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July 31, 2000


The opinion of the court was delivered by: Breyer, District Judge.


On July 10, 2000, this Court issued an Order to Show Cause why this matter should not be remanded for lack of subject matter jurisdiction. Both plaintiff and defendant responded to the Court's order, and the Court heard oral argument on the matter on January 28, 2000. For the reasons set forth below, the Court concludes that it lacks subject matter jurisdiction over this matter, and that it must therefore remand the case to California Superior Court.


In November 1998, plaintiff Melissa Surber purchased a 1994 Hyundai Excel for $3,800. On November 19, 1998, plaintiff purchased an automobile insurance policy from Reliance for a premium of $1,856. That insurance policy is the subject of this litigation.

On September 20, 1999, plaintiff was involved in an automobile accident which damaged her car. She presented a claim to Reliance and submitted the car to Reliance's agents for a repair estimate and appraisal. Following the appraisal, Reliance concluded that the Hyundai was a "total loss" because the cost of repair would exceed the value of the car. Specifically, Reliance's appraiser prepared a report explaining that the pre-accident damage to the car's exterior would cost $2121.40 to repair and that the damage caused by the accident would cost $3,121.12 to repair. Because the total value of the car fell between $4,100.00 and $2,630.00, the report recommended that the car should not be repaired at all. In light of this report, Reliance's claims adjuster contacted plaintiff and informed her that Reliance did not plan to approve her claim. After plaintiff expressed her dissatisfaction with this resolution, Reliance offered her $500 to settle the claim. When plaintiff refused Reliance's offer, Reliance demanded that she submit to a secondary appraisal process mandated under the insurance contract. Because she could not afford the cost of the contractual appraisal process, plaintiff refused to participate.

Instead, plaintiff filed the instant action on February 3, 2000 in Alameda County Superior Court. Plaintiffs complaint alleges three causes of action: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) violation of California Business and Professions Code § 17200, et seq. Reliance removed the action to this Court on April 21, 2000, invoking federal diversity jurisdiction.


This Court may assert subject matter jurisdiction over a case when the amount in controversy exceeds $75,000 and the parties are citizens of different states. See 28 U.S.C. § 1332. There is a strong presumption against the exercise of removal jurisdiction. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). As the removing party invoking the Court's diversity jurisdiction, defendant bears the burden of establishing by a preponderance of the evidence that the amount in controversy exceeds $75,000. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). If it is unclear from the complaint what amount of damages plaintiff seeks, "the defendant bears the burden of actually proving the facts to support jurisdiction, including the jurisdictional amount." Gaus, 980 F.2d at 566. The Court may raise the issue of subject matter jurisdiction sua sponte. See Galt G/S v. Hapag-Lloyd AG, 60 F.3d 1370, 1373 (9th Cir. 1995). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566.

In this case, plaintiffs complaint was initially filed in state court and alleges only state law claims. The complaint states that the total damages "exceed[] $10,000." In its Notice of Removal, defendant contends that this Court has subject matter jurisdiction over the action because the plaintiff is a citizen of California and the defendant is not a citizen of California. Defendant also contends that the amount in controversy exceeds $75,000.00.

Defendant's Notice of Removal fails to allege facts that sufficiently demonstrate the requisite jurisdictional amount in this case. However, in its response to the Court's July 10 order, defendant raises a number of arguments to support its assertion that the amount-in-controversy requirement is met. As explained below, each of these arguments fails.

A. Plaintiff's Statement of Damages

Defendant first argues that the amount in controversy exceeds $75,000 because plaintiff served Reliance with a "statement of damages" on March 31, 2000, claiming that plaintiff was seeking general damages of $210,040 and punitive damages of $1,000,000. Relying on that statement, defendant argues that the amount in controversy clearly exceeds the jurisdictional minimum.

Although plaintiffs "statement of damages" is not part of the complaint or the state court file, it does carry more weight than a typical settlement demand or an informal correspondence between the parties. Pursuant to California Code of Civil Procedure sections 425.10 and 425.11, a plaintiff in a personal injury or wrongful death action may not include a specific damages prayer in her complaint, but, upon request by the defendant, she must provide a detailed statement of damages within 15 days. CAL. CIV. PROC. CODE §§ 425.10, 425.11. The purpose of section 425.11 is to give the defendant specific notice of damages sought by the plaintiff in a document that is separate from both the complaint and existing informal mechanisms such as settlement conference statements. See Debbie S. v. Ray, 16 Cal.App.4th 193, 198, 19 Cal.Rptr.2d 814 (1993). Accordingly, although a statement of damages pursuant to section 425.11 is not filed with the court as part of the complaint, it is normally viewed as a serious estimate of the damages in a given case.

In this case, plaintiffs complaint alleges only that the total amount of damages "exceeds $10,000." Plaintiff's statement of damages alleges damages with far more specificity: $200,000 in pain, suffering and inconvenience, $5,200 in lost earnings, $4,740 in property damage, and $100 ...

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