The Holding

In Hoarau v. Safeco Ins. Co. of America, 2017 WL 3328078 (D.Ariz. August 4, 2017), the Arizona District Court denied an insured's Motion to Remand in an insurance bad faith, punitive damages, and declaratory judgment case.  

The Takeaway

Insurers may consider attorney fees and punitive damages when considering whether a case on the borderline of the $75,000 minimum amount in controversy diversity jurisdiction threshold can be removed to federal court.

The Facts

An Insurer offered $11,000 under a landlord protection policy, the Insured disagreed with that valuation, the Insured retained a public adjuster, and the public adjuster demanded $62,000 of repairs.  The Insured filed suit and alleged the above three claims.  The Insurer removed the case to District Court, and the Insured filed a Motion to Remand.  The Insurer argued the amount in controversy exceeded the $75,000 minimum amount in controversy diversity jurisdiction threshold because the Insured sought $62,000 of compensatory damages, at least $8,000 in attorney fees, and punitive damages.

The Rationale

The District Court considered $57,000 the amount of compensatory damages sought (the $62,000 of repairs the insured sought minus the insurer's original estimate of $6,500).  The District Court confirmed that attorney fees authorized by statute may be considered in an amount in controversy determination, but it used a very conservative amount of attorney fees-the $8,000 minimum sought in the complaint.  And, the District Court confirmed that sought punitive damages may also be considered in an amount in controversy determination.