Veterans Brothers No. 126, L.L.C. v. 7-Eleven, Inc.

Filing 42

ORDER AND REASONS denying 25 Motion by plaintiff Avondale Brothers No. 128 L.L.C. to Remand to State Court. Signed by Judge Sarah S. Vance on 7/1/16. (Reference: 16-2034)(jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AVONDALE BROTHERS NO. 128,
L.L.C.

CIVIL ACTION

VERSUS

NO: 2:16-CV-02034

SEI FUEL SERVICES, INC.

SECTION: R

ORDER AND REASONS
Defendant SEI Fuel Services, Inc. removed plaintiff Avondale Brothers
No. 128 L.L.C.’s state-court action on March 1o, 2016. 1 Plaintiff now moves
the Court to remand the action, arguing that the amount in controversy does
not meet the jurisdictional minimum under 28 U.S.C. § 1332. 2 For the
following reasons, the Court denies the motion.

I.

BACKGROUND
Plaintiff Avondale Brothers No. 128, L.L.C., a convenience and fuel

store, filed this action in the Twenty-Fourth Judicial District Court for the
Parish of Jefferson seeking a declaratory judgment that it is not bound by an

1
2

See R. Doc. 1.
R. Doc. 25-1 at 4.

alleged fuel supply contract with defendant SEI Fuel Services, Inc. 3
Defendant contends that it acquired from a third party the exclusive
contractual right to sell fuel to the Avondale Brothers store.4 Plaintiff
disputes the continuing validity of the contract. 5
On March 10, 2016, defendant removed the action to this Court on the
basis of diversity jurisdiction. 6 On April 5, 2016, plaintiff moved to remand
the action on the grounds that defendant has not established that the amount
in controversy exceeds $75,000. 7 Plaintiff argues that any harm defendant
might suffer in this litigation is mitigated by the fact that plaintiff is
continuing to perform under the disputed contract pending final resolution
of this case. 8
Defendant opposes the motion, asserting that, plaintiff’s present
compliance with the disputed contract notwithstanding, the exclusive
distribution right created by the fuel supply contract is worth well over
$75,000.9 In support, defendant submits the affidavit of its Director of

See R. Doc. 1-1 at 2.
R. Doc. 26 at 1; see also R. Doc. 1-1 at 1.
5 R. Doc. 1-1 at 1.
6 R. Doc. 1 at 5.
7 See R. Doc. 25; see also R. Doc. 25-1 at 4.
8 See R. Doc. 25-1 at 5.
9 See R. Doc. 26.
3

4

Administration and Controls, Barry Bailey.10 Citing the disputed contract’s
requirement that plaintiff purchase from defendant a minimum of 1,403,358
gallons of gasoline per year,11 Bailey values the remaining gasoline and motor
fuel proceeds attributable to the Avondale Brother’s store at $360,000.12
Bailey also values the proceeds attributable to the five-year renewal term at
$270,000. 13

Finally, Bailey states that if defendant loses its alleged

contractual right to supply fuel to plaintiff it will incur a de-branding penalty
of $889,614.85.14

In total, Bailey alleges an amount in controversy of

$1,519,614.85.15

II.

LEGAL STANDARD
A defendant may generally remove a civil action filed in state court if

the federal court has original jurisdiction over the action. See 28 U.S.C. §
1441(a). The removing party bears the burden of showing that federal
jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th
Cir. 1995). In assessing whether removal is appropriate, the Court is guided

See R. Doc. 26-1.
Id. at 26.
12 Id. at 2
13 Id.
14 Id.
15 Id.
10
11

by the principle, grounded in notions of comity and the recognition that
federal courts are courts of limited jurisdiction, that removal statutes should
be strictly construed. See, e.g., Manguno v. Prudential Prop. & Cas. Ins.
Co., 276 F.3d 720, 723 (5th Cir. 2002). While the Court must remand the
case to state court if at any time before final judgment it appears that it lacks
subject matter jurisdiction, the Court's jurisdiction is fixed as of the time of
removal. See 28 U.S.C. § 1447(c); Doddy v. Oxy USA, Inc., 101 F.3d 448, 456
(5th Cir. 1996).

III. DISCUSSION
Defendant has asserted federal jurisdiction based on diversity of
citizenship. See 28 U.S.C § 1332. Diversity jurisdiction exists only when the
parties are citizens of different states, and the amount in controversy exceeds
$75,000. White v. FCI USA, Inc., 319 F.3d 672, 674 (5th Cir. 2002). Because
plaintiff does not dispute that the parties are citizens of different states, the
Court need consider only whether the amount in controversy exceeds the
jurisdictional minimum.
Regarding the amount in controversy, plaintiff does not identify a
specific amount of damages in his petition. As amended by the Federal
Courts Jurisdiction and Venue Clarification Act of 2011, 28 U.S.C. §

1446 provides that the sum demanded in good faith in the initial pleading
shall serve as the amount in controversy. 28 U.S.C. § 1446(c)(2). If the initial
pleading seeks nonmonetary relief, the notice of removal may assert the
amount in controversy, and removal is proper if the court finds, by a
preponderance of the evidence, that the amount of controversy exceeds
$75,000. 28 U.S.C. § 1446(c)(2)(A)(i);(B).
This provision of section 1446 is consistent with the approach taken by
the Fifth Circuit in requiring that the removing defendant prove by a
preponderance of the evidence that the amount in controversy exceeds
$75,000

when

plaintiffs

do

not

request

a

specific

amount

in

damages. See Wright Family Inv., LLC v. Jordan Carriers, Inc., No. 12–
CV–0826, 2012 WL 2457664, at *1 (W.D. La. June 25, 2012) (citing Luckett
v. Delta Airlines, 171 F.3d 295, 298 (5th Cir. 1999)); see also Grant v.
Chevron Phillips Chem. Co., 309 F.3d 864, 868 (5th Cir. 2002). Under Fifth
Circuit jurisprudence, a defendant satisfies this burden either by showing
that it is facially apparent that the plaintiff's claims exceed the jurisdictional
amount or by setting forth the facts in dispute supporting a finding that the
jurisdictional amount is satisfied. Grant, 309 F.3d at 868 (citing Allen v. R
& H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995)). If the defendant
meets its burden of showing the requisite amount in controversy, the

plaintiff can defeat removal only by establishing with legal certainty that the
claims are for less than $75,000. Id. (citing De Aguilar v. Boeing, 47 F.3d
1404, 1412 (5th Cir. 1995)).
In actions seeking declaratory or injunctive relief, the amount in
controversy is measured by the value of the object of the litigation. See Hunt
v. Washington State Apple Advertising Commission, 432 U.S. 333, 347
(1977); Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983). As the Fifth
Circuit holds, the object of the litigation is the value of the right to be
protected or the extent of the injury to be prevented. See Texas Acorn v.
Texas Area 5 Health Systems Agency, Inc., 559 F.2d 1019 (5th Cir. 1977).
Here, the right to be protected is the contractual right to serve as the
exclusive gasoline supplier for plaintiff’s convenience and fuel store. As
plaintiff acknowledges in its state-court petition, the disputed fuel supply
contract has an initial term of 15 years–seven of which still remain–and an
option for an additional five-year renewal. 16 Given the value of the relevant
commodity and the exclusive nature of the contract, it is facially apparent
that the amount in controversy exceeds $75,000.
Any doubt as to the value of the disputed contract right is dispelled by
evidence that defendant submits in opposition to plaintiff’s remand motion.

16

See R. Doc. 1-1 at 1.

In a sworn affidavit, defendant’s Director of Administration and Control
values the gasoline and motor fuel proceeds attributable to plaintiff’s store
under the remaining initial term at $360,000. 17 He also values the five-year
renewal term proceeds at $270,000 and states that defendant will incur a
$889,614.85 de-branding penalty if it loses the right to supply fuel to plaintiff
under the disputed contract. 18 Adding these figures yields an amount in
controversy of over $1.5 million, 19 well in excess of the jurisdictional
requirement.
Plaintiff offers no evidence to rebut defendant’s valuation. Instead,
plaintiff simply asserts that any harm defendant might otherwise sustain if
plaintiff is deemed not to be bound by the fuel supply contract is mitigated
by plaintiff’s promise to continue purchasing defendant’s fuel until this
controversy is judicially resolved. 20 As noted, to determine the amount in
controversy in a declaratory judgment action, the Court looks to the value of
the object of the litigation. See Hunt, 433 U.S. at 347. The object of this
litigation is a multi-year fuel supply contract. That plaintiff is continuing to
purchase fuel under the contract during the pendency of this litigation does

See R. Doc. 26-1 at 2.
Id.
19 Id.
20 See R. Doc. 25-1 at 5.
17

18

not change the fact that a judgment on the contract’s validity will
substantially impact both parties’ bottom lines for years to come. Thus,
plaintiff’s argument fails to establish to a legal certainty that the amount in
controversy is less than $75,000. See Grant, 309 F.3d at 868. Accordingly,
plaintiff’s motion to remand is denied.

IV.

CONCLUSION
For the foregoing reasons, the Court DENIES plaintiff’s motion to

remand.

1st
New Orleans, Louisiana, this _______ day of July, 2016.

___________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE