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Palmer v. State Farm Mutual Automobile Ins. Co.

United States District Court, D. New Mexico

June 27, 2019

FREEMAN J. PALMER, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, STATE FARM FIRE AND CASUALTY COMPANY, and STATE FARM GENERAL INSURANCE COMPANY Defendants.

          MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND GRANTING DEFENDANTS' MOTION TO STAY

         THIS MATTER comes before the Court upon Plaintiff's Motion to Remand, filed April 9, 2019 (Doc. 8), and Defendants' Motion to Stay, filed April 9, 2019 (Doc. 10). Having reviewed the parties' pleadings and the applicable law, the Court finds that Plaintiff's Motion to Remand is not well-taken and, therefore, is DENIED. However, the Court finds that Defendants' Motion to Stay is well-taken and, therefore, is GRANTED.

         BACKGROUND

         This putative class action arises out of a dispute over “underinsured motorist coverage” in an automobile policy. NMSA § 66-5-301 (“‘underinsured motorist' means an operator of a motor vehicle with respect to the ownership, maintenance or use of which the sum of the limits of liability under all bodily injury liability insurance applicable at the time of the accident is less than the limits of liability under the insured's uninsured motorist coverage.”). Plaintiff alleges that underinsured motorist coverage provided by Defendants is illusory or misleading, as the insured will receive either no coverage or substantially reduced coverage once the statutory offset above is applied. Plaintiff seeks to certify the following class:

All persons (and their heirs, executors, administrators, successors, and assigns) from whom State Farm collected a premium for underinsured motorist coverage on a policy that was issued or renewed in New Mexico by State Farm and that purported to provide underinsured motorist coverage, but which effectively provides no underinsured motorist coverage (“UIM”) and/or misleading UIM coverage, because of the statutory offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, 704 P.2d 1092 (1985).

         This putative class action competes with another putative class action filed against Defendants, which is also before the undersigned, Dana Schwartz v. State Farm Mutual Automobile Insurance Company et al., 1:18-cv-00328 WJ/SCY. In this case, Plaintiff purchased uninsured and underinsured motorist coverage in the minimum amount available at $25, 0000 per person and $50, 000 per occurrence. Defendants collected a premium of $70.88 for the uninsured and underinsured motorist coverage for a six-month period beginning in 2014 and ending June 2015. Plaintiff alleges that Defendants misled him and other putative class members, and they did not understand that “if they purchase minimal limits underinsured motorist coverage, they are vanishingly unlikely to receive any underinsured motorist coverage at all, or that if they purchase above-minimal limits… they would only be able to receive limited underinsured motorist coverage in excess of the amounts received from the tortfeasor, losing the full benefit of their above-minimal limits coverage because of the Schmick offset.” Doc. 2, ¶ 60. See generally Schmick v. State Farm Mut. Auto. Ins. Co., 103 N.M. 216, 704 P.2d 1092 (N.M. 1985) (explaining statutory offset in NMSA § 66-5-301).

         There are several other putative class actions in this district asserting similar claims against various insurers. In one of them, Crutcher v. Liberty Mut. Ins. Co. et al, 1:18-cv-412 (JCH/KBM), United States District Judge Judith Herrera certified, and the New Mexico Supreme Court accepted, the following question:

Under N.M. Stat. Ann. § 66-5-301, is underinsured motorist coverage on a policy that offers only minimum UM/UIM limits of $25, 000 per person/$50, 000 per accident illusory for an insured who sustains more than $25, 000 in damages caused by a minimally insured tortfeasor because of the offset recognized in Schmick v. State Farm Mutual Automobile Insurance Company, and, if so, may insurers charge a premium for that non-accessible underinsured motorist coverage?

         (the “certified question”). An answer to this certified question may resolve substantial issues in this case.

         DISCUSSION

         I. Motion to Remand.

         The Class Action Fairness Act (“CAFA”) “gives federal courts jurisdiction over certain class actions, defined in § 1332(d)(1), if the class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million.” Dart Cherokee Basin Operating Co. v. Owens, __ U.S. __, 135 S.Ct. 547, 552, 190 L.Ed.2d 495 (2014). Plaintiff argues that this case should be remanded because Defendants failed to carry their evidentiary burden as to the amount in controversy. The Court disagrees.

         The amount in controversy is “an estimate of the amount that will be put at issue in the course of the litigation.” McPhail v. Deere & Co., 529 F.3d 947, 958 (10th Cir. 2008). “[F]ederal jurisdiction is proper if a defendant proves jurisdictional facts by a preponderance of the evidence such that the amount in controversy may exceed $5, 000, 000. Once a defendant meets this burden, remand is appropriate only if the plaintiff can establish that it is legally impossible to recover more than $5, 000, 000.” Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242, 1247 (10th Cir. 2012). Defendants need only show that the damages are “at issue-that is, that such damages could be awarded.” McDaniel v. Fifth Third Bank, 568 Fed.Appx. 729, 731 (11th Cir. 2014) (emphasis in original); see also McPhail, 529 F.3d at 955 (defendants must establish facts that made it “possible” that the jurisdictional amount was in play). “The amount in controversy is not proof of the amount the plaintiff will recover. Rather, it is an estimate of the amount that will be put at issue in the course of the litigation.” McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008)

         A. Plaintiff's procedural objections are overruled.

         Initially, Plaintiff argues that this case should be remanded because Defendants failed to “prove” jurisdiction in their notice of removal or provide evidence that the amount in controversy was more than $5, 000, 000. However, since Dart Cherokee, Defendants need not provide proof of the amount in controversy in the removal notice. Rather, “a defendant's notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by § 1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant's allegation.” Dart Cherokee Basin Operating ...


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