United States District Court, E.D. New York
ORDER FOR REMAND AND ATTORNEYS' FEES AND COSTS
PAMELA K. CHEN, District Judge.
Before the Court is Plaintiff's motion to remand this case to state court and to award her attorneys' fees and costs in connection with the prior removal of this case to federal court by Defendant. (Dkt. No. 8 ("Pl. Mtn."), at ECF 1.) The Court GRANTS the motions in full for the reasons set forth below.
1. Motion to Remand
In terms of Plaintiff's motion to remand, Defendant, as the party that removed this case to federal court, "bears the burden of demonstrating the propriety of removal." Cal. Pub. Emps.' Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 100 (2d Cir. 2004) (quoting Grimo v. Blue Cross/Blue Shield of Vt., 34 F.3d 148, 151 (2d Cir. 1994)), cert. denied, 543 U.S. 1080 (2005); see also United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994) (same).
According to Plaintiff, the removal of this case was improper, because "[t]he total damages sought by the complaint is far less than the jurisdictional requirement of $75, 000.00." (Pl. Mtn., at ECF 3); see 28 U.S.C. § 1332 (providing that diversity of citizenship requires, among other things, that "the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs"). Notwithstanding its "burden" to prove the contrary, Defendant concedes that "remand is warranted, " based on Plaintiff's concession that "[t]he total of all [her] damages is under $38, 000." (Dkt. No. 13 ("Def. Opp."), at 5; Pl. Mtn., at ECF 72.)
Accordingly, the Court grants Plaintiff's otherwise unopposed motion to remand.
2. Motion for Attorneys' Fees and Costs
Plaintiff's motion for attorneys' fees and costs relating to the improper removal of this case to federal court presents a closer question. The answer depends on whether Defendant had an "objectively reasonable basis" for the removal, despite the fact that it turned out to be baseless. Martin v. Franklin Capital Corp., 546 U.S. 132, 136, 141 (2005) (Roberts, C.J.) (interpreting 28 U.S.C. § 1447(c)). Per the Supreme Court, there is no automatic or presumptive right to such fees and costs. Id. at 136-37. Indeed, fee shifting, in the event of a remand, should only occur in "unusual circumstances, " to avoid discouraging a defendant from exercising its "right to remove." Id. at 140-41.
To assess Defendant's "basis" for removing this case to federal court, the Court considers the allegations in Plaintiff's complaint. The complaint alleges that Plaintiff paid Defendant $95 for a "Mariner Plus Endorsement" insurance policy that provided $5, 000 of coverage for sewer back-up damage; that such damage occurred on her property as a result of Hurricane Sandy; and that, because Defendant refused to honor the insurance policy, she incurred "at least" $27, 700 in costs to repair the property herself. (Pl. Mtn., at ECF 6-8.)
Based on these allegations, Plaintiff's complaint asserts (i) a breach of contract claim, for which Plaintiff seeks the $5, 000 "policy maximum on sewer back-up damage" and "consequential damages"; and (ii) a claim under New York General Business Law § 349 ("GBL § 349") based on the deceptive sale of the $95 insurance policy, for which Plaintiff seeks "treble and punitive damages" and "reasonable attorneys' and experts' fees and other expenses." ( Id. )
With respect to a contractual claim, beyond the coverage provided by an insurance policy that constitutes the basis of the alleged breach, New York law does not permit the recovery of consequential damages, which are "extra-contractual" in nature, owing to "an insurer's bad faith" in honoring the policy. Cont'l Info. Sys. Corp. v. Fed. Ins. Co., No. 02-CV-4168, 2003 WL 145561, at *3 (S.D.N.Y. Jan. 17, 2003) (rejecting, as defying the clear precedent of the New York Court of Appeals, the Appellate Division's ruling, in Acquista v. N.Y. Life Ins. Co., 730 N.Y.S.2d 272 (1st Dep't 2001), that plaintiffs may recover "consequential damages in excess of the policy-limits... for bad faith conduct").
Rather, New York law only permits such recovery, where consequential damages are "specifically contemplated by both parties at the time of contracting." Id. at *5 n.11 (citing Kenford Co., Inc. v. Cnty. of Erie, 73 N.Y.2d 312, 319 (1989)). Defendant, however, has maintained that these types of damages "were not covered under the insuring agreement and/or were excluded from coverage pursuant to unambiguous policy exclusions." (Def. Opp., at 2 n.1.)
Thus, even if Plaintiff claimed that she was entitled to consequential damages in the amount of her repair costs, Defendant should have known-and, indeed, appears to know-that Plaintiff's only potential recovery for the alleged breach of the insurance policy would be the coverage amount, i.e., $5, 000. ( See Def. Opp., at 2 (arguing that "plaintiff claims at least $27, 700 ...