United States District Court, D. Colorado
ORDER
PHILIP
A. BRIMMER Chief United States District Judge.
This
matter is before the Court on Plaintiff's Motion to
Remand to State Court, Docket No. 11, filed on August 26,
2019. Defendant responded on September 12, 2019, Docket No.
13, to which plaintiff replied. Docket No. 17.
On
August 7, 2019, defendant removed this case to federal court
from the District Court of Weld County, Colorado on the basis
that the Court has diversity jurisdiction. Docket No. 1 at 1.
Plaintiff argues that the case must be remanded to state
court due to a lack of complete diversity of citizenship.
Docket No. 11 at 2.
Plaintiff
argues that complete diversity of citizenship cannot be
established in this action because, “when an insurer is
a named party in an action, citizenship of that insurer is
based upon where the insured is located” and,
accordingly, defendant “automatically assumes the
citizenship of” plaintiff. Docket No. 11 at 3.
Plaintiff also argues that “State Farm is a Colorado
citizen” because “[i]t operates as a business in
Colorado, it insures Colorado citizens, and it has its
principal Colorado place of business in Greeley, Colorado as
well as large operation centers in Englewood and Lakewood,
Colorado.” Id. at 4.
Under
28 U.S.C. § 1332, “district courts shall have
original jurisdiction of all civil actions where the matter
in controversy exceeds the sum or value of $75, 000,
exclusive of interest and costs, and is between . . .
citizens of different States.” 28 U.S.C. §
1332(a). “For purposes of this section . . . a
corporation shall be deemed to be a citizen of every State
and foreign state by which it has been incorporated and of
the State or foreign state where it has its principal place
of business, except that in any direct action against the
insurer of a policy or contract of liability insurance,
whether incorporated or unincorporated, to which action the
insured is not joined as a party-defendant, such insurer
shall be deemed a citizen of . . . every State and foreign
state of which the insured is a citizen.” 28 U.S.C.
§ 1332(c). Plaintiff argues that, under this section,
defendant “automatically assumes the citizenship of its
insured” for diversity purposes. Docket No. 11 at 3-4.
“The
overwhelming weight of authority, including several cases
from this District and the Tenth Circuit, hold that actions
by an insured against his or her own insurer are not direct
actions within the meaning of § 1332(c)(1).”
Powers v. Allstate Motor and Cas. Ins. Co., No.
10-cv-00997-WYD-KLM, 2010 WL 2270182, at *2 (D. Colo. June 7,
2010) (citing cases) (emphasis omitted). “Section
1332(c)(1) applies to lawsuits seeking to impose liability
against the insurer for the negligence of any party insured
by the insurer.” Garcia v. Berkshire/Guardian Life
Ins. Co. of Am., No. 10-cv-01355-REB-MEH, 2011 WL 31510,
at *2 (D. Colo. Jan. 5, 2011). “The direct action
exception does not apply to a suit in which the insured is
suing his or her own insurer for withholding benefits.”
Id.
Here,
plaintiff has sued its own insurer for allegedly breaching
the parties' insurance agreement by withholding
underinsured motorist benefits. Docket No. 4 at 2, ¶ 13.
As a result, § 1332(c)(1) does not apply, and defendant
does not assume the citizenship of plaintiff for purposes of
diversity jurisdiction.
Moreover,
plaintiff's allegations that defendant is a citizen of
Colorado because it conducts business in the state are
without merit. “For diversity, a corporation is a
citizen of its state of incorporation and the state where its
principal place of business is located.” Grynberg
v. Kinger Mordan Energy, L.P., 805 F.3d 901, 905 (10th
Cir. 2015). Defendant alleges that it is incorporated in, and
has its principal place of business in, the state of
Illinois. Docket No. 1 at 3. To the extent that plaintiff
argues that defendant is a Colorado citizen because
“[i]t operates as a business in Colorado, ”
“insures Colorado citizens, ” and has physical
business locations in Colorado, see Docket No. 11 at
4, such allegations are insufficient to find that defendant
is a citizen of the state. If such allegations are sufficient
to render defendant a Colorado citizen, then defendant - a
national insurance company - would be effectively precluded
from ever removing a case to federal court in any state. Such
a result “would allow frustration of the purpose of
diversity jurisdiction, which is, after all, to protect the
out-of-state defendant.” McPhail v. Deere &
Co., 529 F.3d 947, 955 (10th Cir. 2008).
Finally,
plaintiff argues that the amount in controversy is not
established for purposes of 28 U.S.C. § 1332, which
provides that district courts shall have jurisdiction in
cases where the amount in controversy exceeds $75, 000,
exclusive of interest and costs. Docket No. 11 at 4-5; 28
U.S.C. § 1332(a)(1). Plaintiff contends that, because
“plaintiff did not demand any particular amount in the
complaint, ” and because “no evidence has been
offered [by defendant] to determine whether [the] case
exceeds the threshold for federal jurisdiction, ” the
case must be remanded to state court. Docket No. 11 at 5.
“In
a removal case, it is the obligation of the removing
defendant to establish that the amount in controversy
requirement has been satisfied.” Huffman v. Saul
Holdings Ltd. P'ship, 194 F.3d 1072, 1079 (10th Cir
1999). The defendant must prove jurisdictional facts by a
preponderance of the evidence. McPhail, 529 F.3d at
953. “The proponent of federal jurisdiction must prove
contested facts; and because a defendant has no control over
the complaint, he cannot put a large sum of money in
controversy simply by demanding it, as a plaintiff often
can.” Id. at 954 (emphasis omitted).
Accordingly, a defendant can “establish what the
plaintiff stands to recover” in a number of ways, such
as “by contentions . . . in state court; by calculation
from the complaint's allegations[;] [or] by reference to
the plaintiff's informal estimates or settlement
demands.” Id. (quoting Meridian Sec. Ins.
Co. v. Sadowski, 441 F.3d 536, 541-42 (7th Cir. 2006)).
“[O]nce [the] underlying facts are proven, a defendant
. . . is entitled to stay in federal court unless it is
‘legally certain' that less than $75, 000 is at
stake.” Id.
In its
notice of removal, defendant states that “[p]laintiff
alleges his damages are in excess of $250, 000.” Docket
No. 1 at 2; see also Docket No. 4 at 1-2,
¶¶ 3, 12 (plaintiff alleging in his complaint that
he is entitled to underinsured motorist benefits from his
insurance policy, which provides underinsured motorist
coverage in the amount of $250, 000 per person). Further,
defendant points to plaintiff's state court cover sheet,
in which plaintiff indicates that he is seeking a monetary
judgment in excess of $100, 000. Docket No. 1-2 at 1.
“The Tenth Circuit has held that a Colorado civil cover
sheet is adequate notice of the amount in controversy sought
by plaintiff.” Stazick v. State Farm Mut. Auto.
Ins. Co., No. 18-cv-03357-PAB, 2019 WL 494376, at *1 (D.
Colo. Feb. 8, 2019) (citing Paros Props. LLC v. Colo.
Cas. Ins. Co., 835 F.3d 1264, 1272 (10th Cir. 2016)).
Because plaintiff represented to the state court in his civil
cover sheet that the amount in controversy is greater than
$100, 000, it is irrelevant that plaintiff “did not
demand any particular amount in the complaint.” Docket
No. 11 at 5; see also McPhail, 529 F.3d at 955
(“[A] plaintiff cannot avoid removal merely by
declining to allege the jurisdictional amount.”).
Because
removal was proper, the Court finds that remand to state
court is unwarranted. Wherefore, it is
ORDERED
that Plaintiff's Motion to Remand to State Court ...