Roberts et al v. Harrison K-9 Security Services, LLC
Filing
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MEMORANDUM OPINION AND ORDER by District Judge Judith C. Herrera granting 9 Plaintiff's Motion to Remand. This case is hereby remanded to the Second Judicial District Court, County of Bernalillo, New Mexico. (baw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
JIM ROBERTS and TRACEY1 ROBERTS,
Plaintiffs,
vs.
Civ. No. 17cv1017 JCH/KK
HARRISON K-9 SECURITY SERVICES, LLC,
a Nevada Limited Liability Company,
Defendant.
MEMORANDUM OPINION AND ORDER OF REMAND
This matter is before the Court on Plaintiff’s Motion to Remand [Doc. 9], filed November
3, 2017. The Court has also reviewed Defendant’s response and Plaintiff’s reply. After reviewing
the briefs, the law, and the evidence provided on jurisdiction, the Court concludes that the
motion should be granted and the case remanded to the Second Judicial District Court, County of
Bernalillo, New Mexico.
FACTUAL AND PROCEDURAL BACKGROUND
On December 2, 2016, Plaintiffs Jim and Tracey Roberts (“Plaintiffs”) filed their
Complaint for Damages [Doc. 1-4] in the Second Judicial District Court, County of Bernalillo,
State of New Mexico.
According to the complaint, in early 2016, during a rash of crime in their neighborhood,
Plaintiffs purchased a personal protection security dog from Defendant Harrison K-9 Security
1
The caption on Defendant’s Notice of Removal [Doc. 1] refers to one of the Plaintiffs as “Stacy
Roberts,” leading to the use of the misnomer on several subsequent pleadings. However, it
appears that this was an error by Defendant and that her name is, in fact, Tracey Roberts as set
forth in the original complaint.
Services, LLC (“Harrison”). Harrison sells its trained canines for anywhere from $30,000 to
several hundred thousand dollars, representing that the cost reflects the fact that the dogs are
expertly trained personal protection dogs that are not only great companions, but also gentle with
children. Harrison represented to Plaintiffs over the course of several conversations that it could
supply them with the best family watch dog available of superior quality and training. As a
result, Plaintiffs purchased from Harrison a purebred male German Shepherd named Leo for the
price of $50,000. Plaintiffs paid Harrison an additional $7,073.20 to deliver Leo to New Mexico
and conduct on-site training at their home. On June 27, 2016, a Harrison K-9 trainer did deliver
Leo to Plaintiffs’ home in New Mexico and conduct a two-day training session to teach Plaintiffs
the German commands and hand signals necessary to control the dog. At that time, Plaintiffs
noticed that Leo had an odd gait and was limping, but when they pointed it out the trainer said
that it was normal for a “true German Shepherd” from Germany. Unconvinced, on June 29,
2016, Plaintiff Tracy Roberts took Leo to a veterinarian for an exam and x-rays, which revealed
chronic changes in Leo’s left hip. The following day, Plaintiffs requested that Harrison provide
them with Leo’s prior x-rays for comparison purposes. Those x-rays, taken on June 5, 2015 in
Germany appeared to show a healthy hip, but also appeared to have been from a different dog.
Harrison continued to insist that Leo was healthy.
Rather than admit that Leo had a medical defect that made him unsuitable for sale,
Harrison offered to exchange Leo for another dog, Eyra, who also allegedly had a German and
internationally certified pedigree. Eyra cost only $40,000, but Harrison refused to refund
Plaintiffs the $10,000 difference. Instead, Harrison offered to send trainers to Plaintiffs’ home in
New Mexico for “touch up” training of Eyra to account for the difference in price. Plaintiffs
agreed, and on July 13, 2016, two Harrison K-9 trainers delivered Eyra to Plaintiffs. They
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conducted the training and the next day produced a contact for Plaintiff Tracey Roberts to sign.
The contract [Doc. 9-1 at 27 of 34] states: “In consideration for the return of [Leo] by buyer,
Harrison K-9 agrees to exchange and buyers agrees to accept [Eyra], a security dog that has been
trained for Personal Protection.” However, the contract did not address the additional $10,000
worth of “touch up” training of Eyra, so Ms. Roberts objected and offered to write in the
provision by hand. The Harrison trainers refused, stating that they would leave and take Eyra
with them if she did not sign the pre-printed contract as it was. Feeling that she had no choice,
Ms. Roberts signed the contract.
Later that day, Ms. Roberts contacted Defendant’s manager, Ms. Holley, to discuss the
omission of the $10,000 from the written contract. Ms. Holley stated that no changes could be
made to Harrison’s standard form of contract, but that Plaintiffs had Harrison’s word that the
additional trainings would be conducted so that they received the full value of the $50,000 they
had paid.
On two occasions during the following month, Ms. Roberts gave Eyra the command to
bark and guard in response to someone Ms. Roberts perceived as a threat. However, Eyra
ignored her repeated commands. Later, when Plaintiffs’ dog-breeder friend came to their house,
Ms. Roberts gave the command to bark and guard, and again Eyra ignored the commands.
However, when the friend held a bite pillow and a tug in her hands, Eyra followed the
commands. Ms. Roberts called and left a message for Ms. Holley, who did not return the call.
Further, Plaintiffs allege that at the time of delivery Eyra had a medical condition that Harrison
did not disclose which affects her energy level, prevents her from providing protection, and
which cannot be cured.
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On December 2, 2016, Plaintiffs filed their complaint in the Second Judicial District
Court, County of Bernalillo, New Mexico. Doc. 1-4. They assert claims for revocation of
acceptance, breach of contract, breach of express warranty, breach of implied warranty of
merchantability, breach of warranty of fitness for a particular purpose, breach of the covenant of
good faith and fair dealing, unjust enrichment, and negligent misrepresentation. They also seek a
finding that the contract is void for unconscionability. With regard to damages, Plaintiffs’
complaint states:
Plaintiffs are entitled to the return of all monies paid to Defendant as well as
incidental and consequential damages incurred as a result of the Purchased
Goods’ nonconformities, including the costs associated with treating the
undisclosed medical condition of the Purchased Goods, and all other damages
allowable under law, all in amounts to be proven at trial, but in a total amount less
than seventy-five thousand dollars, exclusive of interest and costs.
Doc. 1-4 at ¶ 69.2
On October 6, 2017, Harrison removed the case to this federal district court. According to
the Notice of Removal [Doc. 1], there was diversity between the parties and the amount in
controversy exceeds $75,000. As grounds for the latter, Harrison cited Plaintiffs’ Rule 1-068
Offer of Judgment [Doc. 1-2], in which Plaintiffs asked to recover $72,191.57 as well as to retain
possession of the dog Eyra. Because Harrison values Eyra at $50,000, Harrison construed the
Offer of Judgment to be a demand for $132,191.57. Doc. 1 at 2.
On November 30, 2017, Plaintiffs filed their motion to remand on the grounds that the
amount in controversy was not satisfied.
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Elsewhere in the complaint, Plaintiffs state that they seek “rescission of the Contract and
damages in an amount to be determined at trial, but in a total amount less than seventy-five
thousand dollars exclusive of interest in costs.” Doc. 1-4 at ¶ 99. See also id. at p.24 (“Prayer for
Relief”).
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LEGAL STANDARD
Defendants may remove a civil action to federal court where the district court would have
original jurisdiction over the case based upon diversity of citizenship. Huffman v. Saul Holdings
Ltd. P’ship, 194 F.3d 1072, 1076 (10th Cir. 1999) (quoting Caterpillar Inc. v. Lewis, 519 U.S.
61, 68 (1996)). Nonetheless, federal courts “are to ... narrowly [construe removal statutes] in
light of our constitutional role as limited tribunals.” Pritchett v. Office Depot, Inc., 420 F.3d
1090, 1095 (10th Cir. 2005) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09
(1941). The defendant seeking to remove an action to federal court bears the burden of
establishing the district court’s subject-matter jurisdiction over the case. See Montoya v. Chao,
296 F.3d 952, 955 (10th Cir. 2002).
Subject-matter jurisdiction under 28 U.S.C. § 1332(a) requires: (i) complete diversity
among the parties; and (ii) that “the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs.” The Supreme Court of the United States has described this
statutory diversity requirement as “complete diversity,” and it is present only when no party on
one side of a dispute shares citizenship with any party on the other side of a dispute. Strawbridge
v. Curtiss, 7 U.S. (3 Cranch) 267, 267-68, 2 L.Ed. 435 (1806), overruled in part by Louisville &
N.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908); McPhail v. Deere & Co.,
529 F.3d 947, 951 (10th Cir. 2008)). The amount-in-controversy requirement is an “estimate of
the amount that will be put at issue in the course of the litigation.” McPhail, 529 F.3d at 956.
The Supreme Court recently clarified that a defendant seeking removal to federal court
need only include in the notice of removal a plausible allegation that the amount in controversy
exceeds the jurisdictional threshold. See Dart Cherokee Basin Operating Co., LLC v. Owens, 135
S.Ct. at 554. The district court should consider outside evidence and find by a preponderance of
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the evidence whether the amount in controversy is satisfied “only when the plaintiff contests, or
the court questions, the defendant’s allegation.” Dart Cherokee Basin Operating Co., LLC v.
Owens, 135 S.Ct. 547, 554 (2014). That is the circumstance presented here.
DISCUSSION
I.
Defect in Diversity Allegations
Plaintiffs point out that Harrison’s notice of removal is procedurally defective because it
alleges the residences of the various parties, but not their places of citizenship as required by 28
U.S.C. § 1332. Further, Plaintiffs argue that Harrison alleges that it is a “Nevada LLC,” [Doc. 1
at ¶ 3], but such an allegation is insufficient because the citizenship of a limited liability
company is determined by the citizenship of all of its members. Siloam Springs Hotel, LLC v.
Century Surety Co., 781 F.3d 1233, 1234 (10th Cir. 2015). In response, Harrison provides
affidavits that support the conclusion that there is, in fact, complete diversity of citizenship
among the parties and asks to be permitted to amend its notice of removal to reflect that fact.
The Tenth Circuit has allowed defendants to remedy defects in their petition or notice of
removal. See Jenkins v. MTGLQ Investors, 218 Fed. Appx. 719, 723 (10th Cir. 2007)
(unpublished) (granting unopposed motion to amend notice of removal to properly allege
jurisdictional facts); Watkins v. Terminix Int'l Co., Nos. 96-3053, 96-3078, 1997 WL 34676226,
at *1, 1997 U.S. App. LEXIS 36294, at *2 (10th Cir. May 22, 1997) (reminding the defendant
that, on remand, it should move to amend the notice of removal to properly allege jurisdictional
facts); Lopez v. Denver & Rio Grande W.R.R. Co., 277 F.2d 830, 832 (10th Cir. 1960)
(“Appellee’s motion to amend its petition for removal to supply sufficient allegations of
citizenship and principal place of business existing at the time of commencement of this action is
hereby granted, and diversity jurisdiction is therefore present.”). The Tenth Circuit has further
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reasoned that disallowing amendments to the notice of removal, even after the thirty-day removal
window had expired, when the defendant made simple errors in its jurisdictional allegations, like
failing to identify a corporation’s principal place of business or referring to an individual’s state
of residence rather than citizenship, “would be too grudging with reference to the controlling
statute, too prone to equate imperfect allegations of jurisdiction with the total absence of
jurisdictional foundations, and would tend unduly to exalt form over substance and legal flawpicking over the orderly disposition of cases properly committed to federal courts.” Hendrix v.
New Amsterdam Cas. Co., 390 F.2d 299, 301 (10th Cir. 1968).
The Court concludes that under other circumstances Harrison should be permitted to
amend its notice of removal in order to correct the allegations pertaining to citizenship of the
parties. However, in this case such an amendment would be futile, as the Court concludes that
Harrison has failed to establish the jurisdictional amount by a preponderance of the evidence.
II.
Amount in Controversy
The primary issue is whether Harrison has met its burden in establishing by a
preponderance of the evidence that the amount in controversy plausibly satisfies the
jurisdictional threshold of $75,000.00 for the Court’s exercise of diversity jurisdiction. The
amount in controversy, in turn, is not “the amount the plaintiff will recover,” but rather “an
estimate of the amount that will be put at issue in the course of the litigation.” McPhail v. Deere
& Co., 529 F.3d 947, 956 (10th Cir. 2008); see also Gibson v. Jeffers, 478 F.2d 216, 220 (10th
Cir. 1973) (“The test to determine amount in controversy is not the sum ultimately found to be
due, but the sum demanded in good faith.”).
As set forth above, Plaintiffs have pled that they are entitled to the return of all the money
they paid to Defendant, as well as the costs associated with treating Eyra’s undisclosed medical
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condition, and “all other damages allowable under law, all in amounts to be proven at trial, but in
a total amount less than seventy-five thousand dollars.” They also submitted a Rule 68 offer of
judgment in the amount of $72,191.57. Harrison contends that the amount in controversy is
actually greater because Plaintiffs’ offer to settle included not only Harrison returning Plaintiffs’
money but also Plaintiffs retaining the dog, which Harrison contends has substantial value.
Because of this demand, as well as the costs for Eyra’s medical care that Harrison asserts must
continue to accrue, Harrison argues that more than $75,000 is at issue in this case.
The amount in controversy in this case is governed by principles of contract law. “In an
action for breach of contract the party who fails to perform the agreement is justly responsible
for all damages flowing naturally from the breach.” Camino Real Mobile Home Park P’ship v.
Wolfe, 119 N.M. 436, 443, 891 P.2d 1190, 1197 (1995) (citing Shaeffer v. Kelton, 95 N.M. 182,
187, 619 P.2d 1226, 1231 (1980)). Damages sustained by the non-breaching party to a contract
are based on his expectation interest as measured by
(a) the loss in the value to him of the other party’s performance caused by its
failure or deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the
breach, less
(c) any cost or other loss that he has avoided by not having to perform.
Restatement (Second) of Contracts § 347(a) (1981).
Here, the central issue in dispute is whether the dog, Eyra, satisfied the terms of the
contract. If she did not, then Harrison is in breach of the contract and Plaintiffs are entitled to
damages. These damages include recovery of the money the Plaintiffs paid to Harrison as well as
their expenses in maintaining Eyra. If Plaintiffs prevail by proving that Eyra is not a personal
protection dog as promised by Harrison, they would be entitled to recover at most the $72,191.57
set forth in their prior demand. If the factfinder determines that despite Harrison’s breach of the
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contract the dog has any monetary value (for example, for breeding purposes), and if Plaintiffs
wish to keep the dog as a pet, then Plaintiff’s recovery of approximately $72,191.57 would be
offset by the value of the dog they are keeping. In the alternative, if Plaintiffs seek the remedy of
recission of the contract, then they would return Eyra to Harrison and simply recover the
$72,191.57. In either event, the amount in controversy is less than $75,000.
Harrison’s theory that Plaintffs are demanding more than $75,000 by asking for both their
money back and the right to keep the dog ignores the fact that if a jury concludes that the
Harrisons are in breach of their duty to provide a well-trained, healthy personal protection dog,
that also necessarily means that Eyra is not worth the $50,000 that Plaintiffs paid for her. Stated
another way, Plaintiffs prevail and get damages only if Eyra is not worth the money Plaintiffs
paid.
The Court concludes that Harrison has not met its burden to show that the amount in
controversy exceeds $75,000. Therefore, the Court lacks subject matter jurisdiction over this
case, the Court will grant the motion before it and remand this case to state court.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand [Doc. 9] is
GRANTED, and this case is hereby REMANDED to the Second Judicial District Court, County
of Bernalillo, New Mexico.
___________________________________
UNITED STATES DISTRICT JUDGE
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