USAmeriBank v. Plantation Oaks Homeowners Association, Inc.
MEMORANDUM OPINION AND ORDER: Accordingly, it is ORDERED as follows: 1. The Magistrate Judge's Recommendation (Doc. # 30 ) is ADOPTED as modified herein; 2. To the extent Defendant seeks to strike certain portions of Mike Carter's affid avit (Doc. # 18 , Exhibit H), the motion to strike (Doc. # 21 ) is GRANTED; 3. Plaintiff's objections (Doc. # 32 ) are OVERRULED; 4. This case is DISMISSED without prejudice for lack of subject-matter jurisdiction; A final judgment will be entered separately. Signed by Chief Judge William Keith Watkins on 9/12/2017. (kh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CASE NO. 2:16-CV-541-WKW
MEMORANDUM OPINION AND ORDER
In this declaratory judgment action, Plaintiff USAmeriBank complains that
Defendant Plantation Oaks Homeowners Association, Inc., has managed to cast a
cloud upon title to some of Plaintiff’s property. (Doc. # 1, at 10). But a different
cloud looms over Plaintiff: 28 U.S.C. § 1332’s amount in controversy requirement.
Plaintiff obtained several undeveloped lots in the Plantation Oaks Subdivision
via foreclosure sale after the developer of the subdivision defaulted on its mortgage
to Plaintiff. Plaintiff is concerned that various restrictive covenants—some of which
may give rights to Defendant with regard to the development of the lots—cloud its
title to the lots. Plaintiff filed this action seeking a declaration that its title is free
from any encumbrances resulting from these covenants. Defendant and Plaintiff
filed motions for summary judgment. (Docs. # 16, 17.) Defendant further filed an
objection to portions of an affidavit offered by Plaintiff (Doc. # 21), which was
construed as a motion to strike portions of the affidavit.
Upon finding that Plaintiff has failed to show that the amount in controversy
exceeds $75,000, as required by § 1332, the Magistrate Judge entered a
Recommendation (Doc. # 30) that Defendant’s Motion for Summary Judgment
(Doc. # 16) be granted and that the case be dismissed without prejudice. The
Magistrate Judge further found that Defendant’s motion to strike portions of an
affidavit (Doc. # 21) is due to be granted upon finding that some of the statements
in the affidavit are inadmissible hearsay. Plaintiff timely filed an objection to the
Recommendation (Doc. # 32), to which Defendant responded (Doc. # 33).
Although Plaintiff quibbles with portions of the Recommendation’s recitation
of the undisputed facts (Doc. #32, at 2–4), Plaintiff’s objection focuses on the
Recommendation’s determination that Plaintiff has not met the amount in
controversy requirement. Upon an independent and de novo review of the record
and the Recommendation, Plaintiff’s objections are due to be overruled, and the
Recommendation is due to be adopted, as modified below.
I. JURISDICTION AND VENUE
At issue is whether Plaintiff has carried its burden of proving that this court
may exercise subject-matter jurisdiction in this original diversity case. The parties
do not contest personal jurisdiction or venue.
II. STANDARD OF REVIEW
Defendant first challenged the sufficiency of Plaintiff’s subject-matter
jurisdiction allegations in its answer to Plaintiff’s complaint (Doc. # 6, at 1), but
Defendant offered a more robust challenge at the summary-judgment stage (Doc.
# 16, at 7–9). The court will construe that aspect of Defendant’s Motion for
Summary Judgment as a Motion to Dismiss pursuant to Rule 12(b)(1) of the Federal
Rules of Civil Procedure. A federal court cannot grant a motion for summary
judgment if it lacks subject-matter jurisdiction because the court would lack the
ability to enter any judgment on the merits. See Nat’l Parks Conservation Ass’n v.
Norton, 324 F.3d 1229, 1240 (11th Cir. 2003). This court has an obligation to
dismiss claims for want of subject-matter jurisdiction, “sua sponte if necessary,
pursuant to Fed. R. Civ. P. 12(h)(3).” Id. But because the parties have fully briefed
this jurisdictional issue (Docs. # 16, 23, 32, 33), the court will analyze it under the
framework used to analyze motions to dismiss pursuant to Rule 12(b)(1).
A party can challenge the district court’s subject-matter jurisdiction on either
facial or factual grounds. Carmichael v. Kellogg, Brown & Root Servs., Inc., 572
F.3d 1271, 1279 (11th Cir. 2009) (citing Morrison v. Amway Corp., 323 F.3d 920,
924 n.5 (11th Cir. 2003)). “Facial challenges to subject matter jurisdiction are based
solely on the allegations in the complaint. When considering such challenges, the
court must, as with a Rule 12(b)(6) motion, take the complaint’s allegations as true.”
Id. (citing Morrison, 323 F.3d 920, 925 n.5). “Factual attacks,” on the other hand,
“challenge jurisdiction in fact, irrespective of the pleadings.” Morrison, 323 F.3d at
925 n.5 (citing Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)). In a
factual attack, “matters outside the pleadings, such as testimony and affidavits, are
considered.” Lawrence, 919 F.2d at 1529 (citation omitted).
Defendant’s challenge is a factual attack, as it addresses the sufficiency of the
evidence in the record on this issue. See, e.g., Morrison, 323 F.3d at 925 n.5.
Accordingly, “no presumptive truthfulness attaches to [P]laintiff’s allegations, and
the existence of disputed material facts will not preclude the trial court from
evaluating for itself the merits of jurisdictional claims.” Lawrence, 919 F.2d at 1529
(citation omitted). Plaintiff bears the burden of proving jurisdiction and must do so
by a preponderance of the evidence. Underwriters at Lloyd’s, London v. OstingSchwinn, 613 F.3d 1079, 1085 (11th Cir. 2010) (citations omitted).
The Recommendation focused on the question whether Plaintiff had carried
its burden of proving that the amount in controversy in this declaratory judgment
action was greater than $75,000. In doing so, the Recommendation found that some
of the statements in an affidavit submitted by Plaintiff were inadmissible hearsay
that were due to be struck. (Doc. # 30, at 12–13.) Because Plaintiff does not object
to that finding (Doc. # 32, at 4 n.1), only three pieces of admissible evidence offered
by Plaintiff related to the amount in controversy remain: (1) the amount the original
developer owed to Plaintiff secured by a mortgage on the property, (2) the price
listed on Plaintiff’s foreclosure deed, and (3) the price at which Plaintiff had
negotiated to sell the lots to another developer before that developer backed out of
the deal. (Doc. # 23, at 14; Doc. # 30, at 8; Doc. # 32, at 13–15). That evidence is
sufficient, Plaintiff argues, to show that Plaintiff has met the amount in controversy
requirement. In the Recommendation’s view, which Defendant shares, that evidence
at best provides only half of the equation for calculating the amount in controversy
in this case, and Plaintiff’s refusal to make a showing as to the other half makes it
impossible for Plaintiff to carry its burden of proving the amount in controversy.
Plaintiff helpfully invokes the property law cliché of sticks in a bundle of
property rights (Doc. # 32, at 3, 11), but Plaintiff seems to misunderstand how that
cliché applies to this action. Plaintiff’s insistence that the amount in controversy is
simply the value of its lots strongly suggests that Plaintiff believes it is seeking to
reclaim the whole bundle of rights related to its ownership of the lots. In reality,
however, Plaintiff seeks to reclaim only the particular sticks denied to Plaintiff
because of the alleged cloud on its title caused by the restrictive covenants.
The value of those sticks provides the appropriate measure for the amount in
controversy in this declaratory judgment action. As the Recommendation correctly
“When a plaintiff seeks injunctive or declaratory relief, the
amount in controversy is the monetary value of the object of the
litigation from the plaintiff’s perspective.” In other words, “the value
of the injunctive or declaratory relief for amount in controversy
purposes ‘is the monetary value of the object of the litigation that would
flow to the plaintiff if the injunction were granted.’”
(Doc. # 30, at 8 (first quoting Cohen v. Office Depot, Inc., 204 F.3d 1069, 1077 (11th
Cir. 2000); then quoting Fastcase, Inc. v. Lawriter, LLC, 229 F. Supp. 3d 1301, 1305
(N.D. Ga. 2017)).) Here, the benefit that would flow to Plaintiff if it received the
declaratory relief it seeks would be that the cloud the restrictive covenants have cast
on its title to the lots would be lifted. The Recommendation framed the value of this
benefit as “the difference between the value of the property with the [restrictive]
covenants . . . and the value of the property without the covenants at issue.” (Doc.
# 30, at 11–12.)
Put another way, the declaratory relief Plaintiff seeks would theoretically
improve the title Plaintiff already has. The evidence Plaintiff has submitted—the
amount the original developer owed Plaintiff secured by a mortgage on the property,
the price listed on Plaintiff’s foreclosure deed, and the price Plaintiff had negotiated
with another developer for a sale of the property that ultimately did not come to
fruition—speaks only to the value of the title Plaintiff already has. Plaintiff has
failed to offer any evidence of how that value would increase as a result of the
declaratory judgment it seeks. That increase may very well exceed $75,000, in
which case 28 U.S.C § 1332’s amount in controversy requirement would be met and
this court would have jurisdiction over this action.
But the amount of that increase remains a complete mystery in the record.
Rather than offer any evidence of that amount (even in the alternative or for the sake
of argument), Plaintiff has continually insisted on contesting the appropriate
measure of the amount in controversy. (Doc. # 23, at 11–15; Doc. # 32, at 6–10.)
Indeed, Plaintiff’s objection is centered on its attempts to distinguish most of the
cases cited in the Recommendation on this issue. (Doc. # 32, at 4–10.) Those
attempts fail to address that which remains a mystery.
In sum, Plaintiff has failed to meet its burden of proving the amount in
controversy requirement has been met, and this case is due to be dismissed for want
Accordingly, it is ORDERED as follows:
The Magistrate Judge’s Recommendation (Doc. # 30) is ADOPTED as
To the extent Defendant seeks to strike certain portions of Mike
Carter’s affidavit (Doc. # 18, Exhibit H), the motion to strike (Doc.
# 21) is GRANTED;
Plaintiff’s objections (Doc. # 32) are OVERRULED;
This case is DISMISSED without prejudice for lack of subject-matter
A final judgment will be entered separately.
DONE this 12th day of September, 2017.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
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