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Osman v. Geico Secure Insurance Co.

United States District Court, W.D. Washington, Seattle

January 26, 2017

NURIA OSMAN, Plaintiff,
v.
GEICO SECURE INSURANCE CO., a foreign corporation, Defendant.

          ORDER OF REMAND AND DENYING ATTORNEY'S FEES

          Robert S. Lasnik United States District Judge

         I. INTRODUCTION

         This matter comes before the Court on plaintiff Nuria Osman's “Motion to Remand and Motion for Attorney's Fees.” Dkt. #12. Plaintiff argues her claim did not meet the jurisdictional amount in controversy requirement when defendant Geico removed the case to federal court. Plaintiff requests an award of attorney's fees (Dkt. #12) for costs stemming from the putatively improper removal of the case and has also moved for an extension of time (Dkt. #13) to comply with the Court's scheduling order (Dkt. # 4).

         II.BACKGROUND

         Plaintiff's complaint alleges she suffered injuries in a car collision in September 2015. The culpable motorist's insurance policy did not cover all of plaintiff's damages. Plaintiff turned to the policy her husband held with defendant. The policy included a provision for coverage of up to $25, 000 in the event another motorist's policy cannot provide adequate compensation for an injury. After plaintiff rejected defendant's settlement offer of $2, 500, she filed a complaint in King County Superior Court.

         Plaintiff alleges two theories of recovery. One alleges violations of Washington's Insurance Fair Conduct Act (IFCA). Dkt. #1-2 at ¶¶ 5.1-5.5. The second alleges a breach of contract and includes a claim of bad faith. Dkt. #1-2 at ¶¶ 6.1-6.7. Plaintiff's complaint also states her intent to file a Statement of Arbitrability under Washington's mandatory arbitration process. Dkt. #1-2 at ¶ 7.1.

         Plaintiff's prayer for relief requests a judgment that “will fairly compensate her for all damages sustained.” Dkt. #1-2 at ¶ 8.1. Plaintiff specifically requests that defendant perform according to the terms of the insurance contract and that the court declare that defendant acted in bad faith. Plaintiff also requests prejudgment interest, attorney's fees and costs, other damages “appropriate after discovery, ” and “other relief the Court deems just.” Id.

         Defendant removed the case. Dkt. #1. This motion followed.

         III. SUBJECT MATTER JURISDICTION

         Absent a question of federal law, an amount in excess of $75, 000 must be in controversy in order for a state-court action between diverse parties to be removed to federal court. 28 U.S.C. § 1332(a). The removal statutes are strictly construed against removal. Hawaii ex rel. Louie v. HSBC Bank Nev., N.A., 761 F.3d 1027, 1034 (9th Cir. 2014). Where, as here, the amount in controversy is unclear from the state-court complaint, the party seeking the federal forum bears the burden of providing evidence “establishing that it is more likely than not that the amount in controversy” exceeds $75, 000 at the time of removal. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007) (internal quotation marks omitted); Singer v. State Farm Mut. Auto. Insu. Co., 116 F.3d 373, 377 (9th Cir. 1997). An amount pleaded in plaintiff's complaint controls determination of the amount in controversy as long as “the claim is apparently made in good faith.” Singer, 116 F.3d at 375. A defendant “faces an uphill battle to avoid remand where plaintiff sues for less than $75, 000, ” “likely needing to show the amount pleaded was falsely or incompetently set forth.” William W. Schwarzer et al., Federal Civil Procedure Before Trial 2:2385-86 (2016).

         Plaintiff contends her complaint limits her award to an amount under $75, 000 because of her intent to file a Statement of Arbitrability under Washington's mandatory arbitration scheme. Motion at p. 4. Washington limits awards from mandatory arbitration to $50, 000 “exclusive of interest and costs.” RCW 7.06.020(1). Under IFCA, the maximum award to a victim of unreasonable insurance practices is no more than three times the actual damages as well as “reasonable attorney's fees and litigation costs.” RCW 48.30.015.

         Defendant argues that plaintiff's intent to submit to mandatory arbitration is not relevant to the amount in controversy analysis and encourages the Court to construe the complaint as waiving damages above $50, 000 “for purposes of arbitration only.” Response (Dkt. #15) at p. 5. Defendant also asserts that plaintiff's alleged damages, after IFCA penalties, exceed $75, 000. Response at p. 3. Defendant implies the contractual bad faith claim contributes to the amount in controversy. Response at 5.

         The Court construes plaintiff's allegation that her claim is subject to mandatory arbitration to be a representation that she seeks no more than $50, 000, exclusive of interest and reasonable attorney's fees under IFCA. Given the dates of plaintiff's injury and complaint, the Court estimates the maximum accrued interest is approximately $6, 000. See RCW 4.56.110(4) and RCW 19.52.020 (providing a 12% interest rate for contractual claims where the parties have not agreed to a prejudgment interest rate).

         Defendant has not shown by a preponderance of the evidence that plaintiff seeks a total arbitration award in excess of $75, 000. The Response does not provide any details of what amount of attorney's fees the Court should consider reasonable in an arbitration. In light of arbitration's goal to reduce costs, the Court declines to speculate that those costs will exceed approximately $19, 000. Neither does defendant provide sufficient evidence that plaintiff's contractual bad faith claim affects ...


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