Smith v. Nationwide Property and Cas. Ins. Co., —-F.3d—- (6th Cir. 2007), 2007 WL 2819875.
Although a beautiful woman receiving a sponge bath in a hospital by a female nurse caused George Costanza to lose in The Contest, in this case from the U.S. 6th Circuit, the plaintiff remains the Master of his Domain.
Royce Smith filed suit against Nationwide in 2004 after it failed to properly assess his vehicle or pay post-repair loss of value. In 2006 he wised up, amended his complaint, and brought a class action. Nationwide, being the savvy insurer it is, removed to federal court claiming CAFA jurisdiction. What better to settle the jurisdiction than a contest, Seinfeld style.
Smith argued that he was King of the Castle because CAFA did not apply and even if it did Nationwide could not prove the proper amount in controversy. Nationwide, in an attempt to be Queen of the Land argued the amended complaint did not relate back and the potential judgment exceeded $5 million when punitive damages were added.
Ultimately, the court determined that Smith was indeed Master of his Domain. After considering its options, the Court first decided that commencement of an action, for amendment purposes, is determined using state law. Under Tennessee law, Smith’s amended complaint naming a putative class did not relate back because of the individual nature of each contract with Nationwide, thus the amended complaint commenced, for CAFA purposes, after February 18, 2005.
The court next ruled that plaintiff, as master of his complaint, can plead to avoid federal jurisdiction. Nevertheless, a defendant can still remove under CAFA if he can show the actual damages will exceed CAFA’s $5,000,000.00 requirement. Here, Nationwide agreed that compensatory damages would not exceed $5,000,000.00, but argued punitive damages would help eclipse the minimum amount required for CAFA. The court, much like Kramer in “The Contest,” was not impressed. First, Tennessee generally doesn’t allow punitive damages for breach of contract. Second, in the Complaint, Smith (and the putative class members) disclaim any punitive damages. Thus, the Court found that Nationwide could not meet its burden of proving minimum amount in controversy and Smith was indeed master of his domain.