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Case 1:13-cv-00160-L-LDA Document 13 Filed 07/30/13 Page 1 of 11 PageID #: 175

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

AMANDA PORTER,
Plaintiff,
v.

AMERICAN HERITAGE LIFE
INSURANCE COMPANY,

Defendant.

C.A. No. 13-160

DECISION AND ORDER

RONALD R. LAGUEUX, Senior U.S. District Judge.

This matter is before the Court on Plaintiff’s Motion to

Remand her lawsuit to the Rhode Island Superior Court sitting in
Providence from whence it was removed by Defendant. Plaintiff
Amanda Porter is a Rhode Island resident, while Defendant
American Heritage Life Insurance Company is headquartered in
Jacksonville, Florida. Defendant removed the case to the federal
court, citing the complete diversity of citizenship between the
parties as required for removal jurisdiction under 28 U.S.C. §
1441. However, Plaintiff argues that the case must be remanded
because the benefits she seeks under the insurance policies
issued by Defendant are insufficient to satisfy the $75,000
amount-in-controversy requirement of 28 U.S.C. § 1332(a). For
reasons explained below, this Court orders that this matter be
remanded to Providence Superior Court.

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Background

Defendant issued three insurance policies to Plaintiff

covering accident and disability, effective March 1, 2010. In
October 2010, Defendant notified Plaintiff that she was in
arrears in her premium payments on each policy, and requested
payment to bring the policies current. Plaintiff made the
necessary payments in December, and the policies were reinstated.
On April 1, 2011, Defendant notified Plaintiff that her policies
had lapsed as of February 1, 2011, because of her failure to keep
up with the premium payments.

Plaintiff injured her back at her home on February 20, 2011.

She submitted a claim for benefits to Defendant on May 9, 2011,
along with supporting documentation from her doctor and employer.
Her doctor stated that she was suffering from “cervical and
lumbar disc syndrome” and was unable to work. On May 17,
Defendant paid Plaintiff benefits of $4,080 for the period of
February 22 to April 30, 2011. Defendant denied Plaintiff’s
subsequent claims, citing the policies’ lapse as of February 1,
2011. Plaintiff asserts that she is eligible for benefits
because her injury took place during the policies’ grace period.

The Complaint

Plaintiff’s Superior Court complaint sounds in two counts.
Count I alleges that Defendant breached the contractual language
of all three insurance policies when it denied her benefits even

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though she was unable to work. She seeks compensatory damages,
punitive damages, interest and costs. In Count II, Plaintiff
alleges that Defendant denied her claim for benefits in bad
faith, in violation of Rhode Island Gen. Law § 9-1-33. Again,
Plaintiff requests compensatory damages, punitive damages,
interest, costs and attorneys’ fees.
Analysis

Defendant timely removed the case to this Court in March

2013, pursuant to 28 U.S.C. § 1446. The parties agree that
diversity of citizenship exists. However, their dispute concerns
the amount of money at stake in the lawsuit. The federal statute
states that: “The district courts shall have original
jurisdiction where the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs, and is between
citizens of different States.” 28 U.S.C. § 1332(a)(1).

Defendant argues that, since the validity of the policies is
at issue, the amount in controversy must be the total face value
of all three policies, an amount close to $135,000. Plaintiff
responds that she is only seeking the benefits due her under the
policies, an amount limited to $54,720, well below the
jurisdictional requirement.

Burden on party invoking federal jurisdiction

When a plaintiff objects to the removal of the suit to

federal court, the burden is on the defendant to establish that

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federal jurisdiction is proper. Amoche v. Guarantee Trust Life
Ins. Co., 556 F.3d 41, 48 (1st Cir. 2009). In the context of a
dispute over the amount-in-controversy requirement, courts across
the country define that burden differently. In Amoche, the First
Circuit used a “reasonable probability” standard in a class
action suit removed by defendants who claimed federal
jurisdiction under the Class Action Fairness Act:
The removing defendants must show that it
appears to a reasonable probability that the
aggregate claims of the plaintiff class are
in excess of $5 million.


556 F.3d at 49 (citing Blockbuster, In. v. Galeno, 472 F.3d 53,
58 (2nd Cir. 2006). The Amoche Court explained that “reasonable
probability” is essentially the same as a “preponderance of the
evidence” standard, but is a superior semantic formulation for an
analysis that must be undertaken by the court at the pleading
stage of the litigation. Id. at 50.

In Youtsey v. Avibank Manufacturing, Inc., 734 F. Supp.2d

230, 233 (D.Mass. 2010), the Massachusetts District Court
concluded that the First Circuit’s reasoning in Amoche could be
extended beyond class action cases, noting that, “...neither the
First Circuit nor, for that matter, the Supreme Court has ever
addressed the precise issue here, i.e., the proper burden a
removing defendant bears in demonstrating the amount in
controversy in a diversity case.” In reliance on Youtsey, the

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reasonable probability standard has subsequently been applied in
several district court cases in this Circuit, and will be
employed by this Court herein. See Providence Piers, LLC v. SMM
New England, Inc., 2013 WL 178183 (D.R.I.); Toro v. CSX
Intermodal Terminals, Inc., 2013 WL 593947 (D.Mass.); Gomes v.
Midland Funding, LLC, 839 F. Supp.2d 417, 419-20 (D.Mass. 2012);
Reynolds v. World Courier Ground, Inc., 272 F.R.D. 284, 286
(D.Mass. 2011); Mutual Real Estate Holdings, LLC v. Houston Cas.
Co., 2010 WL 3608043 (D.N.H.).

Other factors bearing on the remand analysis

In addition to fixing the burden on Defendant to demonstrate

a reasonable probability that Plaintiff’s claims exceed the
$75,000 threshold, the Court must also place its thumb on the
scale in accordance with well-established legal principles
governing removal jurisdiction. First, the Constitution
demonstrates the intent to limit the jurisdiction of federal
courts. U.S. Const. art. III, § 2, cl. 1. And, by increasing
the financial stakes required to get into federal court, Congress
has made the courts responsible to “police the border of federal
jurisdiction.” Spielman v. Genzyme Corp., 251 F.3d 1, 4 (1st
Cir. 2001). Consequently, as well as for reasons of federalism
and comity, removal statutes are to be construed strictly and, in
ambiguous cases, construed against removal. Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 109 (1941); Rossello-Gonzalez v.

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Calderon-Serra, 398 F.3d 1, 11 (1st Cir. 2004). The final
principle that must be brought to bear by this Court is the axiom
that “the plaintiff is the master of the claim,” meaning that
some liberality must be employed in permitting plaintiff to
pursue her claims in the court of her choice. Rossello-Gonzalez,
398 F.3d at 11. These three principles make the burden heavier
on Defendant herein.

The validity of the policies

Defendant’s sole argument in support of its contention that

Plaintiff’s claims satisfy the $75,000 federal jurisdictional
limit is that the validity of the insurance policies in their
entirety is in dispute, which means that the amount in
controversy must be the total of the full amount available for
every compensable occurrence under all three policies. In
support of its argument, Defendant cites four cases in which the
enforceability of the policy or policy provisions were at issue.

In Hawkins v. Aid Ass’n for Lutherans, 338 F.3d 801 (7th

Cir. 2003), plaintiffs sought to nullify a mandatory arbitration
clause that had been added to their policies after they were
issued. The court concluded that the federal jurisdictional
requirement was satisfied because, “...when the validity of a
policy (as opposed to the insurer’s obligation to pay) is in
dispute, the face value of that policy is a proper measure of the
amount-in-controversy.” Id. at 805.

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In Pepper v. State Farm Mutual Automobile Ins. Co., 2012 WL
6554036 (S.D.W.Va.), plaintiff sought the reformation of his car
insurance policy to include uninsured motorist coverage, as
required by law in West Virginia. Despite the plaintiff’s modest
monetary claim, the court concluded that the amount in
controversy was $100,000, the full amount of uninsured motorist
coverage that would have been included in plaintiff’s policy had
it been in compliance with state law.

In Bell v. Philadelphia Life Ins. Co., 78 F.2d 322 (4th Cir.

1935), plaintiff’s policy had been converted, according to its
terms, to an extended term life insurance policy when he failed
to make his premium payments. Nonetheless, he sought disability
benefits in state court, as well as a declaration that the
original terms of the policy were in full force and effect.
After the case was removed to federal court, it was tried to a
jury, and the judge directed a verdict for defendant. On appeal,
Bell argued that the case should be remanded to federal district
court for remand to state court because the amount-in-controversy
jurisdictional requirement was not met. The Fourth Circuit
denied the motion to remand, stating that, because Bell sought a
declaratory judgment that the policy was still in force, the full
value of the policy was at stake. Id. at 323.

Finally, Defendant relies upon a case from this Court,

Wilbert v. UNUM Life Ins. Co., 981 F.Supp. 61 (D.R.I. 1997). In

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Wilbert, plaintiffs wanted cancelled policies reinstated, but
they did not seek benefits or money damages. Id. at 64. This
writer concluded that the proper measure of the amount in
controversy was the face value of the policy, stating:

In actions for declaratory relief where no
money damages are sought, as in this case,
the amount in controversy is measured by the
value of the object of the litigation, which
is the ‘value of the right to be protected or
the extent of the injury to be prevented.’

Id. at 64 (quoting Leininger v. Leininger, 705 F.2d 727, 729 (5th
Cir. 1983)).

While these cases do not chart a clear path, some common

sense principles come through: When the validity of an insurance
policy is in dispute, a finding that it is valid may, or may not,
bring back to life all the coverage possible under the policy.
If the object of the litigation is to re-establish the operation
of the policy for all purposes, the full face value of the policy
is at stake for the insurance company, and is, therefore, the
amount in controversy. However, if something less than the full
reinstatement of the policy is the plaintiff’s goal, then the
insurance company likely has less at stake.

In Anver v. Unum Provident Corp., 2001 WL 1013166 (D.Kan.),

the court explained the distinction as follows:

In actions for declaratory relief, the amount
in controversy is measured by the value of
the object of the litigation, which is the

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‘value of the right to be protected or the
extent of the injury to prevented.’ In a
suit by the insured to recover disability
benefits the amount involved for purposes of
jurisdiction is the amount of the disability
benefits for which suit is brought, even
though the effect of the judgment may be to
establish the right of the insured to recover
sums far in excess of the jurisdictional
amount.

2001 WL 1013166 at 3 (internal citations omitted). See also
Cheung v. Union Central Life Ins. Co., 269 F.Supp. 2d 321, 324
(S.D.N.Y. 2003)(“Insurance is purchased to protect against
adverse risks, so the amount the carrier ultimately may be called
upon to pay is a defensible measure of the value of the policy.”)

In the present case, Plaintiff does not seek a declaratory
judgment that her policies are in full force and effect, as did
the plaintiffs in Hawkins, Bell and Wilbert. Nor does she seek
reformation of her policies, as was the object in Hawkins and
Pepper. Plaintiff herein seeks only the benefits due her, which
will require an interpretation of the grace-period provisions of
her policies.

Moreover, Plaintiff’s potential recovery is limited by the

terms of the policies, as well as by her own particular
circumstances. She sustained her injury on February 20, 2011, an
occurrence which may, or may not, fall into the policies’ 31-day
grace period. If it is eventually determined that the grace
period was in effect when Plaintiff was injured, the benefits for

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which she may be eligible (if, inter alia, her disability is
demonstrated) are capped by the terms of the policies. The
policies will not spring to life providing her with benefits for
an unlimited future. One policy would provide her with six
months of benefits at $1,600 a month; one would provide her with
24 months of benefits at $1,600 a month; and the accident policy
would provide her with $1,800 for six months. Subtracting the
amount of benefits that she has already received, the total
exposure for Defendant is $54,720. While it is true that
Plaintiff’s Complaint seeks compensatory and punitive damages,
those amounts are not quantifiable at this point in the
litigation.

The cases cited by Defendant are somewhat arcane, and the

distinctions between those cases and the case at the bar are
subtle. However, the Court’s necessary bias in favor of remand
tips the scale. The burden is on Defendant to demonstrate to a
reasonable probability that the amount in controversy would
exceed $75,000. In the face of Plaintiff’s sensible argument
about the limits of her recovery, Defendant has not sustained
that burden.

Conclusion

For the foregoing reasons, this Court grants Plaintiff’s

motion to remand this matter to the Rhode Island Superior Court

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sitting in Providence, for the counties of Providence and
Bristol.

It is so ordered.

/s/Ronald R. Lagueux
Ronald R. Lagueux
Senior United States District Judge
July 30 , 2013

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