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Cumberland v. Nationwide Mutual Insurance Co.

April 30, 2009


The opinion of the court was delivered by: Reagan, District Judge


I. Procedural and Factual Background

On December 26, 2008, William Cumberland, III, and William Cumberland, Jr., (the "Cumberlands") sued Nationwide Mutual Insurance Company ("Nationwide") and Wottowa Insurance Agency, Inc., ("Wottowa") in the Circuit Court of St. Clair County, Illinois. In Count I, the Cumberlands allege that they purchased commercial insurance from Nationwide, which was in effect when their business premises suffered a fire that caused substantial damage. The Cumberlands submit that Nationwide breached the commercial insurance policy by vexatiously and unreasonably denying their claim. In Count II, the Cumberlands incorporated their previous allegations and added a claim that Wottowa, as Nationwide's duly authorized agent, acted as Nationwide's alter ego for purposes of the issuance of the insurance policy and for purposes of the denial of loss.

On February 3, 2009, Nationwide, with Wottowa's consent, removed the action to this Court, invoking subject matter jurisdiction under the federal diversity statute, 28 U.S.C. § 1332. Two days later, after conducting threshold review, the undersigned Judge raised a jurisdictional concern and directed the parties to file briefs. The problem flagged by the Court was that Nationwide's removal notice asserted that Wottowa was fraudulently joined and that the citizenship of Wottowa must be disregarded for this reason. The parties filed their briefs on February 23 and March 2, 2009.

Section 1332 confers original jurisdiction over suits in which the amount in controversy exceeds $75,000, and the action is between citizens of different states. The party invoking federal jurisdiction bears the burden of demonstrating that all jurisdictional requirements have been met. Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).

On March 2, 2009, the Cumberlands moved the Court to remand the case to state court (Doc. 13). They contend that remand is appropriate because neither diversity jurisdiction nor federal question jurisdiction exists with regard to this proceeding.

II. Analysis

Courts presume a plaintiff's choice of forum is valid and resolve all doubts regarding jurisdiction in favor of remand. See Doe v. Allied-Signal Inc., 985 F.2d 908, 911 (7th Cir. 1993). When a defendant removes a case to a federal district court pursuant to 28 U.S.C. § 1441(a), the federal court must be able to exercise original jurisdiction over the matter. See 28 U.S.C. § 1441(a)(1). Under 28 U.S.C. § 1332(a), the federal district courts have original jurisdiction over cases between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). If either requirement of diversity jurisdiction is lacking, the court must remand the case. 28 U.S.C. § 1447(c).

A party seeking to invoke federal diversity jurisdiction may prevent remand by offering "competent proof" that the jurisdictional requirements are met. See Chase, 110 F.3d at 427.

"Competent proof means 'proof to a reasonable probability that jurisdiction exists.'" Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th Cir. 1995), quoting NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir.), cert. denied, 515 U.S. 1104 (1995). Here, then, the burden rests upon Nationwide, as the party seeking to invoke federal jurisdiction, to offer proof to a reasonable probability that the amount in controversy exceeds $75,000 and that diversity of citizenship exists.

A. Amount in Controversy

The Cumberlands contend that their Complaint alleges that they "incurred in excess of $50,000.00 in damages as a result of a fire" (emphasis in original), intimating that the amount in controversy requirement is not met. The Cumberlands do not develop this argument, but since it was raised and Nationwide responded to it, the Court will consider it.

The face of the plaintiff's complaint supplies the starting point in determining the amount in controversy. Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993). The amount in controversy is determined by evaluating the plaintiff's complaint "and the record as a whole." Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 404 (7th Cir. 2004), citing Uhl v. Thoroughbred Tech. & Telecommunications, Inc., 309 F.3d 978, 983 (7th Cir. 2002). Accord Gould v. Artisoft, Inc., 1 F.3d 544, 547 (7th Cir. 1993)(Generally, to determine amount in controversy in removal cases, the court looks "at plaintiff's state court complaint, along with the record as a whole.").

The Cumberlands' complaint prays for relief in excess of $50,000 against each Defendant. In calculating the jurisdictional amount, damages asserted in different claims can be aggregated. Herremans v. Carrera Designs, Inc., 157 F.3d 1118, 1121 (7th Cir. 1998). It is not clear whether the claims against each Defendant represent alternative grounds for recovery of the same ...

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