Feller v. Hartford Life & Accident Insurance
2010 WL 7761518, 2010 U.S. Dist. LEXIS 143886, 817 F.Supp.2d 1097 (2010)
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Rule of Law:
For the purpose of establishing the amount in controversy for federal diversity jurisdiction, a court may aggregate the specific damages claimed in a complaint with potential punitive damages and a reasonable estimate of future attorney's fees, where recoverable under law.
Facts:
- Rebecca Feller was the beneficiary of an accidental death benefits policy insuring her husband, issued by Hartford Life and Accident Insurance Co.
- The policy provided for a payment of $50,000 in the event of accidental death.
- Following her husband's death, Feller submitted a claim to Hartford Life for the accidental death benefits.
- Hartford Life denied Feller's claim for the $50,000 in benefits.
Procedural Posture:
- Rebecca Feller filed a lawsuit against Hartford Life in the District Court for the State of Iowa, Pottawattamie County (a state court of first instance).
- Hartford Life removed the case to the United States District Court for the Southern District of Iowa (a federal trial court), asserting federal jurisdiction based on diversity of citizenship.
- Feller filed a Motion to Remand the case back to state court, arguing the federal court lacked subject matter jurisdiction because the amount in controversy did not exceed $75,000.
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Issue:
In a removed case where the plaintiff's complaint seeks damages below the jurisdictional minimum, does the amount in controversy requirement for federal diversity jurisdiction fail to be met if potential punitive damages and future attorney's fees, when added to the stated damages, could reasonably exceed the jurisdictional threshold?
Opinions:
Majority - Jarvey, J.
No. The amount in controversy requirement for federal diversity jurisdiction is met because the defendant demonstrated by a preponderance of the evidence that a fact finder could legally conclude the plaintiff's damages will exceed the jurisdictional threshold. The court reasoned that both potential punitive damages and future attorney's fees can be included in this calculation. First, under Iowa law, Feller's bad-faith claim against the insurer allows for the recovery of punitive damages, and a potential award of just over $25,000 on top of the $50,000 policy claim would satisfy the jurisdictional amount. Second, the court adopted the reasoning of the Tenth Circuit in Miera v. Dairyland Ins. Co., holding that a reasonable estimate of future attorney's fees should be included in the calculation. The court rejected the argument that future fees are too speculative, equating them to other routinely considered future damages like pain and suffering. Given the nature of the case, it was reasonable to expect future attorney's fees to exceed $25,000, independently satisfying the jurisdictional requirement.
Analysis:
This decision clarifies the standard for calculating the amount in controversy in the Southern District of Iowa, contributing to a circuit split on the inclusion of future attorney's fees. By allowing defendants to aggregate stated damages with potential punitive damages and estimates of future legal fees, the ruling may make it easier for defendants, particularly in insurance bad-faith cases, to remove lawsuits to federal court even when the plaintiff's complaint explicitly seeks less than the jurisdictional minimum. The court's treatment of future attorney's fees as analogous to other unliquidated future damages, such as pain and suffering, establishes a key precedent for future jurisdictional disputes in this district.
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