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COA cautions against claiming controversy amount limits

July 3, 2018

The Indiana Court of Appeals cautioned against plaintiffs proclaiming amounts in controversy will not exceed $75,000 unless they can be held to their word when it ruled in a semitruck crash case Tuesday.

In July 2015, two semi-tractor trailers collided on Interstate 465, injuring one of the drivers, Julian Hayes, who later sued the other driver, William Harr, and Harr’s employer, Finster Courier, Inc., d/b/a/ Elite Express.

The defendants alleged that the federal district court possessed diversity jurisdiction because “the amount in controversy exceeds the sum or value of Seventy-Five Thousand Dollars ($75,000), exclusive of interest and costs,” and that Harr is a citizen of Pennsylvania, Finster is incorporated in New Jersey, and Hayes is a citizen of Indiana.

The case was then moved to the United States District Court for the Southern District of Indiana. Hayes argued the move was premature “in not having conducted discovery to investigate the amount of this claim or even inquire as to Plaintiff’s demand.”  The same day Hayes filed the motion to remand, he also submitted a settlement demand for $72,500.

When the Defendants sent a proposed covenant not to execute with a letter saying they would agree to remand the case if Hayes could provide assurance his judgment would not exceed $75,000, Hayes responded, “WE [sic] cannot agree to any agreement without payment. Are you offering the $75,000? If so, send a check.”

The district court granted Hayes’ motion to remand, and he received a verdict in the amount of $187,500. The trial court subsequently denied Defendants’ motion to limit entry of judgment to $75,000 and its motion to correct error regarding the same. Defendants proceeded to appeal and Hayes cross appealed for attorney’s costs in William R. Harr and Finster Courier, Inc. d/b/a Elite Express v. Julian Hayes and Tracey Hayes, 49A02-1711-CT-2595, claiming their motion was a “frivolous appeal, which is meritless and … filed in bad faith, for purposes of harassment, and delay.”

The Court of Appeals disagreed with the Defendants’ argument that the trial court erred in denying their motion to correct error to modify the judgment to $75,000 under the doctrine of judicial admission and estoppel.

“Due to the context of Hayes’ argument regarding the Defendants’ failure to meet their burden and removal being premature, we conclude Hayes’ statement contains an ambiguity and cannot therefore be regarded as a binding judicial admission,” Judge Margret Robb wrote on Tuesday. “Quite simply, the Defendants failed to meet their burden of proof before the district court and then attempted to cap Hayes’ damages because of it.”

The appellate court noted that it had “no reason to believe that Hayes intentionally misrepresented the amount in controversy or that Hayes acted in bad faith,” however it cautioned litigants about proclaiming that the amount in controversy does not exceed $75,000— “lest they be held to their word.”

The court also found it must exercise “extreme restraint” when awarding attorney’s fees and denied Hayes’ request.

“The rest of Hayes’ claims regarding procedural bad faith involve instances occurring before the trial court. Our discretion to award attorneys’ fees under Appellate Rule 66(E) is limited to instances when an appeal is permeated with meritlessness, bad faith, frivolity, harassment, vexastiousness, or purpose of delay,” Robb concluded.

“Accordingly, Hayes has failed to demonstrate procedural bad faith and although this case has been particularly litigious, the Defendants do not bear such responsibility alone. We therefore deny Hayes’ request for attorneys’ fees.”

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