Drill Cuttings Disposal Co L L C v. Chesapeake Operating Inc

Filing 12

MEMORANDUM RULING re 4 MOTION to Remand filed by Drill Cuttings Disposal Co L L C. Signed by Magistrate Judge Patrick J Hanna on 2/7/2012. (crt,Kennedy, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
DRILL CUTTINGS DISPOSAL
COMPANY L.L.C.

CIVIL ACTION NO. 6:12-cv-00051

VERSUS

JUDGE DOHERTY

CHESAPEAKE OPERATING, INC.

MAGISTRATE JUDGE HANNA

MEMORANDUM RULING

Pending before the Court is the plaintiff’s motion to remand (Rec. Doc. 4). The
motion is not opposed. (Rec. Doc. 11). For the following reasons, the motion will
be granted, and this action will be remanded to the state court where it commenced.

FACTUAL BACKGROUND
According to the plaintiff’s petition, the plaintiff and defendant entered into a
contract by which the plaintiff, Drill Cuttings Disposal Company, L.L.C., agreed to
provide certain services, equipment, and supplies generally involving the processing
of drill cuttings to the defendant, Chesapeake Operating, Inc., with regard to a
particular oil well located in DeSoto Parish, Louisiana. The total charges for Drill
Cuttings’s services were $47,939.31. Drill Cuttings claims that the invoice was never
paid. In this lawsuit, Drill Cuttings seeks to recover the unpaid invoice amount plus

interest and costs. In its petition, Drill Cuttings does not expressly seek to recover
attorneys’ fees, nor does it reference the Louisiana open account statute.
Drill Cuttings originally filed suit in a Louisiana state court. Chesapeake
removed the action to this forum, alleging that the parties are diverse in citizenship
and the amount in controversy exceeds the jurisdictional minimum. Drill Cuttings
then filed the instant motion seeking remand of the action to state court.
Chesapeake responded to Drill Cuttings’s motion to remand by stating that it
does not oppose the motion (Rec. Doc. 11 at 2) because Drill Cuttings has stipulated
that it is not seeking to recover attorneys’ fees (Rec. Doc. 11-1).

ANALYSIS
Federal district courts are courts of limited jurisdiction, possessing only the
power authorized by the Constitution and by statute.1 Accordingly, federal courts
have subject-matter jurisdiction only over civil actions presenting a federal question2
and those in which the amount in controversy exceeds $75,000 exclusive of interest
and costs and the parties are citizens of different states.3 The party invoking subject1

Griffin v. Lee, 621 F.3d 380, 388 (5th Cir. 2010); Halmekangas v. State Farm Fire and
Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010).
2

28 U.S.C. § 1331.

3

28 U.S.C. § 1332.
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matter jurisdiction in federal court has the burden of establishing the court’s
jurisdiction.4 Therefore, when an action is removed from state court, the removing
party bears the burden of showing that federal jurisdiction exists.5
Chesapeake removed this case, arguing that the parties are diverse in
citizenship and that the amount in controversy exceeds the jurisdictional threshold.
For that reason, Chesapeake has the burden of establishing that this Court has
jurisdiction over this matter. Drill Cuttings filed a motion to remand, arguing that the
amount in controversy does not satisfy the jurisdictional requirement.
The amount in controversy is the sum claimed by the plaintiff in his complaint
if the claim was apparently made in good faith.6 To justify remand, “it must appear
to a legal certainty that the claim is really for less than the jurisdictional amount.”7
Therefore, removal is proper if it is “facially apparent” from the complaint that the
claim or claims asserted exceed the jurisdictional amount.8 When the complaint does

4

St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998).

5

Manguno v. Prudential Property and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002);
De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).
6

St. Paul Reinsurance v. Greenberg, 134 F.3d at 1253; De Aguilar v. Boeing Co., 47
F.3d at 1408; Nat’l Union Fire Ins. Co. of Pittsburgh v. Russell, 972 F.2d 628, 630 (5th Cir. 1992).
7

St. Paul Reinsurance v. Greenberg, 134 F.3d at 1253, quoting St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938).
8

Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).
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not state a specific amount of damages, the defendant must establish by a
preponderance of the evidence that the amount in controversy exceeds the
jurisdictional threshold.9 This burden can be satisfied either by demonstrating that
the amount in controversy is facially apparent from the plaintiff’s pleadings or by
setting forth the facts in controversy, with summary-judgment-type evidence, that
support a finding of the requisite amount.10 “The preponderance burden forces the
defendant to do more than point to a state law that might allow the plaintiff to recover
more than what is pled. The defendant must produce evidence that establishes that
the actual amount in controversy exceeds [the jurisdictional amount].”11 Thus, the
district court must first examine the complaint to determine whether it is facially
apparent that the plaintiff’s claims exceed the jurisdictional threshold; if it is not
facially apparent, the court may then rely on summary-judgment-type evidence to

9

Simon v. Wal–Mart Stores, 193 F.3d 848, 850 (5th Cir. 1999); Allen v. R & H Oil &
Gas Co., 63 F.3d at 1335.
10

Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999); Allen v. R & H Oil
& Gas Co., 63 F.3d at 1335.
11

De Aguilar v. Boeing, 47 F.3d at 1412 (emphasis in original).
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ascertain the amount in controversy.12 Any doubts as to the propriety of removal
should be construed strictly in favor of remand.13
In its petition, Drill Cuttings seeks to recover the $47,939.31 it invoiced
Chesapeake plus “interest, costs of these proceedings and for all general, legal or
equitable relief and equitable relief, whether pleaded or not, as plaintiff may at trial
or otherwise be shown entitled to.”14 Chesapeake interpreted the prayer for interest,
costs, and other relief as a basis for arguing that Drill Cuttings has asserted a claim
for attorneys’ fees under the Louisiana Open Account Statute, La. R.S. 9:2781 or
under the contract binding the parties.15 When the state statute governing the parties’
dispute provides for the recovery of attorney's fees, those fees are included as part of
the amount in controversy.16 In such a situation, however, the court “cannot simply
guesstimate their amount and add them to the other damages to arrive at the amount

12

Luckett v. Delta Airlines, 171 F.3d at 298; Allen v. R & H Oil & Gas Co., 63 F.3d at

13

Manguno v. Prudential Prop. and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).

14

Rec. Doc. 1-1 at 3.

15

Rec. Doc. 1 at 3-4.

1335.

16

Manguno v. Prudential, 276 F.3d at 723; Foret v. Southern Farm Bureau Life Ins.
Co., 918 F.2d 534, 537 (5th Cir. 1990).
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in controversy. Some kind of allegation or proof of the amount of fees incurred is
needed.”17
Chesapeake argued that the jurisdictional threshold was crossed when the value
of Drill Cuttings’s claim for attorneys’ fees was added to the amount of the unpaid
invoice. Drill Cuttings countered by stating that it did not mention the open account
statute in its petition and does not seek to recover attorneys fees.18 Drill Cuttings then
stipulated that it is not seeking to recover attorneys’ fees and that if attorneys’ fees
are award, it will waive that award and forego the collection of attorneys’ fees.19
Based upon the stipulation, Chesapeake withdrew its opposition to Drill Cuttings’s
motion to remand.
In light of Drill Cuttings’s stipulation, the undersigned finds that it is facially
apparent that the amount in controversy in this lawsuit is less than the jurisdictional
minimum, necessitating remand of this action to state court.
The undersigned also cautions the parties that no finding is made – or can be
made – with regard to the diversity of the parties. Both Drill Cuttings20 and

17

Mintzer v. Lester, 51 Fed. App’x 929, 2002 WL 31415179, *3 (5th Cir. 2002).

18

Rec. Doc. 4-1 at 4.

19

Rec. Doc. 11-1.

20

Rec. Doc. 4-1 at 2 (stating that Drill Cuttings “concedes that the ‘diversity’
requirement is satisfied.”)
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Chesapeake21 assumed that the diversity prong of the jurisdiction analysis was
satisfied because Drill Cuttings alleged in its petition that it is “a Louisiana limited
liability company having its business office in the Parish of Lafayette, Louisiana.”22
That assumption was misplaced.
A limited liability company is a citizen of every state in which any member of
the company is a citizen,23 and “the citizenship of a LLC is determined by the
citizenship of all of its members.”24 Therefore, the diversity analysis for a limited
liability company requires a determination of the citizenship of every member of the
company.25 If any one of the members is not diverse, the limited liability company
is not diverse. Having no information regarding the citizenship of the members of the

21

Rec. Doc. 1 at 3 (alleging that “[c]omplete diversity of citizenship exists . . . .”)

22

Rec. Doc. 1-1 at ¶ 1.

23

See, Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008).

24

Harvey v. Grey Wolf, 542 F.3d at 1080. [Emphasis added.]

25

See, Harvey v. Grey Wolf, 542 F.3d at 1080; Grupo Dataflux v. Atlans Global Group,
L.P., 541 U.S. 567, 585, n. 1 (2004) (noting that courts of appeal have held that the citizenship of
each member of a limited liability company counts for diversity purposes); Carden v. Arkoma
Assocs., 494 U.S. 185, 196 (1990) (holding that the citizenship of an unincorporated entity or
association is based upon the citizenship of all of its members); Randolph v. Wyatt, No. 09-2020,
2010 WL 299257, at *1 (W.D. La. Jan. 19, 2010); Miracle Ear, Inc. v. Premier Hearing Aid Center,
L.L.C., No. 09-1691, 2009 WL 5198183, at *1 (W.D. La. Dec. 22, 2009). See also Wright v.
JPMorgan Chase Bank, NA, No. 09-cv-0482, 2009 WL 854644, at *1 (W.D. La. Mar. 26, 2009) (“If
the members are themselves partnerships, LLCs, corporations or other form of entity, their
citizenship must be alleged in accordance with the rules applicable to that entity, and the citizenship
must be traced through however many layers of members or partners there may be.”)
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company, the undersigned cannot evaluate whether the parties are – or are not –
diverse in citizenship. Since both prongs of the jurisdictional analysis must be
satisfied, however, the undersigned’s inability to evaluate diversity does not affect its
decision on the remand of this action.

Conclusion
The amount in controversy is less than the jurisdictional requirement.
Accordingly, this court lacks subject-matter jurisdiction, and this action is remanded
to the 15th Judicial District Court, Lafayette Parish, Louisiana.
Signed at Lafayette, Louisiana, on February 7th, 2012.

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