Court: District Court, C.D. California; September 7, 2012; Federal District Court
Plaintiff Nancy Amparo Cain initiated a lawsuit against Defendant Hartford Life and Accident Insurance Company in Los Angeles Superior Court on May 22, 2012, claiming breach of contract and breach of the implied covenant of good faith and fair dealing related to long-term disability insurance benefits. The lawsuit was removed to federal court based on diversity jurisdiction. Cain filed a Motion to remand the case to state court, arguing that Hartford failed to meet the "amount in controversy" requirement. The court, after hearing arguments on September 4, 2012, denied the Motion for Remand.
The case centers on Cain's claim for disability benefits under a group policy issued by Hartford to her former employer, the State Bar of California. The policy provides benefits equal to 60% of Cain's pre-disability earnings after a 90-day elimination period, continuing until age 65, provided she meets the disability definition. Cain, a former paralegal, claims her health decline prevented her from performing her job duties, leading to her disability claim, which Hartford initially approved on January 4, 2011. However, Hartford denied continued benefits on January 10, 2012.
Cain's First Cause of Action alleges bad faith against Hartford for various reasons, including unreasonably delaying and withholding payments, misrepresenting policy facts, failing to investigate her claim promptly, and not attempting in good faith to settle her claim. Her Second Cause of Action claims breach of contract for failure to pay benefits. Cain seeks damages for breach of contract and tort, including unpaid benefits, prejudgment interest, emotional distress damages, and attorneys’ fees.
Cain alleges that Hartford's actions were malicious, oppressive, and fraudulent, justifying punitive damages. Federal law allows for the removal of civil actions from state courts to federal courts when there is original jurisdiction, specifically under diversity jurisdiction, which requires parties to be diverse and the amount in controversy to exceed $75,000. The amount in controversy is assessed based on the claimed damages or property value, with the defendant needing to demonstrate by a preponderance of the evidence that this threshold is met. Courts assume the complaint's allegations are true and consider the potential jury verdict for the plaintiff.
The court confirms jurisdiction under Section 1332, noting complete diversity: Cain is a California citizen, while Hartford is a Connecticut corporation with its principal business in Connecticut. Cain contends Hartford has not proven the amount in controversy, claiming any valuation is speculative. However, Hartford must only show it is likely that Cain's recovery will exceed $75,000 based on her claims.
For breach of contract, Cain seeks $3,760.80 monthly for the period from January 11, 2012, through June 21, 2012, totaling approximately $20,101 in damages, which is undisputed. For the bad faith claim, her future benefits could significantly exceed the $75,000 threshold. Hartford demonstrates that ongoing benefits until age 65 would amount to approximately $448,776.26 undiscounted or $369,765.65 when discounted at 4%, thus satisfying the jurisdictional requirement when combined with her breach of contract damages.
Cain seeks to recover attorneys' fees related to her bad faith claim against Hartford, which could be awarded if she prevails. The court will consider the total attorneys' fees incurred throughout the litigation when assessing the amount in controversy, determining that even a small fee award could surpass the jurisdictional minimum of $75,000. Hartford has presented evidence of attorney fee awards and indicated that Cain's primary attorney charged $425 per hour, suggesting that her claims could exceed the jurisdictional limit.
Additionally, Cain is pursuing emotional distress damages, which the court acknowledges could be substantial based on jury verdicts from similar cases. If awarded, these damages could also exceed the $75,000 threshold. Regarding punitive damages, the court deems it unnecessary to address Hartford's argument as Cain's claims for contractual and bad faith damages already exceed the jurisdictional requirement. Consequently, the court denies Cain's Motion to Remand, confirming that the criteria for diversity jurisdiction have been met.
