$75,000 Pleading

Have we ever mentioned that the insurance companies prefer to fight cases in federal court rather than state court?  And that insurance lawyers representing people who have a claim against their insurance company would prefer to litigate the case in state court?

Here’s a case dealing with the $75,000 pleading requirement to have a case heard in federal court.  The case is from the Southern District of Texas, Houston Division, and is styled, Fernando Abascal v. United Property & Casualty Insurance Company.

Fernando filed suit in state court against United after United partially denied his claim for damage resulting from Hurricane Harvey.  In his pleadings, Fernando stated that he “will never ask, receive, or take a judgment for any amount exceeding $75,000.  United removed the case to federal court arguing that Fernando’s statement does not qualify as a binding stipulation and that Fernando’s demonstrates that the amount in controversy exceeds $75,000.00.

The Court has to decide by a preponderance of the evidence whether the amount in controversy exceeds the jurisdictional amount and whether Fernando has stipulated with legal certainty that the amount in controversy is below $75,000.00.

28 U.S.C., Section 1332(a) gives exclusive jurisdiction to federal courts for all civil actions where the amount in controversy exceeds $75,000.00, exclusive of interest and costs.  When the removing party can show that the amount in controversy exceeds the jurisdictional amount, the party seeking remand must then show with legal certainty  that he will not be able to recover more than the jurisdictional amount.  The United States Fifth Circuit Court of Appeals has explained that once the district court’s jurisdiction is established, subsequent events that reduce the amount in controversy to less than $75,000.00 generally do not divest the court of diversity jurisdiction.

Fernando’s original petition stated that damages do not exceed $75,000.00.  United argues that based on the causes of action alleged and the types of damages sought, it is apparent Fernando seeks damages in excess of $75,000.00.

Fernando alleges damages of $19,303.41.  Fernando also seeks prejudgment and post judgment interest, compensatory damages including, economic hardship, losses due to nonpayment of the amount the insurer owed and damages for mental anguish and emotional distress.  Plus, Fernando seeks treble damages, 18% penalty interest, attorney fees, court costs, punitive and exemplary damages for alleged violations of the Texas Insurance Code, fraud, and breach of good faith and fair dealings.

The court stated, looking at the face of Fernando’s Original Petition, which seeks treble damages, penalty damages, and exemplary damages, it is clear that the amount in controversy exceeds $75,000.00 and the Court has jurisdiction.