Manguno v. Prudential Property and Casualty Insurance Co.

In November, 1993, Merle Manguno’s 1990 Lincoln Towncar was damaged in an accident. Manguno’s insurer, Prudential Property and Casualty Insurance Company, paid her for the repair of the car, but not for the difference between the car’s pre-loss value and its value after the repairs (its “diminished value”). Manguno’s insurance policy provides that Prudential’s liability is limited to the least of (1) the actual cash value of the damaged car, (2) the amount necessary to repair or replace the car with one of like kind and quality, or (3) the amount stated in certain declarations.

In September 1999, Manguno filed a putative class action in Louisiana state court against Prudential, on behalf of herself and other Prudential policyholders who were not compensated for the post-repair diminished value of their damaged vehicles. Manguno’s complaint charged that because Prudential refused to compensate her for the car’s diminished value, it had knowingly, intentionally, and deceitfully breached its contract with Manguno and others similarly situated. Manguno’s petition also asserted that Prudential had hidden and concealed its obligations to its insureds. The petition added that “the amount in controversy does not exceed $75,000″ and “plaintiffs are not seeking attorneys fees under La.R.S. 22:658.” Prudential removed the case to federal court based on diversity jurisdiction. See 28 U.S.C. � 1332. Prudential asserted that the amount in controversy likely exceeds the $75,000 jurisdictional threshold because potential attorney’s fees for the entire class should be aggregated and assigned to the class representative for purposes of determining diversity jurisdiction. Prudential submitted an uncontradicted affidavit stating that, if aggregated, the class attorney’s fees would likely exceed $75,000. Manguno moved to remand the case to state court. The motion was referred to a magistrate, who found that Manguno’s petition contained facts which, if proved, would require an award of attorney’s fees under Louisiana Revised Statute � 22:658.*fn2 The magistrate determined that the statutory attorney’s fees should be aggregated and attributed to Manguno as the class representative under Louisiana Code of Civil Procedure article 595.*fn3 The magistrate disregarded Manguno’s stated waiver of statutory fees because Manguno had neither verified her petition nor submitted a binding stipulation waiving a claim for such fees. Thus, the magistrate denied Manguno’s motion to remand. The district court affirmed the magistrate’s ruling and retained jurisdiction.