Watson et al v. Smith et al

Filing 9

MEMORANDUM OPINION AND ORDER re 6 Motion to Dismiss: Southern Homes argues that the Court should dismiss the claims against it because it was dissolved more than three years prior to the filing of the Complaint as required by the applicable limitat ions statute. The Court does not reach the merits of this argument, however, because after careful consideration of the applicable law and the removal documents, the Court has, sua sponte, determined that it lacks jurisdiction over this matter and mu st remand it to the Circuit Court of Russell County, Alabama. It is ORDERED as follows: 1. This case is REMANDED to the Circuit Court of Russell County, Alabama. 2. The Clerk is DIRECTED to take appropriate steps to effect the remand. Signed by Hon. Chief Judge Mark E. Fuller on 3/23/2010. (Attachments: # 1 Civil Appeals Checklist) Copy mailed to Clerk, Circuit Court of Russell County, Alabama. (dmn)

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA E A S T E R N DIVISION J O A N N S. WATSON, Administrator of th e Estate of Bobby Elton Watson, Sr., d e c e a s e d , et al., PLAINTIFFS, v. L A R R Y S. SMITH, et al., DEFEN DANTS. ) ) ) ) ) ) ) ) ) )

CASE NO. 3:09-CV-711-MEF (W O )

M E M O R A N D U M OPINION AND ORDER T h is case is before the Court on a Motion to Dismiss (Doc. # 6), which Defendant S o u th e rn Homes and Construction, Inc., ("Southern Homes") filed on July 28, 2009. Southern Homes argues that the Court should dismiss the claims against it because it was d is s o lv e d more than three years prior to the filing of the Complaint as required by the a p p lica b le limitations statute. The Court does not reach the merits of this argument, h o w e v e r , because after careful consideration of the applicable law and the removal d o c u m e n ts , the Court has, sua sponte, determined that it lacks jurisdiction over this matter a n d must remand it to the Circuit Court of Russell County, Alabama. Accordingly, this case is due to be REMANDED. F A C T U A L AND PROCEDURAL BACKGROUND Plaintiffs filed this case in the Circuit Court of Russell County, Alabama on June 29, 2 0 0 9 , against Defendants Larry Scott Smith ("Smith"), Kelly M. Johnson, ("Johnson") S o u th e rn Homes, and several Fictitious Defendants, as a result of a motor vehicle collision.

A c c o rd in g to the Complaint, Smith was negligently or wantonly driving a motor vehicle w h ile an employee acting within the scope of his employment by Johnson and Southern H o m e s. (Doc. #1-2 p. 2-3.) The vehicle Smith was driving collided with a vehicle being d riv e n by Bobby Elton Watson, Sr. ("Bobby Watson"). This accident occurred on October 1 9 , 2007, near the intersection of Sunderland Drive and Stevens Loop in Russell County, A la b a m a . Bobby Watson died as a result of the accident. The Complaint states six counts of negligence and wantonness, all of which arise from this accident. Counts I and II are against Smith directly and against Johnson and Southern H o m es through vicarious liability. Counts III, IV, V, and VI implicate Johnson, Southern H o m e s, and various Fictitious Defendants directly. Plaintiffs seek compensatory and

p u n itiv e damages in an unspecified amount and demand a trial by jury. D e f en d a n ts jointly removed the case to this Court shortly after service of the C o m p la in t. They included in their removal papers the Complaint, the other pleadings and d o c u m e n ts from the state court proceeding, an affidavit of Johnson, and the notice of filing o f removal, which Defendants filed with the Clerk of the Circuit Court of Russell County, A la b a m a . In the Notice of Removal, Defendants claim "upon information and belief," that th e amount in controversy is greater than $75,000.00, exclusive of interest and costs. (Doc. # 1 ¶ 3.) They state that "they are aware that they have the burden of proof to establish the a m o u n t in controversy by a preponderance of the evidence" because Plaintiffs demand u n s p e c if ie d damages. (Id.) They state that there is "no question" that Smith, Johnson, and

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S o u th e r n Homes (i.e., the defendants) believe that this case meets the amount in controversy re q u ire m e n t and seek leave "to submit limited interrogatories, requests for production, and/or re q u e s ts for admissions on the issue of damages to the Plaintiffs." (Doc. # 1 p. 4 n.4.) F in a l ly, regarding the jurisdictional amount, Defendants state that Bobby Watson died as a re s u lt of the accident in issue and Joann Watson claims loss of companionship and society. D e f e n d a n t Southern Homes filed a Motion to Dismiss the same day the Defendants jo in tly filed the Notice of Removal. (Doc. # 6.) Southern Homes argues by this Motion that th e Complaint against it must be dismissed because Plaintiffs filed it outside an applicable l i m i t a tio n s period. Specifically, Southern Homes claims it was a corporation, but was d is s o lv e d on December 30, 2003, and that a provision of the Mississippi Code provides that a ll claims against dissolved corporations must be commenced in three years or less. Because the Complaint in this case was filed on June 29, 2009, the argument goes, it was filed more th a n three years after dissolution and must be dismissed. Plaintiffs argue in their response th a t there is a question of fact about when Southern Homes was dissolved and present e v id e n tia ry material to support their side of the argument. The Court does not reach the m erits of the Motion to Dismiss, however, because, for the reasons set forth below, the Court f in d s that it lacks subject matter jurisdiction. D IS C U S S IO N F e d e ra l courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. o f Am., 511 U.S. 375 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994);

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W y m b s v. Republican State Executive Comm., 719 F.2d 1072, 1076 (11th Cir. 1983). As s u c h , federal courts only have the power to hear cases that they have been authorized to hear b y the Constitution or the Congress of the United States. Kokkonen, 511 U.S. at 377. Among the cases over which a federal district court may exercise subject matter ju r is d i c ti o n are civil actions in which only state law claims are alleged if the civil action a ris e s under the federal court's diversity jurisdiction. See 28 U.S.C. § 1332(a). The diversity s ta tu te confers jurisdiction on the federal courts in civil actions "between citizens of different s ta te s ," in which the jurisdictional amount, currently in excess of $75,000, is met. Id. When a case is originally filed in state court, a party may remove it if the case o rig in a lly could have been brought in federal court. See 28 U.S.C. § 1441(a). Accord, L o w e r y v. Alabama Power Co., 483 F.3d 1184, 1207 (11th Cir. 2007), cert. denied, 128 S. C t. 2877 (2008) ("the party seeking a federal venue must establish the venue's jurisdictional re q u ire m e n ts " and therefore removing defendants bear that burden in the context of a motion to remand). "If at any time before final judgment it appears that the district court lacks s u b je c t matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c) (emphasis a d d e d ). Courts must patrol the limits of their jurisdiction, and a district court must remand a case sua sponte if the court lacks subject matter jurisdiction. Id.; Corporate Mgmt. A d v is o r s , Inc. v. Artjen Complexus, Inc., 561 F.3d 1294, 1296 (11th Cir. 2009). Recently the Eleventh Circuit Court of Appeals provided significant clarification of " e x is tin g principles of law governing removal generally - who bears the burden of

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e sta b lis h in g that removal is proper, how that party can satisfy its burden, and how a district c o u rt must proceed in evaluating its jurisdiction after removal." Lowery, 483 F.3d at 1187. A lth o u g h Lowery arose in the context of a removal pursuant to the Class Action Fairness Act o f 2005 ("CAFA"), it is quite plain from the text of Lowery that the holdings of the case are n o t limited solely to cases removed under CAFA. In Lowery, the Eleventh Circuit Court of A p p e a ls reiterated that in cases, such as this one, where the complaint does not specify the a m o u n t of damages sought, "the removing party bears burden of establishing the ju ris d ic tio n a l amount by a preponderance of the evidence." 483 F.3d at 1208-09, 1210. The C o u rt cautioned, however, that "[i]f the jurisdictional amount is either stated clearly on the f a ce of the documents before the court, or readily deducible from them, then the court has ju ris d ic tio n . If not, the court must remand. Under this approach, jurisdiction is either evident f ro m the removing documents or remand is appropriate." Indeed, "in assessing the propriety o f removal, the court considers the documents received by the defendant from the p la in tif f -- b e it the initial complaint or a later received paper--and determines whether that d o c u m e n t and the notice of removal unambiguously establish federal jurisdiction." Id. at 1 2 1 3 . The defendant and the court may not speculate about the amount in controversy, nor s h o u l d "the existence of jurisdiction" be "divined by looking to the stars." Id. at 1215. Im p o rta n tly, the Lowery court stated that it is highly questionable whether a defendant could ever file a notice of removal on d iv e rsity grounds in a case such as the one before us--where the defendant, th e party with the burden of proof, has only bare pleadings containing u n s p e c if ie d damages on which to base its notice--without seriously testing the 5

lim its of compliance with Rule 11. Unlike the typical plaintiff who originally b rin g s a diversity action in federal court, the removing defendant generally will h a v e no direct knowledge of the value of plaintiff's claims. Id. at 1215. "When a plaintiff seeks unliquidated damages and does not make a specific d e m a n d , therefore, the factual information establishing the jurisdictional amount must come f ro m the plaintiff." Id. at1215. In this Court's view, Lowery and its progeny dictate remand of this action. See, e.g., L o w e r y , 483 F.3d 1184; Thibodeaux v. Paccar, Inc., 592 F. Supp. 2d 1377 (M.D. Ala. 2009) (F u lle r, C.J.) (following Lowery and remanding wrongful death case); Yates v. Medtronic, In c ., 08-0337-KD-C, 2008 WL 4016599 at *10-*12 (S.D. Ala. Aug. 26, 2008) (same). Defendants' claim that they have no doubt that the amount in controversy exceeds $ 7 5 ,0 0 0 .0 0 is merely a veiled request that this Court speculate about the probable amount o f a verdict. That is precisely what Lowery prohibits. Additionally, Defendants state, as part o f their argument that the amount in controversy is greater than $75,000.00, that Bobby W a ts o n died and Joann Watson claims lost companionship and society. As this Court has p re v io u s ly noted, the "measure of damages in an Alabama wrongful death claim is not the v a lu e of human life but rather the wrongfulness of the defendant's conduct." Thibodeaux, 5 9 2 F. Supp. 2d at 1381. Whatever inferences Defendants hoped the Court would draw from th e s e facts would be speculative and largely irrelevant to the amount in controversy. M o re o v e r, Defendants' request that they be allowed to conduct limited discovery on the a m o u n t in controversy requirement is contrary to Lowery, which makes clear that if the

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jurisd iction al amount is not either stated clearly on the face of the removal documents before th e court, or readily deducible from them, then the court does not have jurisdiction. Stated o th e rw ise , "jurisdiction is either evident from the removing documents or remand is a p p ro p ria te ." Lowery, 483 F.3d at 1211. Hence, the law of the Eleventh Circuit prohibits the k in d of discovery Defendants request. Defendants have failed to carry their burden of establishing the jurisdictional amount b y a preponderance of the evidence. This finding requires remand of this case. CONCLUSION F o r the foregoing reasons, it is hereby ORDERED as follows: 1. 2. T h is case is REMANDED to the Circuit Court of Russell County, Alabama. T h e Clerk is DIRECTED to take appropriate steps to effect the remand.

D O N E this the 23rd day of March, 2010. /s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE

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