McArdle v. Carter et al

Filing 13

MEMORANDUM OPINION AND ORDER; denying 8 MOTION to Remand to State Court. Signed by Honorable William Keith Watkins on 2/1/2010. (Attachments: # 1 Civil Appeals Checklist)(jg, )

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION S C O T T MCARDLE, P l a in tif f , v. J A M E S CARTER, et al., D e f e n d a n ts . ) ) ) ) ) ) ) ) )

C A S E NO. 2:09-CV-927-WKW [WO]

M E M O R A N D U M OPINION AND ORDER T h is cause is before the court on Plaintiff Scott McArdle's ("McArdle") Motion to R e m a n d . (Doc. # 8.) McArdle contends that Defendants James Carter, Carter & Tate, P.C., a n d James E. Carter & Associates, LLC (collectively "Defendants") failed to establish the a m o u n t in controversy by a preponderance of the evidence as required under 28 U.S.C. § 1332, and seeks remand to the Circuit Court of Montgomery County, Alabama. Defendants o p p o s e the motion (Doc. # 9), arguing that a previous motion filed by McArdle in a related b a n k ru p tcy case, "unambiguously establish[es] that at least $136,000.00 is in dispute" in this c a s e , thus meeting the jurisdictional threshold (Doc. # 9, at 4). For the following reasons, M c A rd le 's motion to remand is due to be denied. I . BACKGROUND M c A rd le filed his complaint in the Circuit Court of Montgomery County, Alabama, o n August 20, 2009, asserting ten claims arising out of a fee-splitting arrangement between M c A rd le and Defendants. (Compl. (Doc. # 1, Ex. A).) Specifically, McArdle claims that

h e and Defendants entered into a binding agreement under which McArdle was entitled to f o rty percent of attorneys' fees earned from the prosecution of a Georgia civil suit stemming f ro m the death of Justin Hall. (Compl. ¶ 6.) Thereafter, the sole heir to Justin Hall's estate f ile d for bankruptcy, and the Bankruptcy Trustee hired the attorneys to continue to represent th e estate. (Compl. ¶ 10.) McArdle alleges that Defendants subsequently settled a portion o f the suit without notifying him, and failed to remit his portion of the fees. (Compl. ¶¶ 121 3 .) I I . DISCUSSION " [ F ]e d e ra l courts have a strict duty to exercise the jurisdiction that is conferred upon th e m by Congress." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). However, " [ f ]e d e ra l courts are courts of limited jurisdiction." Burns v. Windsor Ins. Co., 31 F.3d 1092, 1 0 9 5 (11th Cir. 1994). Thus, with respect to cases removed to this court pursuant to 28 U .S .C . § 1441, the law of the Eleventh Circuit favors remand where federal jurisdiction is n o t absolutely clear. "[R]emoval statutes are construed narrowly; where plaintiff and d e f en d a n t clash about jurisdiction, uncertainties are resolved in favor of remand." Burns, 31 F .3 d at 1095. W h e re the complaint alleges unspecified damages, as in this case, the removing party b e a rs the burden of establishing the jurisdictional amount by a preponderance of the e v id e n c e . Lowery v. Ala. Power Co., 483 F.3d 1184, 1209-10 (11th Cir. 2007). A removing d e f en d a n t can predicate jurisdiction either on the initial pleading, or "an amended pleading,

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m o tio n , order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b) (emphasis added). When a defendant b a s e s removal on a document other than the initial pleading, three specific conditions must b e satisfied. There must be "(1) `an amended pleading, motion, order or other paper,' which (2 ) the defendant must have received from the plaintiff (or from the court, if the document is an order), and from which (3) the defendant can `first ascertain' that federal jurisdiction e x is ts ." Lowery, 483 F.3d at 1215 n.63 (quoting 28 U.S.C. § 1446(b)). The general rule is th a t evidence "contemplated" by 28 U.S.C. § 1446(b) is evidence "received from the p la in tif f s ." 1 Id. at 1221. Hence, "the defendant's appraisal of the amount in controversy . . . w ill ordinarily not provide grounds for his counsel to sign a notice of removal in good faith." Id . at 1215 n.63; see also Stroh v. Colonial Bank, N.A., No. 4:08-cv-73, 2008 WL 4831752, at *2 (M.D. Ga. Nov. 4, 2008). H e r e , Defendants attach a copy of McArdle's "Motion to Disgorge All Attorney['s] F e e s, Costs, and Expenses Paid to Attorney James E. Carter" (Doc. # 1, Ex. B) to their Notice o f Removal. They assert that McArdle's Motion to Disgorge, which was filed in the United S ta te s Bankruptcy Court, constitutes "other paper" under 28 U.S.C. § 1446(b), as discussed in Lowery. 483 F.3d at 1215 n.63. McArdle does not address whether the Motion to D isgo rge constitutes "other paper" under Lowery; instead, McArdle contends that the Motion to Disgorge should not be considered because it relates to a "completely separate matter" and
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The very narrow exceptions to that rule, see Lowery, 483 F.3d at 1215 n.66, are not argued

here.

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b e c a u s e the fees at issue in the bankruptcy motion are not the same fees at issue here. Thus, M c A rd le appears to contest whether the Motion to Disgorge, along with the Notice of R e m o v a l, "unambiguously establish federal jurisdiction." Id. at 1213. M c A rd le filed the Motion to Disgorge in the bankruptcy court shortly after receiving n o tic e from Carter that a portion of the wrongful death case had settled for an undisclosed a m o u n t. (Motion to Disgorge 6 (Doc. # 1, Ex. B).) According to McArdle, his Motion to D is g o rg e "sought to have the fees that Defendants earned, which were the product of fraud co m m itted on the United States Bankruptcy Court, returned to that Court." (Pl.'s Reply Br. 1 (Doc. # 12).) Although he contends that this filing relates to a completely separate matter, th e re is no indication that the fees discussed and quantified in McArdle's Motion to Disgorge a re anything other than the fees at issue in this case, i.e., the fees received in connection with th e prosecution of a civil suit stemming from the death of Justin Hall. McArdle argues in his reply brief that the Bankruptcy Judge's inability to determine th e value of McArdle's services from the evidence presented with his Motion to Disgorge u n d erm ines Defendants' arguments regarding the amount in controversy. (Pl.'s Reply Br. 2 .) However, the value of McArdle's services is not the only measure of damages in this c a se . McArdle's complaint alleges that he is entitled to forty percent of "any attorney's fees e a rn e d on the matter concerning the death of Justin Hall." (Compl. ¶ 8.) In addition to d e m a n d in g judgment "in an amount equal to the value of services rendered" (Compl. ¶ 18, C o u n t I), McArdle demands compensatory damages for, among other things, breach of

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c o n tra c t (Counts II and III). Thus, the amount in controversy necessarily relates to the a m o u n t of attorney's fees Defendants received, not just the value of McArdle's services. McArdle's Motion to Disgorge states that "fees in the amount of $340,000.00 and e x p e n se s in the amount $35,000.00 were paid to Attorney Carter" from the estate of Justin H a ll. (Mot. to Disgorge ¶ 19.) Thus, taking the allegations in the complaint as true, McArdle is entitled to forty percent of $340,000.000, or $136,000, and Defendants have established th e amount in controversy by a preponderance of the evidence as required under 28 U.S.C. § 1332. III. CONCLUSION F o r the foregoing reasons, the Motion to Disgorge, attached to Defendants' Notice of R e m o v a l, "unambiguously estalish[es] federal jurisdiction," Lowery, 483 F.3d at 1213, and, a c c o rd in g ly, it is ORDERED that McArdle's Motion to Remand is DENIED. DONE this 1st day of February, 2010. /s/ W. Keith Watkins UNITED STATES DISTRICT JUDGE

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