UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 99-60277
_______________________
ALICE ADDO,
Plaintiff-Appellant,
versus
GLOBE LIFE AND ACCIDENT INSURANCE COMPANY,
Defendant-Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
_________________________________________________________________
October 16, 2000
Before JONES, DUHÉ, and WIENER, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The determinative question before us is whether an
insurance company timely removed a case from state court over a
$5,000 life insurance policy when it received a letter, after the
case was filed, indicating that plaintiff would seek damages
exceeding the federal jurisdictional minimum. Finding that the
removal petition was untimely, we must vacate a summary judgment
for the insurer and remand with instructions to remand to state
court.
Plaintiff-appellant Alice Addo submitted a claim as the
beneficiary under her mother’s life insurance policy to defendant-
appellee Globe Life and Accident Insurance Company (“Globe”). Upon
investigation, Globe discovered that Addo’s mother misrepresented
a pre-existing condition on her policy application. Accordingly,
Globe denied the claim, rescinded the policy, and refunded Addo the
premiums that her mother paid for the policy.
Addo brought suit in state court, requesting $5,000 in
actual damages -- the face amount of the policy -- and punitive
damages “not to exceed $65,000.” A month later, she served a
demand letter on Globe, offering to settle the suit for an amount
in excess of $75,000.1 Several months passed before Globe served
interrogatories on Addo asking her to confirm that the amount in
controversy would not exceed $75,000. When she refused to confirm,
Globe removed this case to federal court and Addo moved to remand.
The district court denied Addo’s motion and later granted
Globe’s motion for summary judgment. Addo has appealed.
1
Whether the letter is properly characterized as a “demand
letter” or “statement letter” may be disputed, but is irrelevant to
our legal analysis. The letter states:
[To Globe]:
In our telephone conversation of August
21, 1997, it is my understanding that you
offered $5,000 to settle the above referenced
case. We counter offer with $250,000. This
offer will stand until Friday, September 5,
1997.
Very truly yours,
[Plaintiff’s counsel]
2
DISCUSSION
Globe removed on the basis of diversity jurisdiction.
The complaint stated an insufficient amount in controversy to
support diversity jurisdiction See 28 U.S.C. § 1332 (giving
district courts original jurisdiction over matters where there is
diversity of citizenship and where “the matter in controversy
exceeds the sum or value of $75,000"). However, under 28 U.S.C.
§ 1446(b):
If the case stated by the initial pleading is
not removable, a notice of removal may be
filed within thirty days after receipt by the
defendant . . . of a copy of an amended
pleading, motion order or other paper from
which it may first be ascertained that the
case is one which is or has become removable .
. .
Id. (emphasis added). The issue before us is what “other paper”
first gave Globe notice that the amount in controversy exceeded
$75,000 and whether Globe removed within thirty days after
receiving that paper. Addo argues that the demand letter was an
“other paper” and that Globe’s removal was untimely. Globe
counters that Addo has “waived” any removal argument based on the
letter, and alternatively, that it timely removed after receiving
the interrogatory answers. We need not reach Globe’s alternative
contention.
As an initial matter, Globe’s argument that this issue is
not properly before us lacks merit. First, although Addo did not
3
mention the remand ruling in her notice of appeal, the remand
ruling was encompassed within the final judgment she appealed such
that we may consider it on appeal. See Trust Co. of Louisiana v.
N.N.P. Inc., 104 F.3d 1478, 1485 (5th Cir. 1997) (an appeal from a
final judgment sufficiently preserves all prior orders intertwined
with the final judgment.).
Second, Addo has not “waived” her argument that the
letter was an “other paper” which gave Globe notice of the amount
in controversy. Globe concedes that Addo issued the letter after
filing her complaint, but it argues that she waived any remand
argument based on this post-complaint demand letter because she has
continuously, and erroneously, based her remand arguments here and
below on a pre-complaint demand letter. We read the record
differently. Despite some ambiguity in Addo’s trial court
briefing, neither the trial court nor this court has been
misinformed as to the timing of Addo’s letter or the legal
consequences for removal that followed from it.
Turning to the merits of the remand argument, an issue
this court reviews de novo, Rodriguez v. Sabatino, 120 F.3d 589,
591 (5th Cir. 1997), we have not previously determined whether a
post-complaint letter concerning settlement terms may constitute an
“other paper” under § 1446(b). See Chapman v. Powermatic, Inc.,
969 F.2d 160, 164-65 & 164 n.8 (5th Cir. 1992) (declining to reach
4
this question, but concluding for other reasons that a pre-
complaint demand letter does not constitute “other paper”).
However, we have held that similar documents can be “other paper,”
see S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir.
1996) (a deposition answer constituted an “other paper”), and the
majority of lower courts to have considered this issue hold that a
post-complaint demand letter is “other paper” under § 1446(b), see
Stramel v. GE Capital Small Business Finance Corp., 955 F. Supp.
65, 67 (E.D. Tex. 1997); Sunburst Bank v. Summit Acceptance Corp.,
878 F. Supp. 77, 82 (S.D. Miss. 1995); Rodgers v. Northwestern Mut.
Life Ins. Co., 952 F. Supp. 325, 327 (W.D. Va. 1997); cf. 14C
Charles Alan Wright, et al., Federal Practice and Procedure § 3732
(1998) (“[C]orrespondence between the parties and their attorneys
or between the attorneys usually [is] accepted as [an] ‘other
paper’ source[] that initiate[s] a new thirty-day period of
removability.”). Additionally, the SWS case implicitly rejected
the most commonly advanced argument against treating a letter
between counsel as an “other paper,” namely, that a document must
actually be filed in the state court proceedings to be an “other
paper.” See S.W.S. Erectors, 72 F.3d at 494. Moreover, the letter
in this case complies with our rule that “other paper” must result
from the voluntary act of a plaintiff which gives the defendant
notice of the changed circumstances which now support federal
5
jurisdiction. See id. Holding that a post-complaint letter, which
is not plainly a sham,2 may be “other paper” under § 1446(b) is
consistent with the purpose of the removal statute to encourage
prompt resort to federal court when a defendant first learns that
the plaintiff’s demand exceeds the federal jurisdictional limit.
Further, this holding discourages disingenuous pleading by
plaintiffs in state court to avoid removal.
Accordingly, Addo’s post-complaint demand letter was an
“other paper” under § 1446(b) which gave Globe notice that the case
was removable. Because Globe did not, however, remove within
thirty days of receiving that letter, Globe’s subsequent removal
was improper, and Addo’s remand motion should have been granted.
Thus, we VACATE the district court’s judgment and REMAND with
instructions to remand the case to state court.
2
Globe has not argued that Addo’s demand letter was a sham. Although
the amount of punitive damages requested was high compared to the policy amount,
Mississippi law permits punitive damages for bad-faith refusal to pay a policy,
and if a punitive recovery was warranted, it could well have exceeded the federal
jurisdictional limit.
6
Wiener, Circuit Judge, DISSENTING.
By failing to consider the full context in which the August,
1997 letter from the plaintiff’s lawyer (the “Addo letter”) was
sent to Globe’s agent, and then by failing to recognize that letter
for what it really is, the majority opinion reaches the wrong legal
result, albeit under the right law. In the process, that opinion
both encourages disingenuous pleading rather than discouraging it
and sets a trap for the unwary. This is why I respectfully and
reluctantly —— but strenuously —— dissent.
I.
Context
In testing the Addo letter to see if it qualifies as an “other
paper” for purposes of opening § 1446(b)’s 30-day removal window,
we must examine that letter in the framework of all the
circumstances that existed at the time it was sent by Addo’s lawyer
and received by the defendant. Only by so doing can we properly
determine whether Addo’s lawsuit —— which was not removable when
filed —— “is one which is or has become removable”3 by virtue of
that letter.
Addo’s state court petition, filed less than a month before
the Addo letter was mailed, is artfully crafted to eschew
removability: In addition to demanding the $5000 proceeds of the
3
28 U.S.C. § 1446(b).
Globe policy, Addo asked for interest, punitive damages, attorneys’
fees and costs, not to exceed $65,000, thereby expressly capping
her aggregate recovery at $70,000. Within weeks after suit was
filed (and apparently before it was placed in the hands of defense
counsel), Globe’s agent phoned Addo’s lawyer and proposed to settle
the case by paying Addo $5000 in consideration for her dismissal of
the lawsuit. A few days after that phone call, the 2-sentence Addo
letter (reproduced in full in footnote 1 of the majority opinion)
rejected Globe’s $5000 settlement offer.
With settlement rejected, Addo’s lawyer prosecuted her case in
state court until, approximately six months later, defense counsel
endeavored to establish once and for all whether Addo genuinely
capped her claim at $70,000 or, despite her carefully crafted
pleadings, intended to seek more. This exercise took the form of
Globe’s written interrogatories, Addo’s answers to which were so
equivocal and noncommittal that they served as grounds for Globe’s
removing the case to federal court on the basis of diversity.
Given Mississippi’s open-ended law on punitive damages, Addo’s
answers to Globe’s interrogatories were sufficient —— at least in
the eyes of the district judge —— to meet the $75,000
jurisdictional amount for diversity purposes. Indeed, it was only
after this 1998 removal that Addo’s lawyer resurrected his August,
1997 letter and proffered it as a § 1446(b) “other paper,”
purportedly sufficient to have opened the 30-day removal window,
8
after the closing of which Globe’s removal efforts would be forever
barred. These are the circumstances that bracket the sending of
the Addo letter and provide the complete framework for testing it
as one that first established removability for purposes of §
1446(b).
II.
Proper Characterization of Addo Letter
The first sentence of the majority opinion describes the Addo
letter as one “indicating that plaintiff would seek damages
exceeding the federal jurisdictional minimum.” That, I submit, is
not an objective description of the letter; rather, it states the
majority’s legal conclusion of this entire appeal, the one with
which I take issue today. Next, in its second paragraph, the
majority opinion labels the Addo letter a “demand letter,” again a
legal conclusion with which I beg to differ. And, finally, in that
same sentence, the Addo letter is described as “offering to settle
a suit for an amount in excess of $75,000.” If, but only if, we
are willing to read the second and final sentence of the two-
sentence Addo letter “in a vacuum,” while wearing blinders, can we
say it is an offer to settle. I contend, however, that as a matter
of law the Addo letter can neither be read nor analyzed that way.
When read in pari materia with all the facts and circumstances of
the case —— as it must be —— the Addo letter is absolutely nothing
more than an emphatic rejection of Globe’s settlement offer. The
9
first sentence of the letter reiterates that offer; the second
sentence of the letter rejects that offer. It’s as simple as that.
To support its contrary conclusions —— that the Addo letter
was “a demand letter” or that it constituted a bona fide offer to
settle the suit for more than $75,000, thereby making it an
indicator of the plaintiff’s intent to seek damages exceeding the
federal jurisdictional minimum —— the majority relies on its
preliminary finding that the Addo letter is not a “sham.” Although
I agree wholeheartedly that the Addo letter is not a “sham” for its
obviously-intended purpose of rejecting Globe’s $5000 settlement
offer out of hand, I am convinced beyond peradventure that the Addo
letter is a “sham” of a settlement counteroffer. And, unlike most
shams, Addo’s sham counteroffer was not intended to fool or mislead
anyone!
Obviously irked by what he presumably perceived to be an
insultingly-low settlement offer from Globe, Addo’s lawyer
responded in kind, not with a simple, bland rejection but with one
couched in terms of an equally insulting, exaggerated
“counteroffer.” Stated differently, the second sentence of the
Addo letter is no counteroffer at all; it can only have been
intended to drive home the adamancy of her rejection by phrasing it
as a sarcastic and grossly hyperbolized “sham” counteroffer: a
quarter of a million dollars to settle a suit on a $5000 life
insurance claim, plus whatever punitive damages Addo might obtain
10
from a state court jury of her friends and neighbors? Sure!
I acknowledge that reasonable jurists can differ, but I can
discern no justification for characterizing the Addo letter as
anything other than an unconditional rejection of Globe’s proposal
to settle, despite its being dressed for dramatic effect in the
raiment of a faux settlement counteroffer. A counterproposal to
settle for fifty times the amount of the principal demand and more
than three-and-one-half times the capped amount —— even including
punitive damages —— is just not a demand or a settlement proposal,
much less a realistic one.
As proof of this pudding, one need only imagine how
vociferously Addo’s lawyer would be insisting on this very
interpretation had the shoe been on the other foot, i.e., had Globe
timely seized on the Addo letter as an “other paper” and removed
this case to federal court on the basis of the $250,000 figure in
that letter! I repeat, as a rejection of a settlement offer, the
Addo letter is certainly not a sham; as a settlement counteroffer
vel non, however, I cannot reasonably classify it as anything but
a sham. Therein lies the crucial difference between the majority
and me for purposes of § 1446(b).
The slight amount of jurisprudence on the subject confirms
that not every “other paper” exchanged between the parties, or
between counsel, or between counsel opposite and a party, will
start the running of § 1446(b)’s thirty-day removal clock. For
11
example, in Sfirakis v. Allstate Insurance Co.,4 a plaintiff’s
letter demanding $300,000 in damages when only $20,000 had been
sought in the pleadings was held to be “nothing more than posturing
by counsel seeking to stake out a position for settlement
purposes.”5 The court determined that the letter could not
“override the unamended verified complaint that unequivocally
states that the damages did not exceed $20,000.”6 I cannot read
Addo’s letter as even “stak[ing] out a position for settlement
purposes.” The Addo letter is the antithesis of a genuine
invitation to negotiate, much less her lawyer’s true evaluation of
his client’s maximum potential recovery. The district court
obviously reached the same conclusion, one that is certainly not
clearly erroneous.
Similarly, in Golden v. Dodge-Markham Co., Inc.,7 the court
rejected a true demand letter as nevertheless insufficient to
justify a finding of the jurisdictional amount requirement because
the court was “not persuaded . . . that Plaintiff’s settlement
demand was an honest assessment of damages.”8 In the same vein,
4
1991 WL 147482 (E.D. Pa.).
5
Id. at *3.
6
Id.
7
1 F.Supp.2d 1360 (M.D. Fla. 1998).
8
Id. at 1364.
12
the district court in Standridge v. Wal-Mart Stores, Inc.,9 held
that a $75,000 settlement letter, admittedly sent two weeks before
the filing of the complaint, was “nothing more than posturing by
plaintiff’s counsel for settlement purposes and cannot be
considered a reliable indicator of the damages plaintiff [was]
seeking.”10
That line of cases illustrates the appropriate analysis for a
case like this one, rejecting puffery and posturing and crediting
only those writings that are seriously meant to be a plaintiff’s
realistic assessment of the value of his case. To repeat, the Addo
letter was unquestionably intended by its author to serve one
purpose only —— to reject emphatically a low-ball settlement offer.
That, I submit, is the reason why he phrased his response as a sham
settlement counteroffer, underscoring the adamancy of that
rejection. Under the circumstances that existed at the time the
letter was confected, mailed, and received, it had to have been
obvious to all concerned —— especially counsel for Addo —— that
reference to the preposterous sum of $250,000 was neither a serious
settlement counteroffer nor a realistic appraisal of the judgment
value of his client’s lawsuit. Again, no one would have insisted
9
945 F.Supp. 252 (N.D. Ga. 1996).
10
Id. at 256.
13
on my characterization of the Addo letter more zealously than its
author had Globe tried to use it as grounds for removal.
III.
Future Effects
Finally, I must respectfully disagree with the prediction of
today’s panel majority that its holding will discourage
disingenuous pleading by those state court plaintiffs who seek to
avoid removal. On the contrary, what could be more encouraging of
such disingenuous pleading than the majority’s letting Addo get
away with her artfully drafted state court petition filed a few
weeks before her sham letter, and, months later, her craftily
evasive responses to Globe’s interrogatories, which sought only to
determine, one way or the other, whether or not Addo was seeking to
recover $75,000 or more.
Besides providing a blueprint for the drafting of such
duplicitous pleadings, today’s majority opinion also sets a trap
for the unwary. From now on, every scrap of paper sent by a
plaintiff or his lawyer to a defendant or his lawyer that,
irrespective of content or context, happens to mention any dollar
figure in excess of $75,000, can and likely shall be held by a
federal court to have started the running of § 1446(b)’s thirty-day
removal clock. Henceforth, every plaintiff will be free to amend
his state court complaint with impunity —— and with only the sky as
the limit —— as long as he does so more than thirty days after
14
having transmitted some “other paper” that happens to mention a
figure of at least $75,000.
As yet another consequence of what we do today, ultra-cautious
defense lawyers will undoubtedly file notices of removal virtually
every time any writing even obliquely referencing a figure of
$75,000 or more is received from the plaintiff or plaintiff’s
counsel. This will create a veritable ping pong game of removal
and remand between state and federal courts until remand eventually
“sticks.” Even more troubling is the realization that less jittery
lawyers —— whether plaintiff’s or defendant’s —— who are “merely”
diligent practitioners, will awaken one day to find that (1) the
plaintiff has inadvertently subjected himself to removal, or (2)
the defendant (like Globe today) has just as inadvertently lost
forever any opportunity to remove the case, solely because, more
than thirty days earlier, the plaintiff sent the defendant some
seemingly innocuous letter or fax or e-mail.
IV.
Conclusion
I remain convinced that, for purposes of opening § 1446(b)’s
thirty-day removal window, we must harken to the message of the
cases like those cited above and require the presence of a
realistic figure in a bona fide writing that demonstrates, in
context, a true and functional nexus between the dollars mentioned
and the content, context, and circumstances under which such “other
15
paper” is transmitted and received. If this would cause our trial
courts to test “other papers” for objective reasonableness and
functional nexus, so be it: They conduct such tests under other
circumstances on virtually a daily basis.
I certainly agree with the panel majority that removal should
be sought promptly when removability can reasonably be ascertained.
Removal should not be either triggered or forever precluded,
however, by any and every “other paper” that happens to mention a
high dollar figure; only by those writings that can be read
sensibly as first indicating removability. I respectfully dissent.
16