Grow v. Transamerica Life Ins. Co.

HERCILIA H. GROW, Plaintiff, v. TRANSAMERICA LIFE INSURANCE COMPANY, Defendant.

CASE NO. 1:19-CV-00630-KD-C

CASE NO. 02-CV-2018-902419.00

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

March 6, 2020

REMOVED FROM CIRCUIT COURT OF MOBILE COUNTY, ALABAMA

REPORT AND RECOMMENDATION

This matter is before the undersigned, pursuant to 28 U.S.C. § 636(b)(3), on the Plaintiff's Motion to Remand this matter to the Circuit Court of Mobile County, Alabama, (Doc. 3) and Supplement and Amendment to Remand for An Award of Attorney's Fees (Doc. 4); and the Response in Opposition to Motion to Remand filed by Defendant, Transamerica Life Insurance Company ("Transamerica") (Doc. 8). After careful consideration of the pleadings and the briefs of the parties, along with the comments of counsel presented during oral argument, it is determined, for the reasons discussed herein, that Plaintiff's Motion to Remand (Doc. 3) should be GRANTED and further that Plaintiff's Supplement and Amendment to Remand for An Award of Attorney's Fees (Doc. 4) should be GRANTED IN PART AND DENIED IN PART.

I. Background

This action basically concerns a contractual dispute over insurance coverage. It is the second time that defendant Transamerica has removed this matter into this Court. (See Grow v. Transamerica, Civil Action No. 1:18-cv-00455-KD-C). The Plaintiff filed her Complaint (Doc. 1-1, PageID. 21-30) in the Circuit Court of Mobile County, Alabama, on September 21, 2018, asserting claims for breach of contract (Count One), declaratory judgment (Count Two), money had and received (Count Three) and unjust enrichment (Count Four). All four claims arise out of an alleged breach of a policy of long-term care insurance issued to Plaintiff by Defendant Transamerica in 1999. Transamerica timely removed the action on October 22, 2018 pursuant to diversity jurisdiction under 28 U.S.C. §§ 1332, 1441, and 1446.

In her Complaint, Plaintiff alleges that she was 84 years old in 2016 and had made premium payments on a specific policy with Transamerica for nearly 20 years. The Plaintiff claims that after she had fallen several times, she was admitted in August of 2016 to an assisted living facility, Atria Regency, in Mobile, Alabama, and subsequently, she made a claim for alternative care facility benefits under her policy with Transamerica. This dispute arose because Transamerica denied that Plaintiff was entitled to benefits under the policy.

The Complaint seeks "compensatory damages including but not limited to all Alternative Care Facility Benefits afforded to the Plaintiff under the policy" (Count One), "compensatory damages, including but not limited to all premium payments paid by the Plaintiff under the Policy" (Counts Three and Four). In Count Two, Plaintiff seeks a declaratory judgment under specific Alabama statues, asking the court to "declare that the Plaintiff is entitled to Alternative Care Facility Benefits under the Policy, and declare that Plaintiff is entitled to an award for her reasonable attorneys' fees ... ." (Doc. 1-1, PageID. 26-29).

Upon review of the information submitted in support of this Court's jurisdiction after the first removal, Chief Judge DuBose ruled in February 2019 that the removing party had not met its burden of showing by a preponderance of evidence that the amount in this controversy exceeded the jurisdictional amount required for removal in a diversity action. (Doc. 3-4; PageID. 372). She ordered the action remanded to the Circuit Court of Mobile County, Alabama.

Defendant Transamerica filed its second Notice of Removal in this Court on September 11, 2019, asserting that this Court has federal question jurisdiction under 28 U.S.C. §§ 1331, 1441, and 1446 and diversity jurisdiction over this case pursuant to 28 U.S.C. §§ 1332, 1441 and 1446. (Doc. 1.) The Defendant contends that diversity jurisdiction exists because after consideration of all the information relevant to establishing the amount in controversy, some of which did not come to light until just recently, it is now more likely than not that the amount in controversy is in excess of $75,000. (Id. at 1-3.). With respect to the new position that federal question jurisdiction also exists, Defendant explains that it only became aware that this case necessarily turns on a question of federal law on August 22, 2019, during the deposition of Chastity Walker, the corporate representative of Transamerica.

As was the case in the first attempt at removal, there is no dispute that the parties are diverse citizens of different states. The disputed issue with respect to diversity jurisdiction remains the amount in controversy.

With regard to the amount in controversy, the Defendant argues that the Plaintiff's contract with Transamerica includes a "Home and Community Care Benefit" that pays benefits of $40 per day for an "Alternative Care Facility" (assisted living facility), provided that certain criteria are met. Transamerica agreed to "pay the actual charges incurred, not to exceed the Maximum Daily Benefit, while [Mrs. Grow was] confined in an Alternative Care Facility. ... To qualify for Alternative Care Facility Benefits, [she has to show that it was necessary that she] be confined in an Alternative Care Facility and [is] receiving care because [she is] a Chronically Ill Individual." (Doc. 1-1, PageID. 52). The pertinent definition of a "Chronically Ill Individual" is "A person who has been certified by a Licensed Health Care Practitioner as: ... requiring substantial supervision to protect such person from threats to health and safety due to severe CognitiveImpairment. The term "severe Cognitive Impairment" is not defined, however, and it is argued by the Plaintiff that this term in the policy is ambiguous.

Under these circumstances, Defendant calculates that if the Plaintiff were successful on her claim, the Plaintiff has accrued unpaid Alternative Care Facility daily benefits of approximately $43,840.00. (Doc. 1 at 2, PageID. 2). Defendant also calculates that the Plaintiff would be eligible for the "Waiver of Premium" benefit, which at $248.48 per month, would equal approximately $8,945.48 in past premiums to be refunded. (Id.). The Plaintiff does not dispute that the Alternative Care Facility and Waiver of Premium benefits which have arguably accrued as of the date of the Notice of Removal should be considered in determining the amount in controversy. However, these past benefits and premiums to be refunded, in total, do not serve to meet the $75,000 threshold of 28 U.S.C. § 1332(a).

Even so, Transamerica argues that additional facts discovered after the action was remanded, including knowledge that the case now involves a substantial federal question, creates a situation where removal would be timely if filed within thirty (30) days after receipt of papers from which it was first able to ascertain that the case is or has become removable. 28 U.S.C. § 1446(b)(3). The developments that prompted the second removal are described as:

• Rejection of multiple settlement offers and service of intentionally vague discovery responses, indicating Plaintiff's intention to seek more than $75,000;

• Statements on the record that Plaintiff is still evaluating (on the eve of the 1-year removal deadline) whether it will add additional claims in the lawsuit;

• Admission that the combined accrued benefits and waiver of premiums sought by Plaintiff now exceed $52,000 dollars and continue to accrue; and

• Statement on the record revealing that Plaintiff's claim turns on interpretation of a federal tax provision.

(Doc. 1 at 2-3, PaigeID. 2-3).

The "other papers" upon which Defendant relies to start the thirty-day clock for purposes of filing this second removal petition are described as an email from Plaintiff's counsel rejecting Defendant's offer to settle the dispute for $75,000 received on August 12, 2019, the deposition transcript containing Plaintiff's refusal to respond to the renewed settlement offer, the testimony of Chastity Walker taken by Plaintiff's counsel on August 22, 2019, and the transcript of a state court hearing dated August 23, 2019. (Doc. 1-7, PageID. 262-298).

The settlement offer that was rejected by the Plaintiff is contained in an email dated August 5, 2019 (Doc. 1-2, PageID. 248):

I have received authority from Transamerica to make a counteroffer of $75,000 to settle this case. This offer is conditioned on cancellation of Mrs. Grow's policy, and dismissal with prejudice of this lawsuit. It also is conditioned upon Mrs. Grow signing a settlement agreement (to be drafted by me) including confidentiality, non-admission of liability, and disclaimer of tax advice.

(Id.) Plaintiff's counsel responded to this offer by email dated August 12, 2019:

Plaintiff is willing [to] settle her claim for past due benefits and past waiver of premiums for $35,000. Further, as part of this settlement, Transamerica shall immediately begin paying, in accordance with Mrs. Grow's policy, her daily benefit of $40 - and all future premiums shall be waived. No policy release shall be given - and Mrs. Grow reserves the right to apply for other benefits under her policy.

(Doc. 1-3, PageID. 250). It is assumed that Transamerica rejected Plaintiff's counter demand, but any specific response is not in the record. This assumption is based on the email sent by Defendant's counsel the very next day, August 13, 2019, requesting that the Plaintiff stipulate that the amount in controversy did not exceed $75,000. (Doc. 1-4, PageID. 252). Defendant's request for a stipulation went unanswered, either in writing or during the deposition of Ms. Walker. Defendant's August 19, 2019 email renewed the same settlement counteroffer and again requested a stipulation as to the total damages beingsought by Mrs. Grow. The offer was left open until the convening of Ms. Walker's deposition scheduled for August 22, 2019. (Doc. 1-5, PageID. 257).

During the deposition of Ms. Walker, Plainti...