The federal district court remanded to state court a loss of rent claim because the amount in controversy requirement was not met. Geragos & Geragos Fine Arts Bldg., LLC v. Travelers Indemn. Co., 2020 U.S Dist. LEXIS 127427 (C.D. Cal. July 20, 2020).
Geragos suffered loss of rental income due to the COVID-19 tenant relief measures implemented in Los Angeles. The tenant relief orders would remain in effect for the duration of the emergency period, the end date of which was not presently set.
Geragos submitted a claim for loss of rental income to Travelers. When the claim was denied, Geragos sued in state court. Travelers removed to federal district court. Geragos moved to remand the case back to state court for lack of subject matter jurisdiction.
Travelers asserted that Geragos rental income of $6,800per month could serve as a basis for calculating the amount of controversy. The court disagreed that Geragos' monthly rental income represented a colorable source of damages. The Los Angeles ordinance provided that "nothing in this article eliminates any obligation to pay lawfully charged rent." The ordinance also provided, however, that no owner could charge interest or late fees on rent not paid due to the ordinance. Even if policy benefits were triggered by the ordinances at issue, it was not clear that Geragos would ultimately be damaged in an amount greater than the lost interest or late fees on delinquent rents. Therefore, the argument for the amount in controversy was too speculative to overcome the strong presumption against removal jurisdiction given the highly unpredictable nature of the COVID-19 pandemic.
Because Travelers failed to meet its burden to establish the requisite amount in controversy, the court granted Geragos' motion to remand.
