# Pratt v. Safeco Insurance Company of America

> District Court, W.D. Oklahoma · April 15, 2020

URL: https://www.frixlaw.com/law-library/cases/10388210

## Case

- **Court:** District Court, W.D. Oklahoma
- **Decided:** April 15, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA

R ANDY PRATT and DEBRA PRATT, )
)
Plaintiffs, )
)
v. ) Case No. CIV-20-93-D
)
SAFECO INSURANCE COMPANY OF )
AMERICA, )

Defendant. )

O R D E R
Before the Court is Defendant’s Notice of Removal [Doc. No. 1] and Plaintiffs’
Motion to Remand [Doc. No. 7]. Defendant, Safeco Insurance Company of America
(“Safeco”), has filed a Response [Doc. No. 10] in opposition, to which Plaintiffs Randy
and Debra Pratt have replied [Doc. No. 11]. The matter is at issue.
BACKGROUND
Plaintiffs owned a car which was insured by Defendant. Alleging that the car was
rear-ended through no fault of their own, Plaintiffs made a claim with Defendant for
coverage under the insurance policy. Complaint [Doc. No. 1-2] at 1.1 Following the
accident, Plaintiffs assert that Defendant improperly raised Plaintiffs’ automobile
insurance premium in violation of OKLA. STAT. tit. 36 § 941(A). Id. at 2.
Dissatisfied with the premium increases, Plaintiffs filed an action in Oklahoma
County District Court alleging breach of contract, constructive fraud/negligent

1 The parties refer to Plaintiffs’ original pleading as a “Petition”; in keeping with federal
nomenclature, the Court will hereinafter use “Complaint.”
misrepresentation, and unjust enrichment. Id. at 2–5. Defendant timely removed the action
to federal court pursuant to 28 U.S.C. § 1441, arguing that the Court has diversity

jurisdiction over this case under 28 U.S.C. § 1332. Response at 1.
Plaintiffs argue removal was improper and that remand is required due to this
Court’s lack of subject matter jurisdiction. Motion at 1. Specifically, the parties disagree
whether the requisite amount-in-controversy requirement of more than $75,000 is met
under 28 U.S.C. § 1332.
STANDARD OF DECISION

Federal courts are courts of “limited jurisdiction and, as such, must have a statutory
basis to exercise jurisdiction.” Montoya v. Chao, 296 F.2d 952, 955 (10th Cir. 2002). One
such statutory basis is found in 28 U.S.C § 1332. Subject matter jurisdiction under
§ 1332(a) requires completely diverse parties and an amount in controversy that “exceeds
the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a).

The party seeking to remove the case “bears the burden to establish that its removal
of [the] case to federal court was proper.” Hernandez v. Liberty Ins. Corp., 73 F. Supp. 3d
1332, 1336 (W.D. Okla. 2014) (citing Huffman v. Saul Holdings Ltd. P’ship, 194 F.3d
1072, 1079 (10th Cir. 1999)). When original jurisdiction is based on § 1332, “[b]oth the
requisite amount in controversy and the existence of diversity must be affirmatively

established on the face of either the petition or the removal notice.” Singleton v.
Progressive Direct Ins. Co., 49 F. Supp. 3d 988, 991 (N.D. Okla. 2014) (quoting Laughlin
v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995)) (emphasis added).
Typically, in order for a defendant to properly establish the amount in controversy,
the “notice of removal need include only a plausible allegation that the amount in

controversy exceeds the jurisdictional threshold.” Dart Cherokee Basin Operating Co. v.
Owens, 574 U.S. 81, 89 (2014). In the event the Court questions the defendant’s proffered
amount in controversy, however, “[e]vidence establishing the amount is required by
§ 1446(c)(2)(B).” Id.
When determining the amount in controversy in a diversity action, 28 U.S.C.
§ 1446(c)(2) lays out the general rule that “the sum demanded in good faith in the initial

pleading” shall suffice. If, however, the “allegations of the complaint . . . are not
dispositive, the allegations in the petition for removal” may be considered. Lonnquist v.
J.C. Penney Co., 421 F.2d 597, 599 (10th Cir. 1970); see 28 U.S.C. § 1446(c)(2)(a). In the
latter case, the removing party “must affirmatively establish jurisdiction by proving
jurisdictional facts that ma[ke] it possible that $75,000 [is] in play . . . .” McPhail v. Deere

& Co., 529 F.3d 947, 955 (10th Cir. 2008) (emphasis in original).
One avenue for a removing party to affirmatively establish the amount in
controversy is “rel[iance] on an estimate of the potential damages from the allegations in
the complaint.” Id. (citing Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 541 (7th
Cir. 2006)); see also Marchese v. Mt. San Rafael Hosp., 24 Fed. App’x. 963, 964 (10th

Cir. 2001). “A complaint that presents a combination of facts and theories of recovery that
may support a claim in excess of $75,000 can support removal.” McPhail, 529 F.3d at 955.
This leads the removing party to perform an “economic analysis” of the alleged damages
supported by underlying facts. Archer v. Kelly, 271 F. Supp. 2d 1320, 1322 (N.D. Okla.
2003).

After proving the underlying jurisdictional facts, the defendant “is entitled to stay
in federal court unless it is ‘legally certain’ that less than $75,000 is at stake. If the amount
is uncertain then there is potential controversy, which is to say that at least $75,000 is in
controversy in the case.” McPhail, 529 F.3d at 954. In a peculiar sense, “the burden shifts
to the party seeking remand,”—here Plaintiffs—“who must then prove to a legal certainty
that the amount in controversy is less than $75,000.” Smith v. Brown, No. CIV-17-631-R,

2017 WL 2964824, at *2 (W.D. Okla. July 12, 2017) (unpublished). “Punitive damages
may be considered in determining the requisite jurisdictional amount.” Woodmen of the
World Life Ins. Soc’y v. Manganaro, 342 F.3d 1213, 1218 (10th Cir. 2003).
DISCUSSION
Plaintiffs seek the remand of this case to the Oklahoma County District Court

because, they argue, the requirements for diversity jurisdiction under 28 U.S.C. § 1332 are
not met due to an insufficient amount in controversy. Motion at 1. Plaintiffs also contend
that because removal was improper, they are entitled to an award of attorney fees under
§ 1447(c) if the case is remanded. Id. Defendant contends that removal was proper in this
case because the requirements of the diversity statute are satisfied—including that the

amount in controversy exceeds $75,000. Response at 1.
On various grounds mentioned in the Complaint, Plaintiffs seek damages “in excess
of $10,000.” Complaint at 3–5. In their reply, however, Plaintiffs assert that the “true
amount in controversy” in this case is the alleged improper increase in insurance premiums
of $120.60, and any assertion by Defendant that the $75,000 threshold is met is based on
“guesswork about what Plaintiffs may receive . . . .” Reply at 2.

Plaintiffs contend that the actual amount in controversy is as little as $120.60. It
appears undisputed, however, that Plaintiffs seek: (1) compensatory and special damages
arising out of a breach of contract in excess of $10,000; (2) financial losses and mental and
emotional distress arising out of Defendant’s alleged fraudulent conduct in excess of
$10,000; (3) disgorgement of the increased premiums; and (4) punitive damages for
Defendant’s alleged intentional conduct. Plaintiffs seek, at least, “in excess of $10,000”

for actual and consequential damages, and a similar amount for punitive damages. See
Complaint at 5. These amounts, however, do not reach the requisite minimum of $75,000
to remain in federal court; the Court must look elsewhere.
In its Response, Defendant relies heavily on Plaintiffs’ request for punitive
damages. Response at 5–7. Because Plaintiffs’ Complaint states only that they seek

“punitive damages in an amount to be determined by the jury in excess of $10,000,”
Complaint at 5, the Court must determine by a preponderance of the evidence whether the
value of punitive damages raises the amount in controversy in this case above the requisite
$75,000. 28 U.S.C. § 1446(c)(2)(B).
In its analysis regarding punitive damages, Defendant focuses on Plaintiffs’

allegations of “intentional” conduct. Response at 6. More specifically, Defendant asserts
that, under Oklahoma law, “[a] claim for punitive damages based on intentional conduct
carries a possible punitive damages award of either $500,000.00 or twice the amount of
actual damages—whichever number is higher.” Id. (citing OKLA. STAT. tit. 23, § 9.1(C))
(emphasis in original). As Plaintiffs correctly point out, however, asserting that the
maximum amount of any punitive damage award may exceed $75,000, without supporting

facts, will not establish jurisdiction. See Herndon v. Am.Comm. Ins. Co., 651 F. Supp. 2d
1266, 1273 (N.D. Okla. 2009); see also Singleton, 49 F. Supp. 3d at 993 (“A [d]efendant
must nevertheless offer more than a ‘conclusory statement’ that punitive damages are
sought under Oklahoma law and that such law authorizes recovery in excess of that
jurisdictional amount.”).
Singleton v. Progressive Direct Insurance, 49 F. Supp. 3d 988, 991 (N.D. Okla.

2014), is instructive, here. Singleton also involved a dispute between an insurance
company and its insured over whether the amount-in-controversy requirement under
§ 1332 was met. Id. at 990–91. The court stated that a conclusory statement that a punitive
damages award could be as high as $100,000 under Oklahoma law was insufficient to
establish the amount in controversy. Id. at 993. Nevertheless, the court held that, because

a punitive damages award of $65,000 or more would “reach the jurisdictional threshold,”
the defendant had “affirmatively established” that the jurisdictional requirement was met.
Id. at 994 (citing State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003)).
As noted above, the potential actual and consequential damages—based on the face
of the complaint—mean that “even a limited punitive damages award would push

Plaintiffs’ recovery over the jurisdictional threshold.” Daniels v. Safeco Ins. Co. of Am.,
No. CIV-16-360-C, at *2 (W.D. Okla. June 29, 2016) (Cauthron, J.). Based on the alleged
facts before the Court, it is plausible that the amount recoverable in this case exceeds the
amount-in-controversy requirement. Defendant has met its burden of proving jurisdictional
facts that make it possible that more than $75,000 is at stake, and Plaintiffs have failed to
prove to a legal certainty that such recovery is not possible. See McPhail, 529 F.3d at 954.
Therefore, federal subject matter jurisdiction is proper.
Because Plaintiffs’ Motion to Remand is DENIED, Plaintiffs’ request for attorney
fees under § 1447(c) is also DENIED.
CONCLUSION
As set forth herein, Defendant has met its burden of proving this Court has subject
matter jurisdiction over this case and removal was proper.
IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Remand [Doc. No. 7]
is DENIED.
IT IS SO ORDERED this 15" day of April, 2020.

Wy QO,
TIMOTHY D. DeGIUSTI
Chief United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10388210. Public record. Not legal advice.