Suing An Insurance Company And Trying To Stay Out Of Federal Court

Most Palo Pinto insurance lawyers already know that it helps their clients to be able to stay out of Federal Court on insurance disputes. They are many points that need to be kept in mind. A few of those are discussed in a U.S. Southern District of Texas, McAllen Division opinion. It is styled, Jose Villareal v. State Farm Lloyds.
Villareal filed his lawsuit in state court, asserting various insurance related causes of action for damages resulting from a wind or hail storm. State Farm removed the case to Federal Court asserting diversity jurisdiction pursuant to 28 U.S.C. Section 1332. Villareal countered that the amount in controversy does not exceed $75,000, thus the court lacks jurisdiction.
A court does not have subject matter jurisdiction unless the parties are completely diverse and the amount in controversy exceeds $75,000. Generally, the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy. Here, however, the state practice does not permit a demand for a specific sum. State Farm can show the amount in controversy exceeds $75,000 by
(1) showing it is apparent from the face of the petition that the claims are likely to exceed $75,000.00, or
(2) setting forth summary judgment type evidence of facts in controversy that support a finding of the requisite amount.
Evidence that the amount in controversy exceeds $75,000 is shown by State Farm to include the following:
Villareal’s pre-suit demand letter outlined damages of $33,673.12 to satisfy Villareal’s claim. Nowhere in the damage model was a calculation for punitive damages. However, in the lawsuit filed by Villareal, he specifically seeks punitive damages for alleged “intentional and … knowing disregard for Plaintiff’s rights ….”
Under Texas law, punitive damages are included within the definition of exemplary damages. Additionally, in Texas, an exemplary damages award can result in an increase of up to at least $200,000 for a plaintiff. Furthermore, the 5th Circuit had held that punitive damages are “to be considered in ascertaining the amount in controversy when the insurer could be liable for those sums under state law …. Therefore, this Court held the judicial threshold requirement of $75,000 could easy be met if Plaintiff’s claim for punitive damages is successful.