Reyes v. Family Security Insurance Company, Inc

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

TIFFANY REYES, ET AL. CIVIL ACTION

v. NO. 19-13975

FAMILY SECURITY INSURANCE COMPANY SECTION “F”

ORDER AND REASONS

Before the Court is the plaintiffs’ motion to remand. For the

reasons that follow, the motion is DENIED.

Background

This dispute arises from an insurer’s payment of a fire-loss

claim under a homeowner’s policy. Dissatisfied with the amount

paid, the insureds sued the insurer in state court. The insurer

removed the case five months later. The insureds now move to

remand, raising one issue: whether the insurer timely removed the

case.

Manuel and Tiffany Reyes owned a Metairie, Louisiana home

insured under a Family Security homeowner’s policy. The policy

limit was $850,000; it included $500,000 in dwelling coverage,

$50,000 in other-structures coverage, $250,000 in personal-

property coverage, and $50,000 in loss-of-use coverage. The policy

covered, among other risks, loss caused by fire.

In summer 2018, a fire damaged the home. The Reyeses reported

the damage to Family Security, which sent an adjuster to estimate

the loss. The adjuster said the fire caused $360,000 in damage

under the policy’s dwelling coverage. Family Security paid

$290,000 under that coverage but nothing under the personal-

property coverage.

In spring 2019, the Reyeses exchanged emails with Family

Security’s adjuster, offering “additional support” for their

alleged losses under the personal-property coverage. No further

payment followed.

So, on June 6, 2019, the Reyeses sued Family Security in state

court. They alleged claims for breach of contract, intentional

infliction of emotional distress, and bad-faith and negligent

claims adjusting. They said Family Security “failed to tender

sufficient payment” under the policy, including “fail[ing] to pay

any proceeds due” under the personal-property coverage. They

sought “property damages in the amount of [the] homeowner’s policy

limits,” plus penalties and other damages. But they did not demand

a specific sum or say that their damages exceeded the federal

jurisdictional minimum. Compare LA. CODE CIV. PROC. art. 893(A)(1)

(generally prohibiting a prayer for a specific amount of money

damages) with Chapman v. Powermatic, Inc., 969 F.2d 160, 163 (5th

Cir. 1992) (holding that a plaintiff who wants the 30-day removal

clock to begin to run from the defendant’s receipt of the initial

pleading must place in the initial pleading a “specific allegation”

that damages exceed the federal jurisdictional minimum). Family

Security was served with a copy of the petition on June 24, 2019.

On August 5, 2019, Family Security sent the Reyeses a single

request for admission: Admit that “the amount in controversy does

not exceed” the jurisdictional minimum. Family Security also moved

the state court to reduce the time for the Reyeses to respond. The

state court granted the motion and ordered the Reyeses to respond

by August 20, 2019. They failed to do so.

Under Louisiana discovery rules, “[a]ny matter admitted” is

“conclusively established unless the court on motion permits

withdrawal or amendment of the admission.” LA. CODE CIV. PROC. art.

1468. Because the Reyeses failed to timely respond to Family

Security’s request for admission, the request was deemed admitted,

and it was “conclusively established,” as of August 20, 2019, that

the federal jurisdictional minimum was not met. Id.

But Family Security sought further assurance. To block the

Reyeses from later claiming the case was worth more than $75,000,

Family Security moved the state court for an order deeming the

request admitted. The state court set a November 4, 2019 hearing

on the motion; the Reyeses’ counsel did not appear for the hearing

or respond to the motion. The state court nonetheless continued

the hearing to November 18, 2019.

On November 12, 2019, the Reyeses filed a brief opposing

Family Security’s motion. It confirmed that the Reyeses sought

damages exceeding the federal jurisdictional minimum:

Clearly, if Plaintiffs allege $850,000 in damages and

they were only paid $289,396.37, Plaintiffs never

vacated their position that the amount of their alleged

losses and damages in the Petition for Damages exceeds

the sum or value of $75,000, exclusive of interest and

costs.

On November 18, 2019, for reasons unknown —— and despite the

Reyeses’ counsel’s failure to timely respond to the motion or

appear for the original hearing —— the state court denied Family

Security’s motion. The state court thus withdrew the

jurisdictional facts that had been deemed admitted by operation of

Louisiana Code of Civil Procedure Article 1468 more than two months

earlier. So, as of November 18, 2019, it was no longer

“conclusively established” that the amount in controversy was not

met. For the first time since August 20, 2019, removal became a

possibility. Family Security acted promptly.

Two weeks later, on December 2, 2019, Family Security removed

the case on the basis of diversity. See 28 U.S.C. §§ 1332(a)(1),

1441(a). Family Security said, in its notice of removal, that (1)

the petition did not “set forth” a claim satisfying the

jurisdictional minimum, and (2) it could not have “ascertained”

the amount in controversy until November 12, 2019. See 28 U.S.C.

§ 1446(b). That is when it received an “other paper” allegedly

establishing the amount in controversy: the Reyses’ brief in

opposition to Family Security’s motion to have the request for

admission deemed admitted. See 28 U.S.C. § 1446(b)(3).

Now, the Reyeses move to remand on the ground that removal

was untimely. They say the 30-day removal period began to run on

June 24, 2019, the date Family Security was served with a copy of

the petition. Alternatively, they say Family Security had five

“reasons” to “recognize” the amount in controversy was met more

than 30 days before the December 2, 2019 removal. Family Security

rejoins that removal was timely because it was accomplished within

30 days of its November 12, 2019 receipt of “other paper” in the

form of the Reyses’ opposition brief.

I.

On a motion to remand, “[t]he removing party bears the burden

of showing that federal jurisdiction exists and that removal was

proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d

720, 723 (5th Cir. 2002) (citing De Aguilar v. Boeing Co., 47 F.3d

1404, 1408 (5th Cir. 1995)). “Because removal raises significant

federalism concerns, the removal statute is strictly construed

‘and any doubt as to the propriety of removal should be resolved

in favor of remand.’” Gutierrez v. Flores, 543 F.3d 248, 251 (5th

Cir. 2008) (quoting In re Hot-Hed, Inc., 477 F.3d 320, 323 (5th

Cir. 2007)).

II.

The Reyeses contend that remand is required because the

removal was untimely. The Court disagrees.1

A.

A defendant may remove a case from state to federal court if

the case is within the federal court’s original jurisdiction. See

28 U.S.C. § 1441(a). The parties agree that the Court has diversity

jurisdiction.2 See 28 U.S.C. § 1332(a)(1). They dispute whether

removal was timely. See 28 U.S.C. § 1446(b).

B.

A defendant may remove a case within 30 days of receipt of “a

copy of the initial pleading setting forth the claim for relief.”

28 U.S.C. § 1446(b)(1). If “the case stated by the initial pleading

1 What should be a straightforward removal analysis is

complicated considerably by the poor quality of the papers

submitted and arguments made.

2 The Reyeses are Louisiana citizens, and Family Security is

a Hawai’i corporation with a principal place of business in

Florida. The amount in controversy exceeds $75,000, exclusive of

interest and costs, because the Reyeses seek $560,603.63 in

insurance proceeds allegedly available under the policy.

is not removable,” a defendant may remove “within 30 days after

receipt . . . of a copy of an amended pleading, motion, order or

other paper from which it may first be ascertained that the case

is one which is or has become removable.” 28 U.S.C. § 1446(b)(3).

C.

Invoking § 1446(b)(1), the Reyeses say the 30-day removal

period began to run on June 24, 2019, when Family Security was

served with a copy of the petition. Not so.

Section 1446(b)(1) applies “only when that [initial] pleading

affirmatively reveals on its face that the plaintiff is seeking

damages in excess of the minimum jurisdictional amount of the

federal court.” Chapman, 969 F.2d at 163. If a plaintiff wishes

the 30-day period to begin to run from the defendant’s receipt of

the initial pleading, the plaintiff must “place in the initial

pleading a specific allegation that damages are in excess of the

federal jurisdictional amount.” Id.

The Reyeses’ petition did not “affirmatively reveal on its

face” that the amount in controversy was met. Chapman, 969 F.2d at

163. It revealed only that the Reyeses sought “[p]roperty damages

in the amount of” unspecified policy limits. It is of no moment

that, as the Reyeses contend, Family Security “knew” of the

policy’s $850,000 limit. Chapman, 969 F.2d at 163. The Fifth

Circuit’s rule does not account for a removing defendant’s “due

diligence” or “subjective knowledge.” Id.; Bosky v. Kroger Texas,

LP, 288 F.3d 208, 210 (5th Cir. 2002). Neither matters. For the

Fifth Circuit’s is a “bright line rule” that “promotes certainty

and judicial efficiency.” Chapman, 969 F.2d at 163.

Critically, the Reyeses’ petition lacked the “specific

allegation” that damages exceeded the federal jurisdictional

minimum. Id. The Reyeses had to make that “specific allegation” if

they wanted the 30-day removal clock to begin to run upon Family

Security’s receipt of the petition. Id.; Mumfrey v. CVS Pharm.,

Inc., 719 F.3d 392, 400 (5th Cir. 2013).

Because the Reyeses’ petition did not “affirmatively reveal

on its face” that the amount in controversy was met, § 1446(b)(1)

does not apply, and the 30-day removal period did not begin to run

when Family Security received a copy of the Reyeses’ petition. See

Mumfrey, 719 F.3d at 400. The 30-day removal period was instead

triggered when Family Security received a copy of an “amended

pleading, motion, order, or other paper from which” it was first

ascertainable that the case was removable. 28 U.S.C. § 1446(b)3).

D.

The Reyeses next contend that removal was untimely because

Family Security had five “reasons” to “recognize” the case was

removable more than 30 days before removal.

Although the Reyeses use the term “reasons,” they appear to

mean documents and correspondence. And although they do not use

the appropriate statutory term, “other paper,” they appear to

contend that any of the following qualifies as “other paper”

triggering the 30-day removal period:

(1) A claims adjuster’s inspection report that Family

Security received on July 18, 2018. The report

described the home’s interior as “completely

damaged.”

(2) An estimate and settlement of damages that Family

Security prepared on August 31, 2018, which

reflected a payment of $289,396.37 to settle the

Reyeses’ dwelling-coverage claim but no payment for

the personal-property coverage claim.

(3) The Reyeses’ March 26, 2019 submission of

“additional support” for their claim for payment

under the policy’s personal-property coverage.

(4) Family Security’s July 28, 2019 answer to the

Reyeses’ petition.

(5) An October 3, 2019 email exchange between counsel

for the Reyeses and counsel for Family Security.

Items 1-3 are not “other paper.” A document is not “other

paper” unless it is received after the initial pleading, Chapman,

969 F.2d at 164. Family Security received items 1-3 before

receiving the Reyeses’ petition on June 24, 2019. So, none of these

items triggered the 30-day removal period.

Nor is Item 4 —— Family Security’s answer —— “other paper.”

“‘Other paper’ must result from the voluntary act of a plaintiff

[that] gives the defendant notice of the changed circumstances

[that] now support federal jurisdiction.” Addo v. Globe Life and

Acc. Ins. Co., 230 F.3d 759, 762 (5th Cir. 2000) (citing S.W.S.

Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996)).

Family Security’s answer did not “result from the voluntary act”

of the Reyeses; it was created by Family Security and based on

Family Security’s subjective knowledge. Accordingly, Family

Security’s answer could not convert “a non-removable action into

a removable one,” S.W.S. Erectors, 72 F.3d at 494, and did not

trigger the 30-day removal period.

Item 5 is an October 3, 2019 email from counsel for the

Reyeses to counsel for Family Security. It reads:

Shannon:

We are not at a stage for settlement.

Unless your client pays out the content claim, once

we take all depositions, we will submit a demand.

Frankly, your client hasn’t paid a cent in contents

after seeing over the limits lost in the fire [sic]

so we believe there is an extremely credible bad faith

claim. Your client has a duty to pay and it has failed

miserably. We also have knowledge that your client is

discriminating against my Hispanic client, so I look

forward to exploring that as well.

This email presents a closer question. It is true that a post-

complaint demand letter can qualify as “other paper.” See Addo,

230 F.3d at 761-62. This is not that. In the email, counsel

disclaims any intention of discussing settlement and declines to

make a demand. Because the email is not a post-complaint demand

letter, and the Reyeses fail to invoke any supporting authority or

explain how the email could have otherwise caused Family Security

to “ascertain” that the amount in controversy was met, the Court

finds that the email did not trigger the 30-day removal period.

See Morgan v. Huntington Ingalls, Inc., 879 F.3d 602, 608-09 (5th

Cir. 2018) (holding that information supporting removal in an

“other paper” must “be unequivocally clear and certain” before the

removal period begins to run).

Even if the email qualified as “other paper,” however, the

removal period would not have started to run. Recall the request

for admission the Reyeses failed to timely answer.3 That failure

“conclusively establish[ed]” —— from August 20, 2019 to November

18, 2019, the date the state court apparently allowed withdrawal

of the admission —— that the federal jurisdictional minimum was

not met.4 See LA. CODE CIV. PROC. art. 1468. Until that admission was

withdrawn, the case could not be removed.

E.

Family Security removed the case on December 2, 2019, less

than 30 days after the state court’s November 18, 2019 withdrawal

of the Reyeses’ jurisdiction-destroying admission. The Court

3 The two-month delay in answering a single request for

admission smacks of jurisdictional gamesmanship.

4 The Reyeses do not acknowledge this failure or address its

effect on the “other paper” analysis.

therefore finds that, on this record,® removal was timely

accomplished within 30 days of receipt of “an amended pleading,

motion, order or other paper from which it may first be ascertained

that the case is one which is or has become removable.” 28 U.S.C.

§ 1446 (b) (3).

IIl.

Accordingly, IT IS ORDERED: that the motion to remand is

DENIED.

New Orleans, Louisiana, December 18, 2019

MARTIN/{IL. C. ELDMAN

UNITED STATES DISTRICT JUDGE

° The Court emphasizes the parties’ failure to adequately

address the two issues central to the resolution of the motion:

(1) whether the October 3, 2019 email, although not a post-

complaint demand letter, qualifies as “other paper”; and (2) the

effect of the Reyeses’ admission — that the amount in controversy

was not met — on the timeliness analysis under § 1446(b) (3).

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