Free Response to Order to Show Cause - District Court of California - California

Case 3:08-cv-00686-BTM-CAB

Document 8

Filed 06/05/2008

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ROBERT K. SCOTT # 67466 DAVID SCOTT MOHNEY #124426 LAW OFFICES OF ROBERT K. SCOTT 7700 Irvine Center Drive, Suite 605 Irvine CA 92618 Telephone: (949) 753 4950 FacsImile: (949) 7534949 Attorneys for Plaintiff LAlJRIE ORANGE WARREN H. NELSON, JR. #104744 A PROFESSIONAL CORPORATION 6161 EI Cajon Boulevard, # 273 San Diego, CA 92115 Telephone: (619) 2694212 FacsImile: (619) 501 7948 Email: [email protected]
Attol11~y for

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Defendant STANDARD INSURANCE COMPANY

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA LAURIE ORANGE vs. STANTIARDINSURANCE COMPANY, a corporation; and DOES 1 through 10, inclusive, Defendants.
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Case No.: 3:08-cv-00686 BTM-CAB JOINT RESPONSE TO MAY 28. 2008 ORDER TO SHOW CAUSE .

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The parties, plaintiff Laurie Orange and defendant Standard Insurance
Company ("Standard"), jointly and respectfully respond as follows to the Court's


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Case 3:08-cv-00686-BTM-CAB

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May 28, 2008 Order to Show Cause "why this [diversity] case should not be remanded for lack ofjurisdiction" on the issue "whether the jurisdictional amount requirement has been met." Plaintiff Laurie Orange filed this California common law bad faith action, Laurie Orange v. Standard Insurance Company, a corporation; and DOES 1 through] 0, inclusive, case No. 37-2008-00080596-CU-IC-CTL, against Standard in San Diego Superior Court. Orange alleged breach of insurance contract and tortious breach of the covenant of good faith and fair dealing in connection with Standard's closure of her long-term disability benefits claim. The case was removed to this Court on April ] 5, 2008 and a true and correct copy of the Complaint in that action, including Exhibit A to the Complaint, was attached to the Notice of RemovaL The parties state and represent to the Court that the amount in controversy exceeds $75,000.00, exclusive of interest and eosts, by at least several multiples. First, as stated in the Notiee of Removal, paragraph 5, Orange has stated, through her counsel, that she presently seeks in excess of $75,000.00, exclusive of interest and costs: Standard's undersigned counsel has also written a letter to plaintiff's counsel with regard to the amount in controversy issue, a true and correct eopy of which is attached hereto [i.e., to the Notice ofRemoval already before the Court] as Exhibit 3 pp 40-41, and requesting that plaintiff stipulate that she is not seeking in excess of$75,000.00, exclusive of interest and costs. Plaintiff's counsel have responded by voice mail stating that,
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of course, we could not stipulate that we are not seeking damages in

excess ofthe jurisdictional limit, so I did want to respond to you and then say we're seeking-that, of course, we are [i.e., seeking damages in excess of the jurisdictional limit] ."

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Second, the maximum gross monthly benefit at issue is $6896.12, to which an offSet of$5353.87 for San Diego County disability retirement benefits applies, leaving a monthly henefit due of$1542.25. Aside from this offset, Orange contends that no other offset applies to her claim. Orange further contends that Egan v. Mutual of Omaha, 24 CaL3rd 809, 824 fn. 7, 157 CaLRptr. 482 (1979), a . disability case in which a verdict of tortious breach of a disability insurance eontract was based upon a failure to investigate the claim, is applicable here. She therefore contends that, upon Standard's alleged tortious breach of the disability insurance contract, including her claim that Standard did not "reasonably or timely process and investigate" her claim (Notice of Removal Ex 1 p 7), she became entitled to receive accelerated disabilitv insurance benefits: Mutual also contends that the compensatory damage award should be reversed because the trial court permitted the jury to award future policy

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benefits. It is true that in Erreca v. Western States Life Ins. Co. (1942) 91
CaL2d 388, 402 [121 P.2d 689, 141 A.L.R. 68], this court aIlowed the recovery of only accrued benefits in an action for breach of a contract for disability insurance. We have never held, however, that future policy benefits may not be recovered in a valid tort cause of action for breach of the implied covenant of good faith and fair dealing, nor does defendant offer any compellirig reason for extending Erreca to such actions.
ThlL~,

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in applying to

these facts the general rule for fIXing tort damages (Civ, Code, § 3333), the jury mar include in the compensatory damage award future policY benefits that they reasonably conclude, after examination ofthe policY's provisions and other evidence, the policy holder would have been entitled to receive had the contract been honored bv the insurer. To the extent it is
inconsistent herewith. Austero v. National Cas. Co. (1978) 84 CaL App3d 1, 24-25 [148 Cal. Rptr. 653], is disapproved. Egan, 24 Ca1.3rd 824 f.n. 7 (emphasis added).

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As noted above, Orange does seek an accelerated benefits award. When Orange's disability benefits claim closed, she was 50 years and II months old, as she was born on May 29, 1957. Orange has always contended that she is presently entitled to an accelerated benefits award, upon prevailing, to disability benefits through the date she attains the age of65. See Notice of Removal Ex I p 16 (maximum benefits period ends at age 65). Orange thus presently seeks total monthly benefits payments of 14 years and I month at $1542.25 a month, i.e., 169 months at $1542.25 a month, for a total of $260,640.25. Even conceding that the $260,640.25 should be reduced to present value, the contractual benefits alone at issue in this case are well in excess of$75,000.00. Third, Orange also seeks compensatory damages for emotional distress and Brandt damages (Notice of Removal Ex 1 p 8 (Compl ~ 17-18)), i.e., attorney fees expended to reeover contractual benefits. Orange contends that these amounts alone are in excess of $75,000.00. Finally, Orange contends that the contractual and tort compensatory damages set forth above do and would alone and without reference to any other element of damages sought, legally support an award of punitive damages of at least several multiples of $75,000.00. See Notice of Removal Ex 1 p 8-9 (CompI1l19, Prayer for Relief1l3)). Based on the foregoing, the parties jointly and respectfully submit that the amount in controversy in this case is many multiples in excess of$75,000.00, exclusive of interest and costs. Dated: Junei,2008 \

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tJ...J;- -I--..z:-~
A PROFESsi AL cd ORATION 6161 EI Cajon oulevar, # 273 San Diego, CA 92115
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for Defendant STANDARD INSURANCE COMPANY

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Dated: June.2 2008

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Attor11~Ys for Plaintiff
LAURIE ORANGE


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DAVID SCOTI MOHNEY LAW OFFICES OF ROBERT K. SCOTT 7700 Irvine Center Drive, Suite 605
Irvine, CA 92618


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DOCKET No. 3:08-CV-00686 BTM-CAB Orange v. Standard Insurance Company. et aI. PROOF OF SERVICE BY MAIL I, Warren H. Nelson, Jr., the undersigned, hereby certify and declare under penalty of pi:(rjury that I am over the age of 18 years and am not a party to this action. My business address is Warren H. Nelson, Jr., A Professional Corporation, 6161 El Cajon Blvd., # 273, San Diego, CA 92115, telephone (619) 269-4212, facsimile (619) 501 7948. On the 4 th day of June 2008, I served a true copy of the foregoing document titled exactly:

JOINT RESPONSE TO MAY 28, 2008 ORDER TO SHOW CAUSE
By placing it! in an addressed sealed envelope with correct postage affixed thereto and personally dtrpositing it in the United States mail. I addressed the mailing envelope to the follo\\1ng: Robert K. Scott, Esq. D. Scott Mohney, Esq. Law Offices of Robert K. Scott 7700 Irvine Center Drive, Suite 605 Irvine, CA 92618 I declare under penalty of perjury that the foregoing is true and correct. Executed this 41lJ day of June 2008 at San Diego, California.

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Case 3:08-cv-00686-BTM-CAB

Document 8

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DOCKET No. 3:08-CV-00686 BTM-CAB Orange v. Standard Insurance Company. et al. PROOF OF SERVICE BY MAIL I, Warren H. Nelson, Jr., the undersigned, hereby certifY and declare under penalty of perjury that I am over the age of 18 years and am not a party to this action. My business address is Warren H. Nelson, Jr., A Professional Corporation, 6161 El Cajon Blvd., # 273, San Diego, CA 92115, telephone (619) 269-4212, facsimile (619) 501 7948. On the 4th day of June 2008, I served a true copy of the foregoing document titled exactly:

JOINT RESPONSE TO MAY 28, 2008 ORDER TO SHOW CAUSE
By placing i1J in an addressed sealed envelope with correct postage affIxed thereto and
personally depositing it in the United States mail. I addressed the mailing envelope to the
following:
Roberr K. Scott, Esq.
D. Scott Mohney, Esq. Law Offices of Robert K. Scott 7700 Irvine Center Drive, Suite 605 Irvine, CA 92618 I declare under penalty of perjury that the foregoing is true and correct. Executed this 4th day of June 2008 at San Diego, California. ........iJ;lWarren H. ]\ielson, Jr. Warren H. Nelson, Jr.