Morgan v. Makin

Filing 16

ORDER Granting 7 Motion to Remand. Clerk shall enter judgment accordingly. Signed by Judge Edward C. Reed, Jr on 4/4/11. (Copies have been distributed pursuant to the NEF; CC: Certified copy of order, judgment, and docket sheet mailed to state court - ASB)

-RJJ Morgan v. Makin

Doc. 16

1 2 3 4 5 6 7 PHILLIP MORGAN dba PHILLIP MORGAN COMPANY, 8 Plaintiff, 9 vs. 10 SEEMA K. MAKIN, an individual; 11 HABIR MAKIN, an individual; DOES 1-10, and ROE CORPORATIONS 1-10, 12 inclusive, 13 14 15

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) )

2:11-cv-00018-ECR-RJJ

Order

Now pending is a Motion to Remand to State Court (#7) filed by Defendants filed their opposition

16 Plaintiff on January 7, 2011.

17 (#11) on January 24, 2011, and Plaintiff replied (#13) on January 18 28, 2011. 19 20 21

The motion is ripe, and we now rule on it.

I. Background Plaintiff filed suit in state court, asserting claims for

22 breach of contract, breach of implied covenant of good faith and 23 fair dealing, and fraud.

Plaintiff alleges that due to Defendants'

24 acts, Plaintiff sustained damages in excess of thirty-two thousand 25 dollars, and also requests disgorgement of sixteen thousand dollars 26 allegedly wrongfully retained by Defendants.

Plaintiff also

27 requests punitive damages and attorney's fees. 28

Dockets.Justia.com

1

Defendants removed the action to federal court on May 18, 2006

2 on the basis of diversity jurisdiction under 28 U.S.C. § 1332. 3 Thereafter, Plaintiff filed an amended complaint (#4) adding 4 Defendant Habir Makin, who had inadvertently been left out of the 5 caption in the original complaint (#1) filed in state court.

Claims

6 and claim amounts do not appear to have been modified in the amended 7 complaint (#4).

It is undisputed that Plaintiff is a resident of

8 Nevada, and Defendants are residents of Alaska. 9

Plaintiff now challenges the removal based on amount in

10 controversy, and seeks to remand the action. 11 12 13

II. Standard of Review A defendant may remove an action from state court to federal

14 court if the federal court would have had original subject matter 15 jurisdiction over the action.

28 U.S.C. § 1441(a).

Original

16 jurisdiction must be based either on a claim involving the 17 Constitution, laws, or treaties of the United States, 28 U.S.C. § 18 1331, or on diversity of citizenship, which applies to suits 19 totaling more than $75,000 in controversy between citizens of 20 different states, 28 U.S.C. § 1332(a).

Federal jurisdiction under

21 28 U.S.C. § 1332(a) requires "complete diversity of citizenship 22 between the parties opposed in interest." 23 F.3d 1177, 1181 (9th Cir. 2004). 24

Kimtz v. Lamar Corp., 385

"In cases where entities rather than individuals are litigants, Johnson

25 diversity jurisdiction depends on the form of the entity."

26 v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). 27 An unincorporated association such as a partnership or limited 28
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1 liability company has the citizenship of all of its members.

Id.

2 Thus, "the citizenship of unincorporated associations must be traced 3 through however many layers of partners or members there may be." 4 Hart v. Terminex Int'l, 336 F.3d 541, 543 (7th Cir. 2003) (citation 5 omitted). 6

A motion to remand is the proper procedure for challenging Babasa v. LensCrafters, Inc., 498 F.3d 972, 974 (9th Cir.

7 removal. 8 2007).

The removal statute must be strictly construed to limit the

9 federal court's authority to that expressly provided by Congress and 10 to protect the states' judicial powers. 11 Sheets, 313 U.S. 100, 108-09 (1941).

Shamrock Oil & Gas Corp. v.

Any doubt about the right of Durham v. Lockheed Martin The party seeking

12 removal is resolved in favor of remand.

13 Corp., 445 F.3d 1247, 1252 (9th Cir. 2006).

14 removal bears the burden of establishing by a preponderance of the 15 evidence that all removal requirements are met.

Etheridge v. Harbor

16 House Rests., 861 F.2d 1389, 1393 (9th Cir. 1988). 17

When an amended complaint has been filed after removal,

18 propriety of removal is "determined according to the plaintiffs' 19 pleading at the time of the petition for removal."

Pullman Co. v.

20 Jenkins, 305 U.S. 534, 537 (1939); Sparta Surgical Corp. v. Nat'l 21 Ass'n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998). 22

The party asserting jurisdiction in federal court bears the

23 burden of proof, by a preponderance of the evidence, that the amount 24 in controversy requirement has been met.

Sanchez v. Monumental Life

25 Ins. Co., 102 F.3d 398, 403 (9th Cir. 1996). 26 27 28
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1 2

III. Discussion Plaintiff's complaint (#1)1 alleges costs incurred in excess of

3 thirty-two thousand dollars and also alleges that sixteen thousand 4 dollars paid to Defendants through a secret settlement should have 5 been paid to Plaintiff. 6 and attorney's fees.

Plaintiff also requests punitive damages

Because the specified damages do not meet the

7 amount in controversy, we consider Defendants' argument that the 8 additional claims for punitive damages and attorney's fees suffice 9 to bring this action under federal jurisdiction. 10 11

A. Punitive Damages Punitive damages are "part of the amount in controversy in a Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th

12 civil action."

13 Cir. 2001) (citing Bell v. Preferred Life Assur. Soc'y, 320 U.S. 14 238, 240 (1943)).

Defendants cite Nevada law providing that in

15 actions for breach of an obligation not arising from contract where 16 fraud, oppression, or malice is proven, a plaintiff may recover 17 damages in an amount of up to $300,000 when the awarded compensatory 18 damages are less than $100,000.

See NEV. REV. STAT. § 42.005.

19 Defendants do not set forth, however, any factual support that 20 punitive damages in this case should be considered and that the 21 amount will, more likely than not, exceed the amount needed to 22 increase the amount in controversy above $75,000.

A general recital

23 of a statute awarding punitive damages in non-contractual fraud 24 25 26 27 28
The Court is aware of the amended complaint (#4), but will, for purposes this motion to remand (#7), consider the original complaint (#1), attached Exhibit 1 to the notice of removal (#1). We note, however, that there is substantial difference between the two pleadings, other than the addition Defendant Habir Makin to the caption.
1

of as no of

4

1 cases is not sufficient.

See, e.g., McCaa v. Massachusetts Mut.

2 Life Ins. Co., 330 F. Supp. 2d 1143, 1149 (D. Nev. 2004). 3 Therefore, we conclude that Defendants have failed to meet their 4 burden of proof that the amount in controversy in this case more 5 likely than not exceeds the jurisdictional threshold based on 6 Plaintiff's claim for punitive damages. 7 8

B. Attorney's Fees Attorney's fees are part of the amount in controversy if Kroske v. U.S. Bank Corp., 432

9 authorized by statute or contract. 10 F.3d 976, 980 (9th Cir. 2005).

The contract at issue here provides

11 that a party commencing or prosecuting an action in violation of the 12 contract shall be liable for attorney's fees and costs incurred by 13 the opposing party as a result of the action.

Nevada law also

14 allows an award of attorney's fees when the prevailing party has not 15 recovered more than $20,000, or when a claim or defense was "brought 16 or maintained without reasonable ground or to harass the prevailing 17 party."

NEV. REV. STAT. § 18.010.

The contractual provision cited

18 by Defendants awards attorney's fees for a breach of a covenant not 19 to sue, and does not expressly require a defendant in an action to 20 pay attorney's fees.

Defendants have not provided any evidence that

21 Plaintiff will recover less than $20,000, or that Defendants are 22 defending this claim without reasonable grounds or to harass 23 Plaintiff. 24

McCaa, 330 F. Supp. 2d at 1150.

In further support of their argument that attorney's fees

25 increase the amount in controversy above $75,000, Defendants provide 26 that Plaintiff stated in verified interrogatory responses that 27 Plaintiff incurred over $173,000 in fees and costs (not including 28
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1 any costs incurred in this action) to prosecute and defend against a 2 separate lawsuit currently pending in state court.

Plaintiff argues

3 that those fees and costs are sought in the separate state court 4 proceeding, and not in the present action.

Plaintiff explains that

5 the state court action is a lien foreclosure action filed by 6 Plaintiff against Defendants for failure to pay monies due for the 7 construction of the Makins' residence.

Defendants have failed to

8 explain how attorney's fees incurred in an ongoing separate action 9 will, more likely than not, be awarded in this action as fees or 10 special damages.

Nor do the other grounds cited by Defendants

11 provide factual support that attorney's fees in this action will 12 increase the amount in controversy to exceed $75,000.

Plaintiff's

13 claim for attorney's fees, therefore, does not suffice to bring this 14 action under diversity jurisdiction. 15 16 17

IV. Conclusion Plaintiff does not seek damages in a specified amount over Nor have Defendants proven, by a preponderance of the

18 $75,000.

19 evidence, that Plaintiff's claims for punitive damages and 20 attorney's fees may be awarded in an amount sufficient to increase 21 the amount in controversy to the amount required for federal 22 diversity jurisdiction.

Plaintiff's motion to remand (#7) shall,

23 therefore, be granted and the action shall be remanded to state 24 court. 25 26 27 28
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1

IT IS, THEREFORE, HEREBY ORDERED that Plaintiff's motion to

2 remand (#7) is GRANTED. 3 4 5 6 DATED: April 4, 2011 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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The Clerk shall enter judgment accordingly.

____________________________ UNITED STATES DISTRICT JUDGE