interrogatory No. 2 directed NFM to “[p]lease refer

to correspondence dated January 27, 2021,” which was the letter from Plaintiff’s counsel informing

NFM of its representation in this matter. (Id.). In response, Defendant moved for an order from

the state court requiring Plaintiff show cause why Plaintiff should be held in contempt for failing

to comply with the state court’s September 24, 2021 order on NFM’s motion to compel, and for

reasonable expenses incurred from having to file the motion for an order to show cause. (Id. at 3).

On February 3, 2022, the state court granted NFM’s first motion for order to show cause,

in part, and required Plaintiff to amend its answers to Interrogatory No. 1 by specifically stating

the “total amount of compensatory damages sought in this lawsuit,” and to Interrogatory No. 2, by

specifically identifying any documents Plaintiff relies on to support his answer to Interrogatory

No. 1. (ECF No. 1-47). The court ordered Plaintiff to file amended responses on or before

February 7, 2022. (Id.).

Instead of providing amended responses, Plaintiff moved for reconsideration of the state

court’s February 3, 2022 order on Defendant’s motion for order to show cause. (ECF No. 1-49).

The next day, Defendant filed a second motion for order to show cause, on an emergency basis,

noting that the deadline for removal to this Court was February 10, 2022, and Plaintiff still had not

amended its responses to Interrogatories Nos. 1 & 2, as required by the state court. (ECF No. 1-

50). The state court granted Defendant’s emergency motion, in part, giving the same instructions

to Plaintiff to file his amended responses before 5:00 p.m. on February 9, 2022. (ECF No. 1-52 at

1). The state court also denied Plaintiff’s motion for reconsideration. (Id. at 2).

Instead of complying with the state court’s February 9, 2022 deadline, Plaintiff filed a

petition seeking issuance of a Petition for Writ of Certiorari from Florida’s Third District Court of

Appeals. (See ECF No. 1-53 at 4). The appellate court denied the petition two days later. (ECF

No. 1-63). The same day, Defendant filed a third motion for order to show cause with respect to

Plaintiff’s failure to comply with the state court’s February 9, 2022 order directing Plaintiff to

amend his answers to Interrogatories Nos. 1 & 2. (ECF No. 1-53 at 4). Again, the state court

granted Defendant’s third motion for order to show cause, in part, and directed Plaintiff to file

amended responses to Interrogatories Nos. 1 & 2. (ECF No. 1-56).

Finally, on February 15, 2022, Plaintiff amended its responses to Interrogatory Nos. 1 &

2. (ECF No. 1-57). As to interrogatory No. 1, amongst other information, Plaintiff stated that he

was “seeking the total amount of damages available to him,” and that he had obtained an estimate

from his public adjuster, who estimated that as a result of the loss, his property sustained a damages

totaling $89,084.33. (Id. at 5). As to Interrogatory No. 2, Plaintiff stated that he relied on the

Policy, certain documents produced to NFM, “Condominium Bylaws, which are not currently in

Plaintiff’s possession,” and statutory law in Florida. (Id.).

After yet another hearing, Plaintiff submitted its third amended response to Interrogatory

Nos. 1 and 2 on February 22, 2022. (ECF No. 1-61). In his amended response to Interrogatory

No. 1, Plaintiff stated that he was “seeking $71,179.03 in contractual damages . . . as to the pending

breach of contract claim.” (Id. at 3). With respect to Interrogatory No. 2, Plaintiff responded that

he relied upon the Policy, the estimate from the public adjuster, and certain documents produced

to NFM. (Id.).

On March 14, 2022, NFM removed the case to this Court. (ECF No. 1). In the Notice of

Removal, NFM states that the Court has federal diversity jurisdiction because Plaintiff is a citizen

of New York, NFM is a citizen of Nebraska, and after combining Plaintiff’s claim for contractual

damages in the amount of $71,179.03 with attorneys’ fees, the amount in controversy exceeds

$75,000. (Id. at 10). In addition, NFM contends that the one-year deadline for removal does not

apply here because Plaintiff acted in bad faith to prevent removal. (Id. at 10–13). Plaintiff now

moves to remand the case to state court, arguing that the one-year deadline to remove has passed

and the bad-faith exception to that deadline does not apply. (ECF No. 5). The Motion to Remand

is now ripe for the Court’s review. (See ECF Nos. 7 & 10).

II. Legal Standard

A civil action may be removed from a state court to federal court if the federal court can

exercise federal question jurisdiction under 28 U.S.C. § 1331 or diversity jurisdiction under 28

U.S.C. § 1332. See 28 U.S.C. § 1441(a); see also Blab T.V., Inc. v. Comcast Cable Communs.,

Inc., 182 F.3d 851, 854 (11th Cir. 1999). Diversity jurisdiction exists if (1) the parties are “citizens

of different States,” and (2) “the matter in controversy exceeds the sum or value of $75,000.” 28

U.S.C. § 1332(a); see also Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001). With

respect to the amount-in-controversy requirement, “[w]hen a statute authorizes the recovery of

attorney’s fees, a reasonable amount of those fees is included in the amount in controversy.”

Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1265 (11th Cir. 2000). “The Court may use its

reason and experience when considering how much reasonable attorney’s fees would be at the time

of removal.” Coopersmith v. Scottsdale Ins. Co., No. 18-cv-23382, 2019 U.S. Dist. LEXIS 44744,

at *6 (S.D. Fla. Mar. 19, 2019) (citing Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1064 (11th

Cir. 2010)).

If an action is removed, the district court must order remand “[i]f at any time before final

judgment it appears that the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c).

In addition, the district court may order remand when there is “any defect other than lack of subject

matter jurisdiction.” Id. Removal statutes are strictly construed against removal, and the removing

party bears the burden of showing the existence of federal subject matter jurisdiction. See Conn.

St. Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343 (11th Cir. 2009); see also BCC

Apts. v. Browning, 994 F. Supp. 1440, 1442 (S.D. Fla. 1997). Moreover, “any substantial doubts

as to the propriety of the removal must be resolved against proponents of the federal forum.”

Waters v. Bausch & Lomb, Inc., No. 06-80547-CIV, 2006 U.S. Dist. LEXIS 102981, at *4 (S.D.

Fla. Jul. 28, 2006) (internal quotation marks and citation omitted). In other words, “uncertainties

are resolved in favor of remand.” Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994).

Notably, “remand is determined by the evidence available at the time of removal.” White v. PDB

State Farm Mut. Auto. Ins. Co., No. 13-CV-765, 2013 U.S. Dist. LEXIS 163696, at *7 (M.D. Fla.

Nov. 18, 2013).

When a defendant removes a case to federal court, the notice of removal must be filed

“within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the

initial pleading . . . or within 30 days after the service of summons upon the defendant if such

initial pleading has then been filed in court and is not required to be served on the defendant,

whichever period is shorter.” 28 U.S.C. § 1446(b). No case is removable “more than one year

after commencement of the action, unless the district court finds that the plaintiff has acted in bad

faith in order to prevent a defendant from removing the action.” Id. at § 1446(c). Bad faith occurs

when “the plaintiff deliberately failed to disclose the actual amount in controversy to prevent

removal[.]” Id. at § 1446(c)(3)(B). Prior to 2011, the one-year limitation on removal was absolute.

See Burns v. Windsor Ins. Co., 31 F.3d 1092, 1097 (11th Cir. 1994) (noting that, as applied to the

pre-2011 version of 28 U.S.C. § 1446, “Congress has recognized and accepted that, in some

circumstances, plaintiff can and will intentionally avoid federal jurisdiction”).

Since Congress amended 28 U.S.C. § 1446 to include an exception for bad faith, there has

been “little guidance on what acts constitute ‘bad faith’ in the context of § 1446(c)(1). See Wilson

v. Fresh Mkt., Inc., No. 19-cv-81037, 2020 U.S. Dist. LEXIS 1556, at *3 (S.D. Fla. Jan. 3, 2020),

adopted, 2020 U.S. Dist. LEXIS 11504 (S.D. Fla. Jan. 22, 2020). The cases that have applied the

exception have found that plaintiff engaged in “clear attempts at strategic gamesmanship.” Id. at

*16. For example, “[c]ourts have found bad faith when plaintiffs have intentionally delayed

disclosure of the amount in controversy until after the one-year limitation passed.” Hajdasz v.

Magic Burgers, LLC, No. 19-cv-12528, 2018 U.S. Dist. LEXIS 222910, at *7 (M.D. Fla.) (citing

cases), aff’d, 805 F. App’x 884 (11th Cir. 2020).

III. Discussion

As explained below, the Court finds that diversity jurisdiction exists. Next, the Court

analyzes whether removal is timely. Because there is no dispute that Defendant removed this case

within thirty days of learning the amount-in-controversy, the Court only considers whether the

bad-faith exception to the one-year removal deadline applies. After reviewing the facts in this

case, the Court finds that the exception applies.

A. Diversity Jurisdiction Exists

Before examining whether the bad-faith exception to the one-year removal deadline

applies, the Court first decides whether diversity jurisdiction exists. Here, both diversity-

jurisdiction requirements are met. First, the parties are completely diverse because Plaintiff is a

citizen of New York and Defendant is a citizen of Nebraska. (ECF No. 1 ¶¶ 6–8). With respect

to the amount-in-controversy requirement, Plaintiff seeks $71,179.00 in contractual damages

related to Defendant’s purported breach of the Policy. (ECF No. 1-61). There is a $1,000

insurance deductible. (ECF No. 1 ¶ 12). Under Florida law, Plaintiff is entitled to attorney’s fees

if he prevails in this dispute. See § 627.428, Fla. Stat. Here, Plaintiff’s attorney-fee claim at the

time of removal would need to be at least $4,820.97 to create diversity jurisdiction. Plaintiff has

filed an affidavit with this Court in another case representing that he charges $650.00 per hour for

his legal services. See Perez v. Scottsdale Ins. Co., No. 19-cv-22761, 2019 U.S. Dist. LEXIS

183757, at *6 (S.D. Fla. Oct. 24, 2019). Accordingly, Plaintiff’s counsel would only need to

expend approximately 7.5 hours in this case to satisfy the amount-in-controversy requirement.

Based on the pre-removal litigation, the Court is confident based on reason and experience that

Plaintiff’s counsel has expended at least 7.5 hours working on this case. Therefore, diversity

jurisdiction exists, and this case is removable if notice was timely filed.

B. Removal is Proper

There is no question that Plaintiff deliberately refused to disclose the amount in controversy

to prevent removal. Before filing suit, Plaintiff’s counsel “stipulated” that “contractual damages

owed do not exceed the Federal Jurisdictional minimum of $75,000.00, precluding removal.”

(ECF No. 1-62 at 3). Despite this stipulation, Plaintiff repeatedly refused to respond to

interrogatories asking about the amount of damages he sought to recover and steadfastly ignored

court orders instructing him to do so. Only after four orders directing Plaintiff to appropriately

respond to Interrogatories Nos. 1 & 2 and an appeal did NFM learn of the actual amount in

controversy. But by that time, the one-year removal clock had expired.

In Plaintiff’s Motion to Remand, he argues that NFM did not request additional discovery;

for example, NFM did not seek to take Plaintiff’s or the public adjuster’s deposition, nor did NFM

submit any request for production. This argument does not hold water. NFM did serve discovery

on Plaintiff asking him directly how much he sought to recover. NFM was not required to go

looking for other sources to obtain the same information that Plaintiff was ordered to disclose. In

fact, “Defendant was under no affirmative duty to seek out evidence that would prove Plaintiff

was undervaluing his claim before the one year period ran,” but NFM did seek out this evidence,

and Plaintiff intentionally kept it from NFM. See Hill v. Allianz Life Ins. Co., 51 F. Supp. 3d 1277,

1282 (M.D. Fla. Oct. 6, 2014).

Plaintiff also argues that the Court should remand because NFM waived its right to remove

this case by engaging in substantial state court litigation. A defect in removal, “commonly referred

to as litigation on the merits, effectively waives the defendant’s right to remove a state court action

to the federal court.” Yusefzadeh v. Nelson, Mullins, Riley & Scarborough, LLP, 365 F.3d 1244,

1246, 1246 (11th Cir. 2004). Waiver may occur if the defendant takes “some substantial offense

or defensive action in the state court action indicating a willingness to litigate in that tribual before

filing a notice of removal with the federal court . . . waiver will not occur, however, when the

defendant’s participation in the state action has not been substantial or was dictated by the rules of

that court[.]” Id. (quoting Charles A. Wright, et al., 14B Federal Practice & Procedure § 3721

(2003)). Moreover, “[w]hether the state court defendant had waived his right to remove based on

‘active participation must be made on a case-by-case basis.’” Id. (citation omitted).

Much of state court litigation was due to the Plaintiff’s refusal to comply with court orders

instructing him to respond to discovery. Yes, Defendant moved to dismiss. But not before it

served the First INT on Plaintiff containing Interrogatories Nos. 1 & 2. (See ECF No. 1-12 at 2;

ECF No. 1-17 at 13). Moreover, responding to a complaint and participating in discovery does

not in itself constitute waiver. See Baumann v. Circle K Stores, 2020 U.S. Dist. LEXIS 256169, at

*10 (M.D. Fla. May 11, 2020) (noting that defendant “took substantial offensive discovery in the

state case before filing a notice of removal” but that “[t]his did not in itself indicate a willingness

to litigate in state court,” that defendant “never abandoned its removal desire,” and that “[t]he

filing of a motion to dismiss . . . did not constitute waiver of [defendant’s] right to remove, since

such motion was required by the state court rules of procedure”); Del Rio v. Scottsdale Ins. Co.,

No. 05-cv-1429, 2005 U.S. Dist. LEXIS 29992, at *10 (M.D. Fla. Nov. 18, 2005) (“Defendant was

clearly permitted under the case law of the Eleventh Circuit Court of Appeals to file an answer in

state court, serve requests for interrogatories, and then, after receiving Plaintiff’s responses,

determine whether the case was removable.”).

From the beginning of this case, NFM has actively sought to learn of the amount in

controversy. The delay in removal is a direct result of Plaintiff's gamesmanship. Plaintiff's final

argument that this case should remain in state court because state courts are the best forum to

decide insurance disputes is meritless. At bottom, removal is proper here.

IV. Conclusion

For the foregoing reasons, it is hereby ORDERED AND ADJUDGED that Plaintiff's

Motion to Remand, (ECF No. 5), is DENIED.

DONE AND ORDERED in Chambers at Miami, Ftarida, this 8th day of September, 2022.

spl

UNITHD STATES DISTRICT JUD

Copies provided to:

All counsel of record

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