Rogers Electric Service Corporation v. CVS Pharmacy, Inc.
Filing
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OPINION AND ORDER remanding this action to the Superior Court of Gwinnett County, Georgia. It is further ordered that Plaintiff's Motion for Leave to File Motion to Remand 12 and Plaintiff's Motion to Stay Discovery and All Deadlines Pending Ruling on Remand 13 are denied as moot. Signed by Judge William S. Duffey, Jr on 9/19/17. (ddm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ROGERS ELECTRIC SERVICE
CORPORATION, d/b/a Rogers
Electric,
Plaintiff,
v.
1:17-cv-1555-WSD
CVS PHARMACY, INC.,
Defendant.
OPINION AND ORDER
This matter is before the Court on Plaintiff Rogers Electric Service
Corporation’s (“Plaintiff”) Motion for Leave to File Motion to Remand [12] and
Motion to Stay Discovery and All Deadlines Pending Ruling on Remand [13]
(“Motion to Stay”).
I.
BACKGROUND
Plaintiff alleges that, since August 1, 2006, it has provided “electrical and
lighting maintenance and repair services” to “literally hundreds” of Defendant
CVS Pharmacy, Inc.’s (“Defendant”) retail locations throughout the United States.
(Compl. ¶ 6). In 2014, the parties entered into their Master Service Agreement
(“2014 Agreement”), effective April 1, 2014, through March 31, 2017. (Compl.
¶ 7). The 2014 Agreement authorized Defendant “to audit any and all business and
operations practices and procedures of [Plaintiff] as they pertain to this Agreement,
including, but not limited to, billing practices and procedures.” (Compl. ¶ 8).
The 2014 Agreement also granted Defendant “the right to verify/audit that all
service levels agreed to in this Agreement are being met via use of an outside audit
company.” (Compl. ¶ 8).
In 2015, the parties entered into their Purchase and Service Agreement
(“2015 Agreement”), effective March 1, 2015, through December 31, 2017.
(Compl. ¶ 9). The 2015 Agreement included the same auditing provisions as the
2014 Agreement, and “supersede[d]” the 2014 Agreement “in its entirety.”
(Compl. ¶¶ 9-10).
On February 6, 2016, Defendant notified Plaintiff that, under the
2015 Agreement, it intended to audit Plaintiff within the next 90 business days.
([1.1] at 42). Defendant stated that Connolly LLC, an outside auditing firm, would
conduct the audit. ([1.1] at 42). Plaintiff “sought assurances from [Defendant] that
the audit would be restricted to the time period covered by the 2015 [Agreement]
and that Connolly would not be permitted to audit [Plaintiff’s] billing practices and
procedures as only [Defendant] is permitted to do so under the 2015 [Agreement].”
(Compl. ¶ 13). Defendant declined to provide these assurances, “ceased providing
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any new work to [Plaintiff],” and constructively terminated its relationship with
Plaintiff. (Compl. ¶¶ 14-15).
On March 29, 2017, Plaintiff filed its Complaint ([1.1] at 4-11) in the
Superior Court of Gwinnett County, Georgia. Count 1 asserts a breach of contract
claim, for which Plaintiff seeks $22,892.61 in damages, on the grounds that
Defendant failed to pay Plaintiff “for work performed and materials supplied.”
(Compl. ¶ 27). Count 2 seeks a declaratory judgment that Defendant is not entitled
to audit Plaintiff under the 2014 and 2015 Agreements or, alternatively, that
“any audit conducted pursuant to the 2015 [Agreement] may only include services
and billings from March 31, 2015 through the present and that any audit relating to
billing practices and procedures may only be conducted by [Defendant] and not
any outside third-party audit company.” (Compl. at 8).
On May 1, 2017, Defendant filed its Notice of Removal [1] (the “Notice”) to
this Court on the basis of diversity jurisdiction. The Notice alleges that the parties
are citizens of different states and that the combined value of Plaintiff’s requests
for damages and declaratory relief exceeds $75,000. On May 23, 2017, Defendant
filed its Answer and Counterclaim [3], asserting counterclaims for breach of
contract and specific performance on the grounds that Plaintiff failed to submit to
an audit required under the 2014 and 2015 Agreements. On June 13, 2017,
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Plaintiff filed its Answer [4], asserting that the Court lacks subject matter
jurisdiction because the amount in controversy does not exceed $75,000.
On June 22, 2017, Plaintiff again asserted, in the parties’ Joint Preliminary Report
and Discovery Plan [6], that the Court lacks subject matter jurisdiction over this
action. On June 27, 2017, the Court approved the parties’ Joint Preliminary Report
and Discovery Plan, and ordered Plaintiff to file, on or before July 14, 2017, its
motion to remand this action to state court. ([8]). On August 9, 2017, Plaintiff
filed its Motion for Leave to File Motion to Remand, attaching its proposed motion
to remand and supporting memorandum of law.1 On August 14, 2017, Plaintiff
filed its Motion to Stay, seeking to stay this action “pending the Court’s
determination whether this case must be remanded to the Superior Court of
Gwinnett County, Georgia whether pursuant to Plaintiff’s prior motions or sua
sponte.” ([13] at 1). Defendant opposes Plaintiff’s motions, arguing that “[t]he
basis for the Court’s diversity jurisdiction in this matter is set forth in detail in
Defendant’s Notice of Removal.” ([14] at 5).
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Plaintiff’s counsel claims he did not move to remand this action by the
Court’s July 14, 2017, deadline because, due to email difficulties, he first became
aware of the Court’s June 27, 2017, Order on July 25, 2017. ([12.3] at 2).
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II.
DISCUSSION
A.
Legal Standard
Federal courts “have an independent obligation to determine whether
subject-matter jurisdiction exists, even in the absence of a challenge from any
party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 501 (2006). The Eleventh Circuit
consistently has held that “a court should inquire into whether it has subject matter
jurisdiction at the earliest possible stage in the proceedings. Indeed, it is well
settled that a federal court is obligated to inquire into subject matter jurisdiction
sua sponte whenever it may be lacking.” Univ. of S. Ala. v. Am. Tobacco Co.,
168 F.3d 405, 410 (11th Cir. 1999). “In light of the federalism and separation of
powers concerns implicated by diversity jurisdiction, federal courts are obligated to
strictly construe the statutory grant of diversity jurisdiction [and] to scrupulously
confine their own jurisdiction to the precise limits which the statute has defined.”
Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1268 (11th Cir. 2000).
“[T]here is a presumption against the exercise of federal jurisdiction, such that all
uncertainties as to removal jurisdiction are to be resolved in favor of remand.”
Russell Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1050 (11th Cir. 2001); see
City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012)
“[A]ll doubts about jurisdiction should be resolved in favor of remand to state
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court.”); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994)
(“[U]ncertainties are resolved in favor of remand.”). “An order remanding a case
to the State court from which it was removed is not reviewable on appeal or
otherwise.” 28 U.S.C. § 1447(d).
Defendant asserts that the Court has diversity jurisdiction under 28 U.S.C.
§ 1332. Diversity jurisdiction exists where the amount in controversy exceeds
$75,000 and the suit is between citizens of different states. 28 U.S.C § 1332(a).
“The existence of federal jurisdiction is tested at the time of removal,” Adventure
Outdoors, Inc. v. Bloomberg, 552 F.3d 1290, 1294-95 (11th Cir. 2008), and the
burden of establishing diversity jurisdiction “rests with the defendant seeking
removal,” Scimone v. Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013); City of
Vestavia Hills v. Gen. Fidelity Ins. Co., 676 F.3d 1310, 1313 n.1 (11th Cir. 2012)
(“The removing party bears the burden of proof regarding the existence of federal
subject matter jurisdiction.”).
B.
Analysis
Where, as here, “jurisdiction is premised on the diversity of the parties, the
court is obligated to assure itself that the case involves the requisite amount in
controversy.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1261 (11th Cir.
2000). Plaintiff’s Complaint includes a breach of contract claim, for which
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Plaintiff seeks $22,892.61 in damages, and a request for declaratory judgment that
Defendant is not entitled to audit Plaintiff under the 2014 and 2015 Agreements.
“[T]he value of the damages claim[] must be aggregated with that of the
declaratory judgment claim to determine the total amount in controversy for
§ 1332 purposes.” Hardy v. Jim Walter Homes, Inc., No. 06-CV-0687, 2007 WL
1889896, at *4 (S.D. Ala. June 28, 2007). “[T]he value of the requested
[declaratory] relief is the monetary value of the benefit that would flow to the
plaintiff if the [declaration] were granted.” Morrison v. Allstate Indem. Co.,
228 F.3d 1255, 1268 (11th Cir. 2000). Defendant is required to prove, by a
preponderance of the evidence, that the combined value of Plaintiff’s requests for
damages and declaratory relief exceed $75,000. See Hardy, Inc., 2007 WL
1889896, at *5; see also Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir.
2001) (“Where, as here, the plaintiff has not pled a specific amount of damages,
the removing defendant must prove by a preponderance of the evidence that the
amount in controversy exceeds the jurisdictional requirement.”).
Defendant has not met its burden to show by a preponderance of the
evidence that Plaintiff’s declaratory relief claim has a value of at least $52,107.40,
the amount required to meet the amount-in-controversy requirement under
Section 1332 when Plaintiff’s request for $22,892.61 in contract damages is
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credited to the amount in controversy. Plaintiff seeks a declaratory judgment that
Defendant is not entitled to audit Plaintiff under the 2014 or 2015 Agreements.
Both agreements provide that “all costs and expenses incurred by [Defendant] for
such an audit will be paid by [Defendant], unless the inspection discloses errors or
omissions of more than five percent (5%) of the invoiced amount in [Plaintiff’s]
favor in which case the costs and expenses will be paid by [Plaintiff].” ([1.1] at 19,
32). Plaintiff thus is required to pay for the audit only if it reveals a sufficiently
high error rate in Plaintiff’s practices. Defendant’s Notice alleges that “[t]he costs
and expenses of the audit are estimated to be no less than approximately $66,000,”
and that Defendant’s “internal and informal audit suggests that [Plaintiff] has
overcharged [Defendant] by at least $330,000.” ([1] at 5). Defendant does not
elaborate on, or provide any evidence in support of, these allegations, and it
certainly does not present sufficient evidence to establish the amount in
controversy by a preponderance of the evidence. Defendant’s failure to offer
evidence of the monetary value of Plaintiff’s declaratory relief claim is fatal to the
Court’s subject matter jurisdiction. See Vulcan Steel Structures, Inc. v. Murphy,
No. 7:15-CV-109-WLS, 2015 WL 13413348, at *2 (M.D. Ga. Aug. 4, 2015) (“The
removing party has the burden to prove facts supporting jurisdiction by a
preponderance of the evidence.”); Givens v. Publix Super Markets, Inc., No. 1:138
CV-16-WLS, 2013 WL 4518133, at *3 (M.D. Ga. Aug. 26, 2013) (“[T]his Court is
not permitted to speculate as to the amount in controversy without the benefit of
evidence in support thereof. Since Defendant has offered no evidence that the
amount in controversy exceeds $75,000, Defendant has failed to meet its burden to
prove same by a preponderance of the evidence.”); see also Pretka v. Kolter City
Plaza II, Inc., 608 F.3d 744, 752 (11th Cir. 2010) (“[I]t would be impermissible
speculation for a court to hazard a guess on the jurisdictional amount in
controversy without the benefit of any evidence on the value of [plaintiffs’]
claims.”); Lowery v. Alabama Power Co., 483 F.3d 1184, 1214-15 (11th Cir.
2007) (“If [defendant’s] evidence is insufficient to establish that removal was
proper or that jurisdiction was present, neither the defendants nor the court may
speculate in an attempt to make up for the notice’s failings.”).
The Court also finds that the monetary value of Plaintiff’s requested
declaratory relief is “too speculative . . . to be included in determining the amount
in controversy.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1270 (11th Cir.
2000); see Cohen v. Office Depot, Inc., 204 F.3d 1069, 1079 (11th Cir. 2000)
(finding “the claim for injunctive relief too speculative to satisfy the amount in
controversy requirement” and “too tenuous of a foundation for diversity
jurisdiction”). Plaintiff derives monetary value from its requested declaratory
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relief only if a future audit, of undefined scope, would reveal overcharges or
“disclose[] errors or omissions of more than five percent (5%) of the invoiced
amount in [Plaintiff’s] favor.” ([1.1] at 19, 32). Even assuming these conditions
were met, the exact value of Plaintiff’s declaratory relief depends on the specific
overcharges or errors revealed by the audit, the cost of the audit, and the invoiced
amount subject to the audit, all of which are currently unknown or contingent on
future events. “Diversity jurisdiction cannot be founded on contingencies or
speculation about what may or may not happen in the future.” Mann v. Unum Life
Ins. Co. of Am., No. 8:12-CV-1343, 2012 WL 12897381, at *3 (M.D. Fla. Oct. 3,
2012), aff’d, 505 F. App’x 854 (11th Cir. 2013); see Cohen, 204 F.3d at 1079
(finding that “the injunctive relief in this case involves too many contingencies” to
be included in determining the amount in controversy); Hardy, 2007 WL 1889896,
at *5 (“Courts have cautioned . . . that if the value of the relief to the plaintiff is
speculative or immeasurable, then it cannot satisfy the amount in controversy
requirement as a matter of law.”).2 Defendant has not established that the amount
2
See also Vicksburg, S. & P. Ry. Co. v. Nattin, 58 F.2d 979, 980 (5th Cir.
1932) (“Jurisdiction is based on actuality, not prophecy, the pressure of a grievance
immediately felt and presently measureable in money of the jurisdictional amount.
Speculative anticipation that conditions, from which present ills, not now sufficient
in amount to give jurisdiction, flow, may in time aggregate the necessary amount,
will not support jurisdiction.”).
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in controversy exceeds $75,000, and this action is remanded to the Superior Court
of Gwinnett County, Georgia. See Newman v. Spectrum Stores, Inc.,
109 F. Supp. 2d 1342, 1345 (M.D. Ala. 2000) (“Because federal court jurisdiction
is limited, the Eleventh Circuit favors remand of removed cases where federal
jurisdiction is not absolutely clear.”). Because this action is remanded to state
court for lack of subject matter jurisdiction, Plaintiff’s pending motions are denied
as moot.
III.
CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that this action is REMANDED to the
Superior Court of Gwinnett County, Georgia.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File
Motion to Remand [12] is DENIED AS MOOT.
IT IS FURTHER ORDERED that Plaintiff’s Motion to Stay Discovery
and All Deadlines Pending Ruling on Remand [13] is DENIED AS MOOT.
SO ORDERED this 19th day of September, 2017.
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