First Franklin Financial Inc. v. Weakley et al
MEMORANDUM OPINION. Signed by Judge Abdul K Kallon on 9/28/2016. (YMB)
2016 Sep-28 PM 01:13
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
FIRST FRANKLIN FINANCIAL,
TIMOTHY WEAKLEY and
Civil Action Number
This action is before the court sua sponte. For the reasons stated more fully
below, the court concludes that the action is due to be remanded for lack of subject
I. FACTS AND PROCEDURAL HISTORY
First Franklin Financial, Inc. (“FFF”) filed this lawsuit in the Small Claims
Court of Lauderdale County, Alabama, alleging that Timothy Weakley and Anita
Weakley defaulted on a loan, and seeking judgment against the Weakleys in the
amount of $2,531.50. See doc. 1-8 at 5.1
FFF obtained a default judgment
against the Weakleys on June 23, 2016. Id. at 1. Three days later, FFF filed for a
process of garnishment against Anita Weakley’s wages. Doc. 1-6 at 3–5; doc. 1-7
at 1–2. On September 12, 2016, Anita Weakley filed a Motion to Stop Wage
Case number SM 16-260.
Garnishment, claiming exemption. Doc. 1-3 at 3–4. The state district judge
scheduled a bench trial for September 28, 2016. Id. at 5.
The Weakleys answered the complaint on August 5, 2016, admitting that
they owed a debt, but disputing the amount claimed. Doc. 1-6 at 1. Then, on
September 9, 2016, the Weakleys filed an amended answer, motion to dismiss, and
Doc. 1-3 at 6–10; doc. 1-4 at 1–10; doc. 1-5 at 1–3.
counterclaim alleges that FFF violated the Equal Credit Opportunity Act of 1974,
15 U.S.C. § 1961 (“ECOA”), thus rendering the underlying contract null and void.
On September 21, 2016, the Weakleys filed Suggestions of Bankruptcy and
Motions for Release from Garnishment, stating that they filed a petition for
Chapter 13 bankruptcy in the United States Bankruptcy Court for the Northern
District of Alabama. See doc. 1-1 at 1–4.
The Weakleys removed the action to this court on September 23, 2016.
Doc. 1. The notice of removal asserts that the action is properly before this court
on the basis of diversity jurisdiction or, alternatively, federal question jurisdiction.
See id. Specifically, the Weakleys contend that their demand for judgment in
excess of $75,000 on their counterclaim 2 provides the requisite amount in
controversy under § 1332. Alternatively, they contend that their counterclaim
under the ECOA presents a federal question under § 1331.
The Weakleys seek “$100,000,000 in punitive damages.” Doc. 1-4 at 7.
The court turns now to the question of whether it has subject matter
jurisdiction over this action.
Federal courts are courts of limited jurisdiction and are “empowered to hear
only those cases within the judicial power of the United States as defined by
Article III of the Constitution.” Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974
(11th Cir. 2005) (citing Univ. of S. Ala. v. Amer. Tobacco Co., 168 F.3d 405, 409
(11th Cir. 1999)). Therefore, the court must make an early, independent
jurisdictional assessment and, if necessary, dismiss or remand any claims that fall
outside of the court’s subject matter jurisdiction. See also 28 U.S.C. § 1447 (“If at
any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.”).
A. Diversity Jurisdiction
28 U.S.C. § 1332 provides, in relevant part, that federal district courts “shall
have original jurisdiction of all civil actions where the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs, and is
between — (1) citizens of different States.” 1 28 U.S.C. § 1332(a)(1).
The court will assume, for purposes of this opinion, that complete diversity of
The original amount in controversy, as set forth in FFF’s complaint, was
$2,351.50. The fact that a counterclaim seeks an amount in excess of the amount
in controversy required by § 1332 does not confer subject matter jurisdiction on a
federal court. See Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 281 (1918))
(“[I]f allegations in the complaint do not bring the case within the removal
jurisdiction of the district court, ‘[the suit] cannot be made removable by any
statement in the petition for removal or in subsequent pleadings by the
defendant.’”); Conference Am., Inc. v. Q.E.D. Int’l, Inc., 50 F. Supp. 2d 1239,
1241–43 (M.D. Ala. 1999) (counterclaims cannot be considered in determining
whether the amount in controversy requirement has been met); Boudin v. South
Point, Inc., No. 08-0390-CG-M, 2009 WL 1635927, at *3–4 (S.D. Ala. June 9,
2009). In short, there is no basis for subject matter jurisdiction under § 1332.
B. Federal Question Jurisdiction
28 U.S.C. § 1331 provides that federal district courts “shall have original
jurisdiction of all civil actions arising under the Constitution, laws, or treaties of
the United States.” A defendant may remove a state civil action to a federal court
if the pending action is “founded on a claim or right arising under the Constitution,
treaties or laws of the United States.” 28 U.S.C. § 1441(b). Under the wellpleaded complaint rule, a court must look to the face of the complaint to determine
whether a claim “arises” under federal law. Caterpillar, Inc. v. Williams, 482 U.S.
386, 392 (1987). The assertion of a defense that raises a federal question will not
invoke the original jurisdiction of a federal court when the plaintiff’s complaint
does not raise a federal question on its face. See id. at 392–93; Pan Am. Petroleum
Corp. v. Superior Court of Delaware, 366 U.S. 656, 663 (1961); Dial v.
Healthspring of Alabama, Inc., 541 F.3d 1044, 1047 (11th Cir. 2008) (citing
Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (2003)) (“[I]n determining whether
[a] claim arises under federal law, we examine the ‘well pleaded’ allegations of the
complaint and ignore potential defenses.”).
Moreover, a counterclaim arising under federal law does not invoke a
district court’s “arising under” jurisdiction. See Vaden v. Discover Bank, 556 U.S.
49, 66 (2009) (stating that “a counterclaim . . . does not provide a key capable of
opening a federal court’s door”); Holmes Grp., Inc. v. Vornado Air Circulation
Sys., Inc., 535 U.S. 826, 831 (2002) (“[A] counterclaim — which appears as part of
the defendant’s answer, not as part of the plaintiff’s complaint — cannot serve as
the basis for ‘arising under’ jurisdiction.”); Diaz v. Sheppard, 85 F.3d 1502, 1505
(11th Cir. 1996) (although an action may arise under federal law if the right to
relief under state law requires resolution of a substantial question of federal law,
the mere presence of a federal issue does not automatically confer federal question
In this case, FFF’s complaint relies solely upon state law. The Weakleys’
assertion of a counterclaim under the ECOA as a basis to void the original contract
does not create a basis for federal question jurisdiction. Therefore, the court lacks
subject matter jurisdiction under § 1331.
In light of the foregoing, the court finds that the Weakleys cannot satisfy the
requirements for removal under either § 1332 or § 1331. Therefore, the court
remands this action to the Small Claims Court of Lauderdale County, Alabama, for
lack of subject matter jurisdiction.
The court will enter a separate order consistent with this opinion.
DONE the 28th day of September, 2016.
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
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