     11-961
     Bindrum v. American Home Assurance Company, Inc.


                           UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                       SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1             At a stated term of the United States Court of Appeals
 2        for the Second Circuit, held at the Daniel Patrick Moynihan
 3        United States Courthouse, 500 Pearl Street, in the City of
 4        New York, on the 29th day of September, two thousand eleven.
 5
 6        PRESENT: DENNIS JACOBS,
 7                               Chief Judge,
 8                 PETER W. HALL,
 9                 GERARD E. LYNCH,
10                               Circuit Judges.
11
12        - - - - - - - - - - - - - - - - - - - -X
13       JEREMIAH BINDRUM,
14
15                    Plaintiff-Appellant,
16
17                    -v.-                                              11-961
18
19       AMERICAN HOME ASSURANCE COMPANY, INC.,
20       AMERICAN INTERNATIONAL GROUP, INC.,
21       AIG SPECIALTY CLAIMS SERVICES, INC.,
22       CHARTIS INSURANCE COMPANY,
23
24                    Defendants-Appellees,
25
26
27       - - - - - - - - - - - - - - - - - - - -X
28

                                                    1
 1   FOR APPELLANT:    Christopher J. McVeigh
 2                     McVeigh Skiff
 3                     Burlington, VT
 4
 5
 6   FOR APPELLEES:    Mark F. Werle (John A. Serafino, on the
 7                     brief)
 8                     Ryan, Smith & Carbine, Ltd.
 9                     Rutland, VT
10
11
12
13        Appeal from a judgment of the United States District
14   Court for the District of Vermont (Reiss, C.J.).
15
16        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
17   AND DECREED that the district court’s judgment is AFFIRMED.
18
19        Jeremiah Bindrum appeals the district court’s judgment
20   dismissing his complaint sua sponte for lack of subject
21   matter jurisdiction. We assume the parties’ familiarity
22   with the underlying facts, the procedural history, and the
23   issues presented for review.
24
25        We review de novo a district court’s sua sponte
26   dismissal of a complaint for lack of subject matter
27   jurisdiction. See Digitel, Inc. v. MCI Worldcom, Inc., 239
28   F.3d 187, 190 (2d Cir. 2001). To invoke the diversity
29   jurisdiction of the federal district courts, the amount in
30   controversy must exceed $75,000 in value. 28 U.S.C. §
31   1332(a). As the party seeking to invoke this court’s
32   diversity jurisdiction, plaintiff “has the burden of proving
33   that it appears to a reasonable probability that the claim
34   is in excess of the statutory jurisdictional amount.”
35   Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781,
36   784 (2d Cir. 1994) (internal quotation marks omitted).
37   “This burden is hardly onerous, however, for we recognize ‘a
38   rebuttable presumption that the face of the complaint is a
39   good faith representation of the actual amount in
40   controversy.’” Scherer v. Equitable Life Assurance Soc’y of
41   U.S., 347 F.3d 394, 397 (2d Cir. 2003) (quoting Wolde-Meskel
42   v. Vocational Instruction Project Cmty. Servs., Inc., 166
43   F.3d 59, 63 (2d Cir. 1999)). To overcome this presumption,
44   the party challenging jurisdiction must demonstrate “‘to a

                                  2
 1   legal certainty’ that the amount recoverable does not meet
 2   the jurisdictional threshold.” Id. (quoting St. Paul
 3   Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89
 4   (1938)).
 5
 6   [1] Plaintiff argues that the defendants delayed submitting
 7   their Medicare Set-Aside (“MSA”) proposal to the Centers for
 8   Medicare and Medicaid Services (“CMS”) as required under the
 9   terms of the agreement between plaintiff and the defendants
10   settling plaintiff’s workers’ compensation claims. As a
11   result of such delay, plaintiff contends, he was forced to
12   draw monthly advances on the $225,000 settlement amount and
13   use the funds to finance medical expenses that would
14   otherwise have been reimbursable by Medicare. But, as the
15   district court concluded, the maximum amount of damages
16   which plaintiff could have suffered as a result of the
17   defendants’ failure to timely submit their MSA proposal is
18   $49,000, which represents the aggregate amount of advances
19   taken by plaintiff. See Bindrum v. Am. Home Assurance Co.,
20   No. 5:10-CV-116, 2011 WL 474408, at *4 (D. Vt. Feb. 4,
21   2011). This is $26,000 shy of the jurisdictional threshold.
22
23   [2] Plaintiff next argues that the defendants
24   underestimated his expected medical costs and undervalued
25   the MSA in their initial proposal to CMS. But plaintiff’s
26   claim that the defendants did not adequately fund the MSA
27   cannot possibly lead to recovery. Under the settlement
28   agreement, the defendants were only obligated to fund the
29   MSA up to the amount required for CMS approval, which is
30   precisely what they did. Although CMS rejected the
31   defendants’ initial MSA estimate as inadequate, it then
32   conducted its own independent analysis and determined the
33   appropriate set-aside amount. Therefore, the amount which
34   the defendants ultimately funded was the amount required by
35   CMS, rather than defendants’ initial estimate. This is all
36   that the settlement agreement required. In addition,
37   because (1) the MSA funds are applied only to medical
38   expenses that would otherwise be reimbursable by Medicare,
39   (2) Medicare will cover any additional reimbursable expenses
40   once the MSA fund has been exhausted, and (3) any excess
41   amounts in the MSA account are remitted to the defendants
42   under the settlement agreement, the amount of the set-aside
43   has no bearing on plaintiff’s ability to obtain
44   reimbursement for his work-injury-related medical expenses.

                                  3
 1   Any inadequacy in the set-aside would therefore harm only
 2   Medicare, not plaintiff. As such, plaintiff cannot
 3   establish that he was damaged by any alleged undervaluation
 4   of the MSA. See Smith v. Country Vill. Int’l, Inc., 944
 5   A.2d 240, 243 (Vt. 2007) (“To prove breach of contract,
 6   plaintiff must show damages.”).
 7
 8   [3] Plaintiff argues that the district court erred by not
 9   incorporating the possibility of a punitive damages award
10   into its amount in controversy calculations. Potentially
11   recoverable punitive damages can be considered in
12   determining whether the jurisdictional amount in controversy
13   has been satisfied if punitive damages are allowed under the
14   controlling law. A.F.A. Tours, Inc. v. Whitchurch, 937 F.2d
15   82, 87 (2d Cir. 1991). However, claims for punitive damages
16   merit “closer scrutiny” when calculating the amount in
17   controversy. Zahn v. Int’l Paper Co., 469 F.2d 1033, 1034
18   n.1 (2d Cir. 1972). Under Vermont law, punitive damages may
19   only be awarded against a corporation if the plaintiff
20   establishes “actual malice” and if the challenged act is an
21   act “of the governing officers of the corporation or one
22   lawfully exercising their authority, or, if the act relied
23   upon is that of a servant or agent of the corporation, it
24   must be clearly shown that the governing officers either
25   directed the act, participated in it, or subsequently
26   ratified it.” Shortle v. Cent. Vt. Pub. Serv. Corp., 399
27   A.2d 517, 518 (Vt. 1979). Because the complaint contains no
28   allegation of such involvement by any officers of the
29   defendant insurance companies, the punitive damages claim
30   cannot survive the “closer scrutiny” to which we subject it,
31   and does not merit inclusion in the amount in controversy
32   calculation.
33
34   [4] The complaint also seeks attorney’s fees. The district
35   court held that attorney’s fees could not be considered as
36   part of the amount in controversy, and plaintiff has not
37   contested this holding. See, e.g., Norton v. Sam’s Club,
38   145 F.3d 114, 117 (2d Cir. 1998) (“Issues not sufficiently
39   argued in the briefs are considered waived and normally will
40   not be addressed on appeal”). Moreover, Vermont follows the
41   American Rule that “parties must bear their own attorneys’
42   fees absent a statutory or contractual exception,” and the
43   standard for departing from that rule is “demanding.”
44   Concord Gen. Mut. Ins. Co. v. Woods, 824 A.2d 572, 579 (Vt.

                                  4
 1   2003) (internal quotation marks omitted). Plaintiff has not
 2   presented any argument to suggest that he would be entitled
 3   to attorney’s fees as a matter of right, and therefore we do
 4   not consider them in determining whether the jurisdictional
 5   threshold has been met. See In re Ciprofloxacin
 6   Hydrochloride Antitrust Litig., 166 F. Supp. 2d 740, 755
 7   (E.D.N.Y. 2001); see also Givens v. W.T. Grant Co., 457 F.2d
 8   612, 614 (2d Cir.), vacated on other grounds, 409 U.S. 56
 9   (1972).
10
11        We have considered plaintiff’s remaining arguments and
12   find them to be without merit. For the foregoing reasons,
13   the judgment of the district court is hereby AFFIRMED.
14
15
16
17                              FOR THE COURT:
18                              CATHERINE O’HAGAN WOLFE, CLERK
19
20




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