American Zurich Insurance Company v. Jasso

United States District Court,

W.D. Texas, Midland-Odessa Division,

Midland–Odessa Division.

American Zurich Insurance Company, Plaintiff,

v.

Sandra Jasso, Beneficiary of Hilario Jasso, Deceased, Defendant.

MO–12–CV–007

|

Signed 03/26/2012

ORDER DENYING DEFENDANT’S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION, PURSUANT TO FRCP 12(b)(1)

ROBERT JUNLL, United States Drstrict Judge

*1 Before the Court is Defendant’s Motion to Dismiss for Lack of Subject Matter Jurisdiction, Pursuant to FRCP 12(b)(1) (Doc. No. 3), and Plaintiff s Response to Plea to Jurisdiction (Doc. No. 5). After consideration, the Court is of the opinion that the motion should be denied.

BACKGROUND

This complaint seeks review of a decision of the Appeals Panel of the Texas Department of Insurance, Division of Workers’ Compensation. Compl. ¶ 7, Doc. No. 1. The contested case hearing officer determined that the Deceased, Hilario Jasso, sustained a compensable injury on July 20, 2010, that resulted in his death, and that Sandra Jasso is entitled to death benefits. Id. at ¶ 8. Plaintiff contests the determinations made by the hearing officer, and pleads it would show this Court the hearing officer’s decision is erroneous and the Deceased was not in the course and scope of employment at the time of his motor vehicle accident on July 20, 2010. Id. at ¶ 9.

Plaintiff states its has exhausted its administrative remedies under the Texas Workers’ Compensation Act of 1989. Id. at ¶ 7. On December 19, 2011, the decision of the Appeals Panel and the decision of the benefit contested case hearing officer were filed with the Division of Hearings of the Texas Department of Insurance, Division of Workers’ Compensation, and the decisions became final and appealable. Id. Thereafter, on January 25, 2012, Plaintiff filed suit seeking a judgment setting aside the final decision of the Appeals Panel of the Texas Department of Insurance, Division of Workers’ Compensation. Defendant then filed its motion currently before the Court on February 27, 2012, seeking dismissal for lack of jurisdiction.

STANDARD OF REVIEW

Rule 12(b)(1) of the Federal Rules of Civil Procedure authorizes the filing of a motion to dismiss a case for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Federal courts are “courts of limited jurisdiction, having ‘only the authority endowed by the Constitution and that conferred by Congress.’ ” Halmekangas v. State Farm Fire and Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010) (citations omitted). A lawsuit must be dismissed for lack of subject matter jurisdiction “when the court lacks the statutory or constitutional power to adjudicate the case.” Home Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (internal quotation marks and citation omitted). The district court “has the power to dismiss for lack of subject matter jurisdiction on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.” Stiftung v. Plains Marketing, L.P., 603 F.3d 295, 297 (5th Cir. 2010) (quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)). The party seeking to litigate in federal court bears the burden of establishing subject matter jurisdiction. Ramming v. U.S., 281 F.3d 158,161 (5th Cir. 2001)(citing BarreraMontenegro v. U.S., 74 F.3d 657, 659 (5th Cir. 1996)).

DISCUSSION

*2 Defendant argues this Court lacks subject matter jurisdiction for the following reasons: 1) a district court may not entertain an appeal of the decision of the Appeals Panel of the Texas Workers’ Compensation Commission; and 2) the requisite jurisdictional amount in controversy is not met. In the alternative, Defendant asserts this Court should abstain from exercising jurisdiction.

A. The Court may entertain Plaintiff’s appeal of the decision of the Appeals Panel.

Defendant argues under the post–1989 Workers’ Compensation Act, the Supreme Court’s decision in Horton v. Liberty Mutual Insurance Company, 367 U.S. 348, 81 S.Ct. 1570 (1961), is no longer authoritative, and therefore, federal courts have no jurisdiction over appeals from the workers’ compensation administrative agency. The Court disagrees. As Plaintiff articulates, in Horton, the United States Supreme Court addressed continued federal diversity jurisdiction of Texas Workers’ Compensation claims, in light of 28 U.S.C. § 1445(c) which prohibits removal of a civil action from state court arising under the workers’ compensation laws of the state. 367 U.S. 348, 81 S.Ct. 1570. In finding that an insurance carrier may file a Texas Workers’ Compensation claim seeking to set aside an award from the state agency, the United States Supreme Court concluded:

Congress used language specifically barring removal of such cases from state to federal courts and at the same time left unchanged the old language which just as specifically permits civil suits to be filed in federal courts in cases where there are both diversity of citizenship and the prescribed jurisdictional amount. In this situation we must take the intent of Congress with regard to the filing of diversity cases in Federal District Courts to be that which its language clearly sets forth. Congress could very easily have used language to bar filing of workmen’s compensation suits by the insurer as well as removal of such suits, and it could easily do so still. We therefore hold that under the present law the District Court has jurisdiction to try this civil case between citizens of different States if the matter in controversy is in excess of $10,000.

Id. at 352, 81 S.Ct. at 1573. Thus, “[a]lthough it is unusual to find a worker’s compensation case filed in Federal Court because it is a state statutory action, the court does have subject matter jurisdiction so long as complete diversity and the requisite amount in controversy are established.” Rubell v. Gen. Dynamics Corp., 2011 WL 477175, *1 (N.D. Tex. Jan. 20, 2011) (citing Horton, 367 U.S. 348, 81 S.Ct. 1570).

Further, in 1989, after the legislature passed the new Workers’ Compensation Act, the Texas Supreme Court held the final decision of a Texas Workers’ Compensation Appeals Panel “may be appealed to the courts under what might best be described as modified de novo review.” Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 515 (Tex. 1995). “For all issues regarding compensability of the injury (for example, whether it occurred in the course and scope of employment) and eligibility for and the amount of income and death benefits, there is a right to trial by jury.” Id. (citing Tex. Lab. Code § 410.304). The party appealing the decision of the Appeals Panel bears the burden of proof by a preponderance of the evidence. Id. (citing Tex. Lab. Code § 410.303). “Issues other than compensability of the injury and eligibility for and the amount of income and death benefits are reviewed by the court under the substantial evidence rule.” Id. (citing Tex. Lab. Code § 410.255). Therefore, Defendant’s argument has no merit; Horton remains authoritative on this issue. Accordingly, this Court may entertain Plaintiff s appeal of the decision of the Appeals Panel.

B. The amount in controversy exceeds $75,000.

*3 Defendant argues because this case is an appeal of an agency finding and there is no pleading for monetary recovery, the Court lacks jurisdiction because there is no amount in controversy. The Plaintiff contends the amount in controversy is determined by the value of the consequences of the litigation and not the particular money sought.

Here, the Complaint alleges the Court has jurisdiction over this case based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). The burden of establishing subject matter jurisdiction in federal court rests on the party seeking to invoke it. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998). Here, the parties do not dispute diversity of citizenship. Rather, the dispute involves whether the amount in controversy exceeds $75,000.

In an action for declaratory or injunctive relief, like this case, the amount in controversy for purposes of establishing diversity jurisdiction under § 1332(a) “is the value of the right to be protected or the extent of the injury to be prevented.” Greenberg, 134 F.3d at 1252–53. “[U]nless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.” Id. at 1253. When a complaint does not allege a specific amount of damages, the party invoking federal jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional amount. Id. If it is not facially apparent from the complaint that the claims exceed the jurisdictional amount, the court may rely on “summary judgment-type” evidence to ascertain the amount in controversy. Id. To justify dismissal, “it must appear to a legal certainty that the claim is really for less than the jurisdictional amount.” Id. (citing St. Paul Mercury Indent. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)); see also Johns–Manville Sales Corp. v. Mitchell Enterprises, Inc., 417 F.2d 129 (5th Cir. 1969).

The Fifth Circuit has held “under the Texas workers’ compensation scheme, if the insurance company claims an amount supporting jurisdiction, ‘federal jurisdiction exists unless the insured denies the allegation that he will seek more than [the jurisdictional minimum] in the court action and makes an affirmative claim for compensation for a sum which does not exceed [the jurisdictional minimum].’ ” Hardware Mut. Cas. Co. v. McIntyre, 304 F.2d 566, 569–70 (5th Cir.), cert. denied, 371 U.S. 878, 83 S.Ct. 147, 9 L.Ed.2d 115 (1962). If the employee counterclaims for less than the minimum jurisdictional amount, “it then becomes clear to a legal and mathematical certainty that the amount in controversy is less than the jurisdictional requisite.” Id. at 570.¹

*4 Turning to the facts pled, Plaintiff insurance company alleges the amount in controversy is at least $125,000. Compl. at ¶ 3. Defendant does not counterclaim that she will seek less than $75,000; rather, she argues there is no amount in controversy because this is an appeal of the decision of the Appeals Panel. Def.’s Mot. Dismiss ¶ 8, Doc. No. 3. This argument lacks merit. Again, in an action for declaratory or injunctive relief, like this case, the amount in controversy “is the value of the right to be protected or the extent of the injury to be prevented.” Greenberg, 134 F.3d at 1252–53. Should the Court affirm the decision of the Appeals Panel of entitlement to death benefits, then Plaintiff would be liable in an amount exceeding $75,000.² Therefore, it does not appear to a legal certainty that the amount in controversy is less than $75,000.

C. Abstention is not appropriate in this case.

Lastly, Defendant argues the Court should abstain from exercising jurisdiction in this case under the Burford Abstention Doctrine. The Fifth Circuit has acknowledged that federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress. See Colorado River Water Conservation Dist. v. U.S., 424 U.S. 800, 821, 96 S.Ct. 1236, 1248, 47 L.Ed.2d 483 (1976) (“[F]ederal courts have a ‘virtually unflagging obligation ... to exercise the jurisdiction given them’ ”). This duty is not, however, absolute. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716, 116 S.Ct. 1712, 1720 (1996). It is generally agreed that there are at least four specific situations in which federal courts may properly abstain from deciding cases brought before them.³ Hurst v. Regis Low Ltd., 878 F.Supp. 981,983 (S.D. Tex. 1995). The form of abstention relevant to the facts before the Court is Burford abstention, which is summarized as follows:

Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar”; or (2) where the “exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”

See New Orleans Public Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361, 109 S.Ct. 2506, 2514–15, 105 L.Ed.2d 298 (1989) (citations omitted). Although “Burford is concerned with protecting complex state administrative processes from undue federal interference, it does not require abstention whenever there exists such a process, or even in all cases where there is a ‘potential for conflict’ with state regulatory law or policy.” Id. at 362, 109 S.Ct. at 2515.

*5 Defendant, in this case, invokes the doctrine of Burford abstention by arguing that the Court should not exercise jurisdiction where there is adequate state law and administrative remedies. Defendant argues Plaintiff is attempting to appeal what is a heavily regulated state law matter. Plaintiff contends abstention is improper because this Court’s decision regarding Defendant’s entitlement to death benefits will not disrupt Texas’ policies or the workers’ compensation system.

In St. Paul Insurance Company v. Trejo, the Fifth Circuit examined Burford abstention in the context of Texas Workers’ Compensation cases:

The concerns governing the Burford abstention doctrine are not present in the instant case. St. Paul’s lawsuit does not involve a state administrative proceeding. Further, it does not seek to interfere with Texas’ worker’s compensation system. St. Paul’s declaratory judgment action simply seeks interpretation of the First Settlement in light of a Texas statute. Thus, unlike the situations in which Burford-type abstention is appropriate, federal jurisdiction in this case would neither affect the state’s system of reviewing worker’s compensation awards nor be disruptive of the state’s policies respecting worker’s compensation. Hence, the district court erred in relying on the Burford doctrine to dismiss this case.

410.301(a) (Vernon 2006) (“Judicial review of a final decision of the appeals panel regarding compensability or eligibility for or the amount of income or death benefits shall be conducted as provided by this subchapter.”) (emphasis added). Specifically, Plaintiff seeks review of the determination of the Appeals Panel that Decedent was in the course and scope of employment at the time of the accident, and therefore, entitled to benefits. The Texas Supreme Court has held issues concerning compensability (whether an injury occurred within the scope of employment) and eligibility for death benefits are subject to modified de novo review. Garcia, 893 S.W.2d at 515; ESIS, Inc. v. Johnson, 908 S.W.2d 554, 55860 (Tex. App.-Fort Worth 1995, writ denied); Tex. Prop. and Cas. Guar. Ass’n v. Nat’l Am., 208 S.W.3d 523, 539 (Tex. App.-Austin 2006, pet. denied) (holding that whether injured workers were acting within the scope of employment of a covered employer is a question of compensability). Thus, unlike the situations in which Burford-type abstention is appropriate, federal jurisdiction in this case would neither affect the state’s system of reviewing worker’s compensation awards nor be disruptive of the state’s policies respecting worker’s compensation.

CONCLUSION

For the reasons stated above, this Court finds that it has jurisdiction and abstention is not appropriate. Therefore, the Court denies Defendant’s motion. Accordingly,

IT IS ORDERED that Defendant’s Motion to Dismiss for Lack of Subject Matter Jurisdiction, Pursuant to FRCP 12(b)(1) (Doc. No. 3) is hereby DENIED.

SIGNED this 26 Day of March, 2012.