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Bay Area Surgical Management, LLC v. Principal Life Insurance Company

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION


August 24, 2012

BAY AREA SURGICAL MANAGEMENT, LLC, PLAINTIFF,
v.
PRINCIPAL LIFE INSURANCE COMPANY, DEFENDANT.

The opinion of the court was delivered by: Edward J. Davila United States District Judge

United States District Court For the Northern District of California

ORDER DENYING MOTION TO REMAND

(Re: Docket No. 15)

Pending before the court is Plaintiff Bay Area Surgical Management, LLC's ("Bay Area")

Motion to Remand. For the reasons discussed below, Bay Area's motion to remand is DENIED.

I. BACKGROUND

On February 3, 2012, Bay Area filed a complaint in the Superior Court of the State of 21 California for the County of Santa Clara against Defendant Principal Life Insurance Company 22

("Principal") alleging breach of contract, violation of the California Business & Professions Code 23

17200 et seq., negligent misrepresentation, promissory estoppel, and equitable estoppel. See Notice 24 of Removal Ex. A ("Compl."), Docket No. 1. According to the Complaint, Bay Area is a citizen of 25

California. Id. ¶ 12. The Complaint does not allege Principal's citizenship, but the Notice of 26

Removal states that Principal is a citizen of Iowa. See Notice of Removal at 4:20-27, Docket No. 1. 27

The Complaint states that it seeks $124,208.27 in damages. Compl. ¶ 32, at 11:20-21.

Principal removed the action to this court on March 7, 2012 based on federal question 2 jurisdiction and diversity jurisdiction. Id. at 2-4. On April 2, 2012, Bay Area filed the First 3 Amended Complaint ("FAC"). See Docket No. 14. According to the FAC, Bay Area seeks $74,500 4 in damages. Id.¶ 34, 36, at 10:20-21. 5

On, April 4, 2012, Bay Area filed this motion to remand the case to state court, arguing the 6 federal court lacks both federal question and diversity jurisdiction. See Docket No. 15. On July 10, 7 L.R. 7-1(b). 9 had subject matter jurisdiction over the case. 28 U.S.C. § 1441(a). There are two bases for federal 12 subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331, and (2) 13 diversity jurisdiction under 28 U.S.C. § 1332. If it appears at any time before final judgment that 14 the federal court lacks subject matter jurisdiction, the federal court must remand the action to state 15 court. 28 U.S.C. § 1447(c). The party seeking removal bears the burden of establishing federal 16 jurisdiction. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 17 2009). "The removal statute is strictly construed, and any doubt about the right of removal requires 18 resolution in favor of remand." Moore--Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th 19

III. DISCUSSION

The Court has diversity jurisdiction in all civil actions where the amount in controversy 22 exceeds $75,000 and is between citizens of different States. 28 U.S.C. § 1332(a). Bay Area is a 23 citizen of California, and Principal is a citizen of Iowa. Consequently, it is undisputed that the 24 parties are diverse. 25

Area admits that its original complaint stated a prayer for damages in the amount of $124,208.27,*fn1

FAC ¶ 34.

2012, the court found the motion was suitable for determination without oral argument. See Civil 8

II. LEGAL STANDARD

A suit may be removed from state court to federal court only if the federal court would have

Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)).

Bay Area argues that the amount in controversy no longer exceeds $75,000. Specifically, Bay but after removal Bay Area filed the FAC, in which Bay Area chooses to only seek $74,500. Bay 2

Area argues that this amended complaint reduces the amount in controversy and deprives the court 3 of diversity jurisdiction.*fn2

When removal is based on diversity jurisdiction, "events occurring subsequent to removal 5 which reduce the amount recoverable, whether beyond the plaintiff's control or the result of his 6 volition, do not oust the district court's jurisdiction once it has attached." St. Paul Mercury

Indemnity Co. v. Red Cab Co., 303 U.S. 283, 293 (1938). "In the law of diversity jurisdiction . . . 8 jurisdiction is not destroyed by subsequent events that reduce the amount recoverable below the 9 statutory limit." In re Scovis, 249 F.3d 975, 986 (9th Cir. 2001); see also Barcume v. Cortes, 24 F. 10

App'x 754, 756 (9th Cir. 2001) ("Moreover, under St. Paul, Barcume's later decision to pursue a 11 single claim for less than $75,000 did not divest the district court of jurisdiction."). Accordingly,

the court may not consider Bay Area's FAC in determining whether more than $75,000 is in 13 controversy. 14

Here, the action was properly removed on the basis of diversity jurisdiction. The parties are 15 citizens of different states, which Bay Area does not dispute, and the Complaint stated on its face 16 that it sought damages in the amount of $124,208.27. Compl. ¶ 32, at 11:20-21. Bay Area cannot 17 deprive the court of jurisdiction by amending its pleadings to reduce the claim below $75,000. See 18 19 20 21

GRANTED. Docket Nos. 33, 34. These cases, however, are inapposite to this motion. See Bay Area Surgical Management, LLC v. Blue Cross Shield of Minnesota, Inc., No. 12-CV-0848-LHK, 23

2012 WL 2919388, at *10 (N.D. Cal. July 17, 2012) (finding no diversity jurisdiction where the original complaint sought a limited monetary award of $49,522.14); Bay Area Surgical 24

Management, LLC. v. United Healthcare Ins. Co., No. C 12--01421 SI, 2012 WL 3235999, at *5 (N.D.Cal. Aug. 6, 2012) (remanding action that was removed on the basis of federal question 25 jurisdiction and finding no diversity jurisdiction where the amended complaint seeks damages of $74,500 but including no discussion of the damages sought in the original, removed complaint). In 26 fact, Judge Koh's order in Bay Area Surgical Management, LLC v. Blue Cross Shield of Minnesota, Inc. supports this court's analysis, determining the amount in controversy based on the 27 allegations in the original complaint and finding that "the Court may not consider Bay Area's FAC in determining whether more than $75,000 is in controversy." 2012 WL 2919388, at *9 (citing St. 28

id. at 289. Thus, the court has subject matter jurisdiction over this action based on diversity.*fn3

Paul Mercury Indemnity Co., 303 U.S. at 293).

Accordingly,

IT IS HEREBY ORDERED that Bay Area's motion to remand is DENIED. 4


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