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YNR LLC Series O v. State Farm Lloyds, Inc.

United States District Court, W.D. Texas, El Paso Division

December 6, 2017

YNR LLC SERIES O, Plaintiff,



         On this day, the Court considered Plaintiff YNR LLC Series O's ("Plaintiff) "Memorandum of Law in Support of Motion to Remand" ("Motion"), filed in the above-captioned case on November 13, 2017. Therein, Plaintiff asks the Court to remand this case to state court for lack of jurisdiction. On November 20, 2017, Defendant State Farm Lloyds, Inc. ("Defendant") filed its "Brief in Opposition to Plaintiffs Motion to Remand" ("Response"). On November 27, 2017, Plaintiff filed its Reply. After due consideration, the Court denies Plaintiffs Motion for the following reasons.


          This case involves a rental policy dispute in which Plaintiff is asking for declaratory judgment. In February 2016, Plaintiff purchased a home in El Paso, Texas, to lease for residential use. Def. 's Notice Removal Ex. A-2, at 4. At the same time, Plaintiff purchased a rental policy from Defendant. Id. In October 2016, Plaintiff s then-tenant ("Tenant") informed Plaintiff of issues with the home's HVAC unit. Id. Plaintiff then initiated a claim with Defendant under the rental policy for damage to the home, and Defendant stated Tenant's claims were not covered under the rental policy. Id. at 4-10. On June 14, 2017, Tenant filed suit against Plaintiff and two other defendants for physical and mental harm resulting from the property damage in the HVAC unit. Def.' s Resp. Mot. Remand Ex. 1, at 3.

         On August 30, 2017, Plaintiff filed its Original Petition ("Petition") in the 243rd District Court in El Paso County. In its Petition, Plaintiff claims that it purchased the rental policy from Defendant and that it now "seeks a declaratory judgment holding [Defendant] has a duty to defend and indemnify [Plaintiff] under the terms of the Policy, up to the applicable policy limits." Def 's Notice Removal Ex. A-2, at 4, 10. Plaintiff seeks declaratory judgment, breach of contract, quantum meruit, unjust enrichment, equitable estoppel, promissory estoppel, breach of duty of good faith and fair dealing, and violations of the Texas Insurance Code. Id. at 10-16. Plaintiff does not specify how much it is requesting in damages and states the following:

59. The Plaintiff has suffered actual damages and/or economic damages by State Farm's above-described acts and omissions. The Plaintiffs damages include having to pay for the costs associated with testing the Property. Plaintiff was further damaged by State Farm's failure to defend and/or indemnify Plaintiff in regards to the former Tenant's claims. State Farm's unconscionable conduct also cause [sic] Plaintiff considerable mental anguish. The Plaintiff has been further damaged by the need to retain the undersigned law firm in order to pursue its claims against State Farm.
60. Plaintiff seeks the value of services and/or restitution for services provided to State Farm.

Id. at 16-17.

         On October 12, 2017, Defendant filed its Notice of Removal. Therein, it claims that this Court has jurisdiction based on diversity of citizenship ("diversity jurisdiction"). Def s. Notice Removal ¶ 7. On November 13, 2017, Plaintiff filed the instant Motion, which is fully briefed.


         "Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A district court has diversity jurisdiction when the amount in controversy exceeds $75, 000, and the claims are between citizens of different states. 28 U.S.C. § 1332(a). A defendant may remove a state court action to federal court based on diversity jurisdiction. 28 U.S.C. § 1441(b).

         A plaintiff may challenge an improper removal by filing a motion to remand under 28 U.S.C. § 1447. "On a motion to remand, the removing party bears the burden of showing that federal jurisdiction exists and that removal was proper." Barker v. Hercules Offshore, Inc., 713 F.3d 208, 212 (5th Cir. 2013) (internal quotation marks and brackets omitted). Further, "removal statutes are to be construed strictly against removal and for remand." Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir. 1996).


         Plaintiff argues that the amount in controversy in this case does not exceed $75, 000 and that, therefore, the Court does not have diversity jurisdiction over it. Pl.'s Mot. Admis. Pro Hac Vice Ex. 2, at 1-2 [hereinafter Pl.'s Mot. Remand]. Specifically, Plaintiff argues that the amount in controversy is measured by the value of the underlying claim and not the policy limit and that Defendant's potential liability under the rental policy does not reach the jurisdictional requirement for amount in controversy. Id. at 4-7. Defendant argues that Plaintiffs reliance on Hartford Insurance Group v. Lou-Con Inc.,293 F.3d 908 (5th Cir. 2002) (per curiam) undermines its argument for remand and that Plaintiff asks the Court to evaluate Tenant's claims based on other courts' previous decisions to determine the jurisdictional amount-which would be improper for this Court to do. ...

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