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Nationwide Mutual Insurance Company v. Larry Wenhold

November 15, 2011

NATIONWIDE MUTUAL INSURANCE COMPANY, PLAINTIFF,
v.
LARRY WENHOLD, DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge E.A. Preston Deavers

Judge George C. Smith

REPORT AND RECOMMENDATION

This matter is before the Court for consideration of Plaintiff's Motion to Remand Case to State Court. (ECF No. 9.) The parties dispute whether Defendant has satisfied his burden of demonstrating that the amount in controversy in this case exceeds $75,000. For the reasons that follow, it is RECOMMENDED that the Court DENY Plaintiff's Motion to Remand.

I. BACKGROUND

Defendant, Larry Wenhold, is a principal independent contractor agent of Plaintiff, Nationwide Mutual Insurance Company. The instance action involves a dispute over the succession process that Plaintiff will apply to Defendant's agency. Plaintiff filed this action in the Franklin County Court of Common Pleas, seeking declaratory relief. Plaintiff seeks a declaration that it is entitled to apply its current policies relating to agency succession and is under no contractual obligation to apply a former succession plan. Defendant, on the other hand, maintains in a counter-claim that Plaintiff is contractually obligated to apply the former plan and is currently in breach of contract.

The prior succession plan, which Defendant asserts resulted in a contractual obligation, was in place until 2003. This plan allowed an agent whose agency met certain standards to appoint a qualified successor. Most importantly, for the purposes of the current Motion, Defendant submits that succession under this plan did not include a purchase price that Plaintiff would collect.*fn1 (See Notice Removal ¶ 10, ECF No. 1; Wenhold Decl. ¶ 2, ECF No. 1-1.) In 1994, pursuant to this process, Defendant nominated his daughter, Wendy Wenhold, to be the successor for his agency.*fn2 The parties dispute, assuming this prior plan applies, whether Defendant's agency still meets the requirements for succession and whether Wendy Wenhold is a qualified successor.

Beginning in 2003, Plaintiff began making changes to its succession policy. These changes ultimately resulted in the current policy, known as the Replacement Agency Executive Program, that Plaintiff seeks to apply to the succession of Defendant's agency. The current policy places various qualification requirements on any person who wishes to acquire the servicing rights of an agency. The current policy also places production goals on the successor. Finally, and once again most importantly for the current Motion, the current policy requires any successor to purchase the agency's servicing rights from Plaintiff for valuable consideration.

In 2009, Defendant notified Plaintiff that he wished to retire and attempted to initiate the succession procession. The parties' disagreement as to which succession approach to apply ultimately led Plaintiff to commence this action in the Franklin County Court of Common Pleas.

On July 15, 2011, Defendant removed the action to this Court claiming diversity jurisdiction. Defendant asserts that the amount in controversy exceeds $75,000, in part because Plaintiff is seeking a purchase price of over $900,000 for the succession of his agency to his daughter. To support this assertion, Defendant relies on a proposed Replacement Agency Executive Program Performance Agreement that Plaintiff provided Defendant on May 4, 2011.*fn3 (See RAE Agreement, ECF No. 17-1.) The proposed agreement sets the purchase price, valuing the servicing rights of Defendant's agency, at $912,566. (Id. at 12.)

Plaintiff moved to remand this case to state court on August 15, 2011. Plaintiff submits that Defendant has failed to demonstrate that the amount in controversy exceeds $75,000. According to Plaintiff, there is no amount in controversy because it is seeking only declaratory judgment as to its contractual rights. Plaintiff stresses that a grant of the declaratory relief it seeks would not place an obligation on anyone to pay the purchase price. Additionally, Plaintiff notes that Ms. Weinhold is not a party to this suit, and that any damages she may incur as a result of this case may not be taken into account in assessing the amount in controversy.

Plaintiff also maintains that the value of the object of litigation is too speculative to satisfy the amount in controversy. Plaintiff specifically contends that the value of its ability to enforce its policies cannot be quantified. With regard to any purchase price, Plaintiff submits that the value of an agency is the result of a variety of ever-changing factors and cannot be determined until a transition event (i.e., an agent's retirement, disability, or death) actually occurs. Plaintiff emphasizes that the Replacement Agency Executive Program Performance Agreement Defendant provided is a confidential settlement document that is not binding on either party. According to Plaintiff, the parties drafted this document as part of a larger attempt to resolve this dispute without litigation. Finally, Plaintiff submits that the value of Defendant's agency has been declining since 2007.

II. STANDARD

The Court has diversity jurisdiction over actions between citizens of different states "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs . . . ." 28 U.S.C. ยง 1332(a). "The party invoking federal court jurisdiction . . . has the burden of demonstrating by competent proof that the complete-diversity and amount-in-controversy requirements are met." Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 559 (6th Cir. 2010). A removing defendant "has the burden of showing that the [amount in controversy] more likely than not is satisfied." Id. (internal quotations omitted). This standard, however, "does not place upon the defendant the daunting burden of ...


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