Kraus et al v. Lennar Reno, LLC et al

Filing 23

ORDER that Lennar's motion to file a sur-reply (ECF No. 14 ) is granted; and Plaintiff's motion to remand (ECF No. 7 ) is denied. Signed by Judge Miranda M. Du on 8/27/2018. (Copies have been distributed pursuant to the NEF - LH)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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WILLIAM G. KRAUS,

Case No. 3:18-cv-00120-MMD-WGC
Plaintiffs,

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ORDER

v.
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LENNAR RENO, LLC, et. al.,
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Defendants.
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I.

SUMMARY

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Plaintiffs filed this action in state court asserting claims arising from alleged

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construction defects. Defendants Lennar Reno, LLC and Lennar Reno, LLC dba Lennar

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Homes (collectively, “Lennar” or “Defendant”) removed based on diversity jurisdiction.

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(ECF No. 1.) Before the Court is Plaintiffs’ motion to remand (“Motion”). (ECF No. 7.)

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Lennar opposes (ECF No. 10) and Plaintiffs have replied. (ECF No. 11.) Lennar filed an

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errata to submit a signed Declaration of Mark Sustana. (ECF No. 12.) Lennar also filed a

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motion for leave to file sur-reply to Plaintiffs’ motion to remand (“Lennar’s Motion”). (ECF

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No. 14.) For the following reasons, the Court grants Lennar’s Motion and denies Plaintiffs’

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Motion.

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II.

BACKGROUND

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Plaintiffs own homes located in the Casa Bella subdivision in Reno. (ECF No. 1-2

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at 3.) Plaintiffs purchased their homes from Lennar on various dates beginning in 2012.

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(Id. at 11.) The gist of their claims is that the slab foundations for their homes were

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defective or inadequately installed, resulting in damages to their homes. (Id. at 5-11.)

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On February 8, 2018, Plaintiffs filed their Complaint, asserting numerous state law

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claims. (ECF No. 1-2.) On March 15, 2018, Lennar removed the action, alleging that

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removal was timely as Lennar was served with the Complaint on February 14, 2018, a fact

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which Plaintiffs do not dispute. (ECF No. 1 at 3.)

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III.

LEGAL STANDARD

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Federal courts are courts of limited jurisdiction, having subject-matter jurisdiction

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only over matters authorized by the Constitution and Congress. U.S. Const. art. III, § 2, cl.

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1; see also, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A

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suit filed in state court may be removed to federal court if the federal court would have had

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original jurisdiction over the suit. 28 U.S.C. § 1441(a). However, courts strictly construe

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the removal statute against removal jurisdiction, and “[f]ederal jurisdiction must be rejected

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if there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980

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F.2d 564, 566 (9th Cir. 1992) (emphasis added). The party seeking removal bears the

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burden of establishing federal jurisdiction. Durham v. Lockheed Martin Corp., 445 F.3d

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1247, 1252 (9th Cir. 2006).

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To establish subject matter jurisdiction pursuant to diversity of citizenship under

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section 1332(a), the party asserting jurisdiction must show: (1) complete diversity of

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citizenship among opposing parties and (2) an amount in controversy exceeding $75,000.

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28 U.S.C. § 1332(a). Where it is not facially evident from the complaint that $75,000 was

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in controversy at the time of removal, a defendant seeking removal must prove, by a

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preponderance of the evidence, that the amount in controversy requirement is met. Valdez

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v. Allstate Ins. Co., 372 F.3d 1115 (9th Cir. 2004).

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Under a preponderance of the evidence standard, a removing defendant must

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“provide evidence establishing that it is ‘more likely than not’ that the amount in

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controversy exceeds” the jurisdictional minimum. Id. at 1117 (citations omitted). As to the

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kind of evidence that may be considered, the Ninth Circuit has adopted the “practice of

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considering facts presented in the removal petition as well as any ‘summary-judgment-

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type evidence relevant to the amount in controversy at the time of removal.’” Matheson v.
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Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (quoting Singer v.

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State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). Conclusory allegations

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are insufficient. See Matheson, 319 F.3d at 1090 (citation omitted).

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IV.

DISCUSSION

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Plaintiffs argue that Lennar has failed to carry its burden of demonstrating that the

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parties are diverse and the amount in controversy exceeds $75,000. (ECF No. 7.) The

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Court will address these arguments in turn.

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As an initial matter, Plaintiffs raise a procedural defect argument for the first time in

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their reply.1 Plaintiffs argue that Lennar’s removal was untimely under 28 U.S.C. 1446

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because the removal was filed more than thirty (30) days from when Lennar was served

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with Plaintiffs’ pre-litigation settlement demands, giving notice of the amounts in dispute.

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(ECF No. 11 at 3-4.) Defendant correctly points out Plaintiffs’ infirm procedural argument—

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Lennar could not have removed when it received the pre-litigation settlement demands

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months before the Complaint was filed. (ECF No. 14-1 at 3.) Plaintiffs do not dispute that

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Defendant was served with the Complaint on February 14, 2018. 2 Lennar thus timely

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removed this action on March 15, 2018.

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Plaintiffs argue that Defendant has not met its burden to show that the parties are

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diverse because Defendant fails to include corporate governing documents for any

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members of Lennar Reno, LLC, which is a Nevada entity. (ECF No. 7 at 3-4.) Although

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corporations are citizens of any state in which they are incorporated or have their principal

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place of business, “an LLC is a citizen of every state of which its owners/members are

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citizens.” Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).

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Here, Lennar asserts in the petition for removal that Lennar Reno, LLC’s sole member is

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Lennar Pacific Properties Management, Inc., which is a Delaware corporation with its

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For this reason, the Court grants Lennar’s Motion (ECF No. 14) to permit Lennar
to address an argument improperly raised in Plaintiffs’ reply.
2 Lennar attached a copy of the proof of service of the Complaint to support its
unchallenged representation that service was effectuated on February 14, 2018. (ECF No.
14-2.)
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principal place of business in Florida. (ECF No. 1 at 3.) Lennar submitted a signed

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declaration from its managing officer to support this representation. (ECF No. 12-1 at 2.)

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Accordingly, the Court finds that Lennar has satisfied its burden of demonstrating diversity

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of citizenship.

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Next, Plaintiffs insist that the amount in controversy is not met because the

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Complaint alleges each individual Plaintiff’s claim exceeds $50,000, which is below the

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minimum required amount in controversy. (ECF No. 7 at 5.) Lennar responds that in the

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pre-litigation process required under NRS 40,3 Plaintiffs made settlement demands that

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included estimated costs to repair the homes to range from about $98,00 to $131,000 for

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each home, excluding other costs and attorneys’ fees. (ECF No. 10 at 6; ECF No. 10-2 at

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5-17.) Plaintiffs argue that the settlement demands document is privileged and

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inadmissible under NRS § 48.105. However, even if state evidentiary rules apply to this

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Court, NRS § 18.105(1) provides that an offer of compromise “is not admissible to prove

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liability for or invalidity of the claims or its amount.” In fact, subsection 2 goes on to qualify

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that “[t]his section does not require exclusion when the evidence is offered for another

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purpose.” NRS § 18.105(2). Plaintiffs allege their individual claims exceed $50,000, but

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do not contend that they fall under $75,000. Defendants merely rely on the settlement

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demands to show that the individual claims exceed $75,000, and not for any purposes

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prohibited under NRS § 18.105.

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“A settlement letter is relevant evidence of the amount in controversy if it appears

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to reflect a reasonable estimate of the plaintiff’s claim.” Cohn v. Petsmart, Inc., 281 F.3d

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837, 840 (9th Cir. 2002). The settlement demands here itemize specific amounts, including

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“Total Repair Estimate,” “Total Expert Costs to date” and “Costs of Suit to date.” (See ECF

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No. 10-2 at 6-17.) The estimated cost of repair alone for each individual home exceeds

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the amount in controversy. Thus, Plaintiffs’ settlement demands establish that the amount

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in controversy more likely than not exceeds $75,000 for each individual Plaintiff.

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NRS §§ 40.600 through 40.695 govern construction defect claims.
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V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the outcome of the motion before

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the Court.

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It is therefore ordered that Lennar’s motion to file a sur-reply (ECF No. 14) is
granted.

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It is therefore ordered that Plaintiff’s motion to remand (ECF No. 7) is

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denied. DATED THIS 27th day of August 2018.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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