IYH Estates v. Ohio Security Insurance Company d/b/a Liberty Mutual Insurance

Background

IYH Estates, LLC d/b/a Mint Leaf Kosher filed a single breach-of-contract claim against Ohio Security Insurance Company d/b/a Liberty Mutual Insurance in the Supreme Court of the State of New York, County of Orange. IYH Estates alleged that it held an insurance policy issued by Ohio Security, submitted a timely claim for losses from a fire occurring on or about March 23, 2023, and received several payments. It claimed that Ohio Security still owed additional amounts for building damage, lost contents and inventory, extra expenses, and lost building income.

Ohio Security removed the action to the Southern District of New York. It asserted that the federal court had diversity jurisdiction—a form of federal jurisdiction based on the parties being citizens of different states—because complete diversity existed and the amount in controversy exceeded $75,000.

Amount-in-Controversy Analysis

The court explained that the party seeking removal bears the burden of showing a reasonable probability that the claim exceeds the $75,000 jurisdictional threshold. The complaint did not state a specific dollar amount. Instead, it alleged that the damages exceeded the jurisdictional limits of lower New York courts.

Ohio Security relied first on conversations with IYH Estates before the complaint was filed, asserting that IYH Estates had repeatedly said it was owed more than $75,000. The court found that this conclusory assertion and the alleged oral demand were insufficient to establish the jurisdictional amount.

Ohio Security also relied on the insurance policy’s multiple limits and sublimits, which totaled more than $6 million. The court rejected that approach because IYH Estates sought money damages for breach of contract, not declaratory or injunctive relief. For a New York breach-of-contract claim, the relevant measure is the compensatory amount needed to make the plaintiff whole, not the total limits available under the policy. The court also determined that the complaint’s reference to the limits of lower New York courts referred to the state courts’ $50,000 limit, not the federal court’s $75,000 requirement.

The court additionally noted that Ohio Security’s civil cover sheet listed a demand of $575,000. Because the notice of removal did not provide facts supporting that number and Ohio Security submitted no documents substantiating it, the court found the civil cover sheet insufficient.

Disposition

The court concluded that Ohio Security failed to establish that the amount in controversy exceeded $75,000. Judge Philip M. Halpern held that removal was improper and remanded the action to the Supreme Court of the State of New York, County of Orange. The clerk was directed to send that court a copy of the order and close the federal action; all pending matters were terminated.