United States District Court, E.D. Kentucky, Southern Division, London
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE.
matter is before the Court on the plaintiffs motion to remand
(DE 6) this action to Whitley Circuit Court. The Court hereby
ORDERS that the motion is GRANTED.
plaintiff Amy Gambrel filed this complaint in state court
alleging that the defendant American National Insurance
Service Company, her insurer, wrongfully denied her claim for
property damage. She asserts claims for breach of contract
and statutory bad faith under Kentucky's Unfair Claims
Settlement Practices Act, KRS § 304.12-230. Among the
damages she seeks are compensatory and punitive damages. In
her complaint, however, Gambrel did not specify the amount of
National removed the action to this Court asserting that
federal subject matter jurisdiction exists under 28 U.S.C.
§ 1332(a)(1). That statute grants federal courts
jurisdiction over civil actions between citizens of different
states where the amount in controversy exceeds $75, 000.
There is no dispute that Gambrel and American National are
from different states. In Gambrel's motion to remand,
however, she asserts that the amount in controversy does not
exceed $75, 000. She states that she seeks contract damages
of $15, 000 and punitive damages of $50, 000 maximum and
that, therefore, this case does not meet the federal amount
in controversy requirement.
American National removed this case from state court, it
bears the burden of proving that the requirements for
diversity jurisdiction-including the amount in
controversy-are satisfied. Cleveland Hous. Renewal
Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559
(6th Cir.2010). Where, as here, the complaint seeks an
unspecified amount of damages "that is not
self-evidently greater or less than the federal
amount-in-controversy requirement, " the removing
defendant must prove that it is more likely than not that the
plaintiffs claim exceeds $75, 000. Gafford v. Gen. Elec.
Co., 997 F.2d 150, 158 (6th Cir.1993), abrogated on
other grounds by Hertz Corp. v. Friend, 130 S.Ct. 1181
(2010). This means that the defendant does not have the
"daunting burden of proving, to a legal certainty that
the plaintiffs damages are not less than the
amount-in-controversy requirement." Id. at 159.
Nor is the defendant required to research and prove on its
own the plaintiffs claim for damages. Id.
Nevertheless, the defendant must show more than that the
plaintiffs claim "may" exceed $75, 000.
Gambrel asserts in her motion to remand that American
National owes her $15, 000 under the policy. In its response
brief, American National does not dispute that the amount at
issue on the contract claim is $15, 000. Gambrel also seeks
attorney's fees and prejudgment interest. American
National does not address the value of these damages in its
response brief. Instead, American National focuses on the
value of Gambrel's punitive damages claim. In order to
establish federal jurisdiction based only on compensatory and
punitive damages, American National must prove that it is
more likely than not that Gambrel's punitive-damages
claim is worth at least $60, 000.01, or more than four times
the compensatory damages that she seeks.
evidence that the plaintiffs punitive damages award would
likely reach that amount, American National cites the
verdicts in three Kentucky cases in which the plaintiff
asserted a bad-faith claim against an insurer arising from
the insurer's denial of a property damage claim. (DE 7,
Response at 7.) While some courts have found that a defendant
may satisfy its burden of establishing the amount in
controversy "by proffering jury verdicts or punitive to
compensatory ratios in analogous cases, . . . the cases
should be factually analogous." Martin v. Fifth
Third Bank, Inc., No. 1:11-CV-00182-JHM, 2012 WL
1906506, at *3 (W.D. Ky. May 25, 2012). "If they are
not, they are of little value in sustaining the
defendant's burden." Id.
first case cited by American National, the plaintiff was
awarded $71, 013.47 in compensatory damages and $2 million in
punitive damages (approximately a 28:1 ratio of
punitive-to-compensatory damages). In the second, the
plaintiff was awarded $925, 000 for emotional distress and
$2.5 million in punitive damages (approximately 2.7:1 ratio).
In the third, American National asserts that the plaintiff
was awarded $151, 003.05 in compensatory damages and $100,
000 in punitive damages (approximately 2:3 ratio). American
National also cites a fourth case in which the plaintiff was
awarded $200, 000 in compensatory damages and $2 million in
punitive damages (10:1 ratio). That case, however, involved
an insurance claim by the estate of a man who was killed in a
car crash. (DE 1-6, p. 3.)
American National cites only one case in which the
punitive-to-compensatory damages ratio was as high as
four-to-one where a plaintiff alleged bad faith by an insurer
who denied a property damage claim. While that case certainly
helps to prove that a punitive damages award of more than
$60, 000 in this case is possible, it does not prove
that it is likely. "[T]he mere possibility of a
punitive damages award is insufficient to prove that the
amount in controversy requirement has been met."
Martin, 2012 WL 1906506, at *3 (citing Burk v.
Med. Sav. Ins. Co., 348 F.Supp.2d 1063, 1069
National also points to a report by Kentucky Trial Court
Review (DE 1-4) showing that the plaintiffs average award in
bad faith cases between 1998 and 2013 in Kentucky was $2,
053, 848 or $977, 000 if one particularly high verdict is
omitted from the calculation. American National does not,
however, demonstrate that these cases are factually similar
to Gambrel's. Thus, the Court cannot use these averages
as a basis for predicting the amount of punitive damages
Gambrel will likely recover in this case. Further, American
National does not explain what portion of the average award
consists of compensatory damages. Thus, the average award
does not provide any basis for this Court to conclude that
that Gambrel will likely receive punitive damages four times
the amount of her compensatory damages.
American National has not established that it is more likely
than not that the amount in controversy in this case exceeds
$75, 000, the Court hereby ORDERs that the motion to remand
(DE 6) is GRANTED and this matter is REMANDED to Whitley
extent that Gambrel seeks the payment of any attorney's
fees or costs incurred as a result of the removal under 28
U.S.C. § 1447(c), that request is DENIED. A district
court "may award attorney's fees under §
1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal." Martin v.
Franklin Capital Corp.,546 U.S. 132, 141 (2005). While
American National has failed to establish by a ...