Angeles v. Monumental Life Ins. Co., No. C 09-4119 JF, 2010 WL 2077154 (N.D. Cal. May 21, 2010).

In an uncommon case, a District Court in California (not surprising, since so many uncommon cases come out of California) remanded the action to state court given the counsels’ accusation against each other about misrepresenting the telephonic conversation in which the $100,000 settlement offer allegedly was made. (Editors’ Note: this case is not really a CAFA case, but it is another instance of CAFA decisions impacting non-CAFA cases. Since you are reading this blog you must be a CAFA geek, and as a CAFA geek, you celebrate when others cite to CAFA cases).

Teodorico Angeles filed this insurance bad faith action in state court against Monumental Life Insurance Company. Monumental issued two life insurance policies to Angeles and his wife, Dominga Angeles.  The combined benefits under the policies totaled $175,000.  After Dominga died in a car accident, Monumental refused to pay any benefits under the policies to Dominga’s daughter.  Monumental also failed to send Teodorio a claim form so that he could file a claim for benefits under the policies.  Teodorico then retained legal counsel on a contingency basis. When counsel filed a claim with Monumental, it approved the claim.  Because of his contingency fee agreement with counsel, Teodorico Angeles had to pay counsel a total of $44,224.79 out of the policy benefits.  

Angeles alleged that $44,224.79 in legal fees was incurred as a direct result of Monumental’s breach of contract when it initially refused Angeles’ claim and failed to send him a claim form. Angeles also claimed that he would owe counsel $17,697.92 for prosecuting the instant action in the event that Angeles recovered the full amount of $44,224.79.  Angeles next sought damages for emotional distress in an amount to be shown at trial.

Monumental removed the action to the federal court asserting that the damages claimed in the complaint–$61,922.70, and other damages arising from Monumental’s alleged bad faith conduct, exceeded $75,000.  Along with the notice of appeal, Monumental also filed an affidavit of its counsel, Henry Wang, stating that during a telephone call, Angeles’ counsel, David Lilienstein, told Mr. Wang that the amount in controversy exceeded $100,000 including a claim for emotional distress. 

Angeles sought to remand the action to state court under 28 U.S.C. §1332(a) asserting that the amount in controversy did not exceed $75,000. Mr. Wang then filed an additional declaration stating that he spoke with Mr. Lilienstein about the instant motion to remand, and pointed out that the motion was inconsistent with Mr. Lilienstein’s prior settlement demand of $100,000.

The Court discussed whether the legal certainty test or the preponderance of the evidence test in CAFA cases would be applicable. It cited the decision in Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699-700 (9th Cir. 2007) as authority that this issue was still open.  It did not answer the question itself. (Editors’ Note: See the CAFA Law Blog analysis of Guglielmo posted on November 6, 2007).

Then the court held that because it is unclear from the face of the complaint whether the total amount in controversy exceeds the jurisdictional minimum, the preponderance of the evidence standard applies.

The Court noted the legal proposition in Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002), that a plaintiff’s reasonable settlement demand constitutes evidence sufficient to establish the amount in controversy by a preponderance of the evidence.  But here, the evidence presented by Monumental that Mr. Lilienstein made a settlement demand in the amount of $100,000 during a telephonic conversation with Mr. Wang, was disputed.  Contrary to Monumental’s evidence, Mr. Lilienstein submitted his own declaration stating that during the telephone call he stated expressly that the amount in controversy was less than $75,000.  Mr. Lilienstein also submitted his letter to Mr. Wang accusing Mr. Wang of mischaracterizing his conversation in the notice of removal and stating that “Plaintiff is willing to settle this action for the amount of his claim, $44,224.79; plus attorneys’ fees, which are currently estimated at $17,697.92; for a total of $61,922.70.”

Mr. Wang responded accusing Mr. Lilienstein of misstating the substance of their discussion and reiterating his position that Mr. Lilienstein made a $100,000 settlement demand on that date.  

Finally, Mr. Lilienstein submitted Mr. Wang’s email offering to settle the matter for $10,000.

The competing declarations of counsel presented a classic “he said, he said” situation. Thus, given the conflict in the evidence, the Court concluded that it could not say that Monumental established by a preponderance of the evidence that the amount in controversy exceeded $75,000.