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Wilson v. Badejo

United States District Court, E.D. Tennessee

February 17, 2017

HERB WILSON, Plaintiff,
v.
ELAINE BADEJO, et al., Defendants.

          MEMORANDUM AND ORDER

          SUSAN K. LEE, UNITED STATES MAGISTRATE JUDGE

         The parties were asked to address whether the Court has subject matter jurisdiction over this matter, in particular whether this action meets the “amount in controversy” requirement for removal and the exercise of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). The Court has considered the parties' arguments concerning this issue and, for the reasons that follow, the Court will REMAND this action to state court.

         I. PROCEDURAL BACKGROUND

         On November 16, 2015, Plaintiff Herb Wilson (“Plaintiff”) filed a complaint in the Circuit Court for Hamilton County, Tennessee, asserting claims against Defendants Elaine Badejo, Badejo Insurance Agency, Farmers Insurance Company of Washington, and Foremost Insurance Company (collectively “Defendants”) for failure to procure, negligent misrepresentation, breach of fiduciary relationship, breach of contract, and violations of the Tennessee Consumer Protection Act (“TCPA”) [Doc. 1-1].[1] Plaintiff limited the judgment requested in his complaint to “an amount to not exceed $75, 000.00” [Doc. 1-1 at Page ID # 18].[2]Defendants removed the action to this Court on January 6, 2016. Defendants' Notice of Removal states that removal is proper pursuant to 28 U.S.C. § 1332, as there is complete diversity of citizenship between Plaintiff and Defendants and “[a]s set forth in Plaintiff's demand for monetary relief in the Complaint, the amount in controversy exceeds $75, 000.00” without any further explanation [Doc. 1 at Page ID # 2]. Plaintiff did not file a motion to remand.

         In January 2017, Plaintiff filed a response to Defendants' partial motion for summary judgment. The response raised to the Court's attention the amount in controversy. As the Court is under a continuing obligation to ensure it has subject matter jurisdiction over the cases before it and can raise the issue of jurisdiction sua sponte at any time during the pendency of a case, Answers in Genesis of Ky., Inc. v. Creation Ministries Int'l., Ltd., 556 F.3d 459, 465 (6th Cir. 2009), the Court issued an order on February 2, 2017, directing the parties to address subject matter jurisdiction [Doc. 25].

         Defendants have responded that this Court has subject matter jurisdiction and should follow Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000) [Doc. 28].[3] Plaintiff has responded that the Court does not have subject matter jurisdiction and has filed a stipulation to clarify, to the extent necessary, and show that his judgment will not exceed the $75, 000.00 jurisdictional limit [Docs. 29 & 29-1].[4]

         II. ANALYSIS

         Diversity jurisdiction under 28 U.S.C. § 1332 requires that the amount in controversy must “exceed[] the sum or value of $75, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Typically, “[i]f removal of a civil action is sought on the basis of the jurisdiction conferred by section 1332(a), the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy.” 28 U.S.C. § 1446(c)(2); see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294 (1938) (“If [plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.”).

         “A disclaimer in a complaint regarding the amount of recoverable damages does not preclude a defendant from removing the matter to federal court upon a demonstration that damages are ‘more likely than not' to ‘meet the amount in controversy requirement, ' but it can be sufficient absent adequate proof from defendant that potential damages actually exceed the jurisdictional threshold.” Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 407 (6th Cir. 2007) (quoting Rogers, 230 F.3d at 871). A defendant removing a case to federal court on the basis of diversity jurisdiction has the burden of proving the jurisdictional requirements exist at the time of removal. Rogers, 230 F.3d at 871. Because federal courts are courts of limited jurisdiction, they resolve doubts regarding their jurisdiction by favoring remand. Eastman v. Marine Mech. Corp., 438 F.3d 544, 549-50 (6th Cir. 2006) (“Because lack of jurisdiction would make any decrees in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand.”).

         Although Defendants correctly point out that jurisdiction is determined at the time of removal, remand is nevertheless warranted in this instance. Section 1447(c) provides that “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). Further, as the Supreme Court held in Powerex Corp. v. Reliant Energy Servs., 551 U.S. 224 (2007), section § 1447(e) supports that a case can suffer from a failing in subject matter jurisdiction that requires remand even if the case was properly removed. Powerex, 551 U.S. at 232. For the reasons set forth herein, the Court FINDS that diversity jurisdiction is lacking in this case so that removal was improper under 28 U.S.C. § 1441.

         Defendants have the burden of proving that removal is proper, and removal will generally be improper if, on the face of the complaint, a plaintiff states a claim for less than $75, 000.00. See Gafford v. Gen. Elec. Co., 997 F.2d 150, 157 (6th Cir. 1993) abrogated on other grounds by Hertz Corp. v. Friend, 559 U.S. 77 (2010). In their January 6, 2016 notice of removal, Defendants' justification for how Plaintiff met the $75, 000.00 jurisdictional threshold was to state “[a]s set forth in Plaintiff's demand for monetary relief in the Complaint, the amount in controversy exceeds $75, 000.00 pursuant to 28 U.S.C. § 1332(a).” [Doc. 1 at Page ID # 2]. However, in his complaint, Plaintiff actually limited any award to an amount not to exceed $75, 000.00 [Doc. 1-1 at Page ID # 2].

         Defendants now appear to rely on Plaintiff's Rule 26 initial disclosures that Defendants state were provided to them on February 16, 2016, to support their position that Plaintiff met the jurisdiction threshold at removal [Doc. 28 at Page ID # 198]. As represented by Defendants, Plaintiff claimed the following damages in his Rule 26 disclosures: $7, 500 for the 1978 Apollo RV; $2, 000 for the 1986 Honda automobile; $35, 000 for the personal property in the RV; $10, 000 for out-of-pocket expenses; an amount of damages to be determined under the TCPA; and an award of attorneys' fees and expenses [id.]. Also on February 16, 2016, Defendants filed a partial motion to dismiss Plaintiff's claims under the TCPA [Doc. 13]. Defendants argued that Plaintiff's TCPA claim was not legally viable because it was statutorily barred by Tenn. Code Ann. § 56-8-113, which eliminates the TCPA as a viable cause of action for disputes arising from the insurer-insured relationship. The Court, concluding that Plaintiff's TCPA claim was statutorily barred by Tenn. Code Ann. § 56-8-113, dismissed the TCPA claim on April 8, 2016 without any opposition from Plaintiff [Doc. 17].

         Defendants have failed to show how Plaintiff legally is entitled to recover any damages beyond “an amount not to exceed $75, 000” and the Rule 26 disclosures do not suggest otherwise. At the time of removal, Defendants could not argue in good faith that treble damages under the TCPA and/or attorneys' fees under the TCPA proved “more likely than not” that removal was proper even though Plaintiff limited the judgment sought to an amount not to exceed $75, 000.00. Defendants have not provided any proof or facts showing that the amount in controversy was “more likely than not” above the $75, 000.00 limit pled in Plaintiff's complaint.

         Defendants further argue that the Court should look to the amount in controversy set forth in Plaintiff's initial complaint which was removed by Defendants to this Court on September 4, 2014 from the Circuit Court for Hamilton County, Tennessee and was ultimately voluntarily dismissed by the parties on December 5, 2015 pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii) [Doc. 28 at Page ID # 197-98]. In that action, Plaintiff asserted the same causes of action as in the matter currently pending before this Court but sought damages in the amount of $100, 000.00 along with treble damages under the TCPA [id.; Doc. 1-1 in Case No. 1:14-cv-264]. Defendants rely on Rogers in which the plaintiff initially filed an action in state court seeking more than $900, 000.00 in damages; after removal to federal court, the action was dismissed; and the plaintiff filed a new action in state court seeking an amount not to exceed $75, 000.00. In Rogers, the defendant relied on the facts that the plaintiff's original action had sought almost $1 million in damages and that plaintiff had made sworn responses to discovery in the original action that her damages exceeded $447, 000 to meet its burden for removal. Rogers, 230 F.3d at 871. ...


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