United States District Court, Eastern District of Michigan; Case #14-cv-11901
Hon. Mark A. Goldsmith
Official Michigan Reporter Citation: Not Applicable; Opinion Not Available 
STATUTORY INDEXING:
Allowable Expenses for Medical Treatment [§3107(1)(a)]
Work Loss Benefits: Nature of the Benefit [§3107(1)(b)]
TOPICAL INDEXING:
Federal Jurisdiction and Removal of PIP Claims
CASE SUMMARY:
In this written Opinion involving federal diversity jurisdiction, Federal Judge Mark Goldsmith remanded the action back to state circuit court because the amount in controversy requirement that is needed to establish diversity jurisdiction was not met.
Plaintiff was injured in an accident and claimed he had a no-fault policy with defendant, Auto-Owners Insurance. Plaintiff alleged that Auto-Owners refused to pay benefits and he filed this action in Washtenaw County Circuit Court, asking for a judgment against Auto-Owners for the total amount owing, plus statutory interest and attorney fees. Plaintiff alleged the amount in controversy exceeded $25,000. Auto-Owners removed the case to federal court, asserting the amount-in-controversy requirement was satisfied because, although Auto-Owners denied liability, the claim involved $75,000 or more. Auto-Owners then filed a third-party complaint against State Farm, claiming that either plaintiff or his father had a no-fault policy with State Farm and that State Farm was the higher priority insurer. Auto-Owners sought a declaratory judgment to this effect, asserting the amount it had already paid, although allegedly improperly, was more than $400,000. Plaintiff then filed a motion to remand the case back to state court, claiming the federal amount-in-controversy requirement for jurisdiction had not been satisfied.
Sending the case back to state court, Judge Goldsmith said:
“Plaintiff argues that the amount-in-controversy requirement is not met because the only outstanding medical bills and unpaid wage loss at the time of removal totaled $24,562, consisting of $12,662 in medical bills and $11,900 in lost wages. … Plaintiff claims that any amounts Defendant already paid – i.e., the over $400,000 alleged by Defendant as includable – are not considered in the amount-in-controversy calculation because they ‘have been paid.’”
In reaching this conclusion, Judge Goldsmith rejected Auto-Owners various arguments:
“First, Defendant argues that Plaintiff claims he has suffered serious injuries. … Defendant suggests the Court should include the value of any potential future medical bills and lost wages in calculating the amount in controversy. … Second, Defendant argues that Plaintiff’s claim that only $24,562 is in controversy is belied by his Complaint, which specifically states that over $25,000 is in controversy. … Third, Defendant claims that the amount in controversy must exceed $75,000 because Plaintiff refused to stipulate that his recovery in this case may not exceed that amount. … Finally, Defendant notes that it disputes whether it should have paid the earlier benefits (totaling over $400,000), and it has filed a third-party claim to recover this amount. … Defendant thus argues that these payments also should be included in determining the amount in controversy.”
Regarding the claim that plaintiff would likely incur additional medical bills and lost wages, the judge said these were “irrelevant” to determining diversity jurisdiction. Relying on case precedent from the 6th U.S. Circuit Court of Appeals and other federal courts, the judge said:
“Although the Sixth Circuit did not expound upon its reasoning …, various other federal courts have explained the reason for excluding future potential benefits from the amount-in-controversy determination when the validity of the policy is not in dispute.”
Judge Goldsmith noted that Auto-Owners asserted it was, indeed, challenging the validity of the insurance policy because it believed the amount it had already paid ($400,000) should have been covered by State Farm. To this argument, the judge said:
“But Defendant does not claim that the underlying policy at issue in Plaintiff’s claim is unenforceable or should be rescinded. … In other words, Defendant challenges the extent of its obligations under the policy, not whether the policy itself is valid. Therefore, … the Court cannot consider potential benefits not yet incurred at the time of removal in determining the amount in controversy. … Nor is the Court persuaded by Defendant’s argument that the amount in controversy cannot be $24,562, as alleged by Plaintiff, because Plaintiff’s complaint expressly states that the amount in controversy exceeds $25,000. … It is possible that Plaintiff’s total damages over the course of the litigation – including potential medical bills that arise before trial and/or continued lost wages that Defendant may continue to refuse to pay – ultimately may make the value of this case greater than $25,000. But that is entirely speculative and not based on costs incurred at the time of removal.”
Moreover, Judge Goldsmith noted that plaintiff might agree that “some future, not-yet-incurred costs are not reimbursable,” which could bring the amount in controversy to more than $25,000, but below $75,000. In addition, the judge said that plaintiff “may not incur any additional costs” and State Farm “may agree to cover some or all of any potential post-removal costs ….”
Further, Judge Goldsmith said he was not persuaded by the argument that plaintiff’s refusal to stipulate to setting recovery below $75,000 gave the federal court jurisdiction. The judge noted evidence showed that plaintiff’s unpaid bills and lost wages totaled less than $75,000 and that Auto-Owners offered no evidence to dispute this:
“In short, Defendant fails to explain how Plaintiff’s incurred costs at the time of removal cross the $75,000 threshold – with or without consideration of attorney fees and/or statutory interest. Therefore, Defendant has not met its burden of establishing diversity jurisdiction.”
Regarding Auto-Owner’s third-party claim, Judge Goldsmith concluded:
“This argument fails. Defendant has provided no authority suggesting that the Court should consider a third-party complaint, filed after removal, when determining the amount if controversy for the plaintiff’s original, removed action. … Therefore, defendant’s dispute with State Farm over Defendant’s past payment of benefits is irrelevant to whether the amount-in-controversy requirement is satisfied with respect to Plaintiff’s claim for relief.”
