Cruzbike, Inc. v. Tolhurst

Filing 21

ORDER granting 12 Motion to Remand and finding as moot 16 Motion to Stay. This matter is REMANDED to the Superior Court of Columbus County, North Carolina. Signed by District Judge Terrence W. Boyle on 6/23/2016. (Romine, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO. 7:15-CV-263-BO
CRUZBIKE, INC.,
Plaintiff,
v.
JOHN TOLHURST,
Defendant.

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ORDER

This matter comes before the Court on plaintiffs motion to remand [DE 12] and
defendant's motion to stay pretrial deadlines and discovery [DE 16]. The appropriate responses
and replies have been filed, and the matters are ripe for ruling. For the reasons below, plaintiffs
motion to remand is GRANTED, and defendant's motion to stay is DENIED AS MOOT.
BACKGROUND
Plaintiff initially brought suit in state court in Columbus County, North Carolina, on June
29, 2015. [DE 1-2]. Plaintiffs complaint sought injunctive relief for breach of agreement,
"compensatory and punitive damages in an amount in excess of $10,000.00," "an amount in
excess of Ten Thousand Dollars ($10,000.00), for punitive damages," attorney's fees, costs, and
expenses. Id. Defendant was served on November 19, 2015. [DE l]. On December 15, 2016,
defendant removed the case to federal court in the Eastern District of North Carolina on the basis
of diversity jurisdiction. Id. On March 10, 2016, plaintiff moved to remand to state court. [DE
12]. On March 14, 2016, defendant moved to stay pretrial deadlines and discovery. [DE 16].
DISCUSSION
Diversity jurisdiction exists "where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between ... citizens of a State and citizens or
subjects of a foreign state." 28 U.S.C. § 1332(a). Upon removal of a state action to federal court,

"[t]he burden of establishing federal jurisdiction is placed upon the party seeking removal."

Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (citing Wilson v.
Republic Iron & Steel Co., 257 U.S. 92 (1921)). When considering whether a removal is proper,
the Court must remand the case if federal jurisdiction is doubtful, as removal jurisdiction raises
significant federalism concerns. Mulcahey, 29 F.3d at 151.
In North Carolina, a pleading properly "shall not state the demand for monetary relief,
but shall state that the relief demanded is for damages incurred or to be incurred" in excess of a
set amount-either $10,000.00 or $25,000.00-depending on when the suit was brought. N.C.
Gen. Stat. § lA-1, Rule 8.
Here, the parties agree that there is diversity of citizenship, as plaintiff is a North
Carolina corporation and defendant is a citizen of Australia. [DE 1, 13]. However, defendant's
notice of removal made no mention of the amount in controversy requirement. [DE l]. Plaintiff,
in its state court complaint, pled that the relief for compensatory and/or punitive damages would
exceed $10,000. [DE 1-2]. Therefore, upon removal, defendant had the burden of proving an
amount in controversy in excess of $75,000.00 by a preponderance of the evidence. 28 U.S.C. §
1446(c).
The parties agree that the amount in controversy is fixed at the time the complaint is
filed. See St. Paul Mercury lndem. Co. v. Red Cab Co., 303 U.S. 283, 291-93 (1938). However,
given the nature of North Carolina's state pleading rules, more information is needed than is
provided in the complaint. Accordingly, the Court considers the existing record. Aerial Images,

Inc. v. Anderson, No. 5:99CV320-B0(3), 2000 WL 33682689, at *2 (E.D.N.C. Feb. 21, 2000)
(citing Hoffman v. Vulcan Materials Co., 19 F.Supp.2d 475 (M.D.N.C.1998)). To that end,
plaintiff, who bears no burden in the instant consideration, filed an affidavit from Mr. James

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Parker, shareholder and director of Cruzbike, Inc., clarifying that its damages flowing from the
breach of contract are no greater than $56,000.00. [DE 13-1 ]. A later affidavit clarified that
plaintiff seeks $12,000.00 in punitive damages and that the injunction sought is not worth any
financial amount, as it is a purely protective measure to enforce the non-disparagement clause as
necessary in the future, as it is presently not affecting business. [DE 20-1]. Altogether, plaintiffs
affidavits establish that plaintiff seeks no more than $68,000.00 in damages. [DE 13-1, 20-1 ]; see
Griffin v. Holmes, 843 F. Supp. 81, 87-88 (E.D.N.C. 1993).

Defendant, who does bear a burden, has filed no affidavits or otherwise put forth
sufficient evidence or arguments to establish by a preponderance of the evidence that the amount
in controversy actually exceeds $75,000.00. As to the injunction specifically, the Court
recognizes that "requests for injunctive relief must be valued in determining whether the plaintiff
has alleged a sufficient amount in controversy." JTH Tax, Inc. v. Frashier, 624 F.3d 635, 639
(4th Cir. 2010). However, this is not an exact science. Plaintiffs evidence that the injunction
would make no impact on the business is instructive on this issue, as is defendant's lack of
evidence to support its claim that the injunction is worth more than the amount necessary to clear
the jurisdictional bar. Accordingly, the Court finds that defendant's argument that it is reasonable
to conclude that the injunctive relief sought satisfies the amount in controversy requirement is
insufficient to meet its burden.
Accordingly, as plaintiff has provided evidence demonstrating that the amount in
controversy is less than the jurisdictional amount, and defendant has not met its burden to prove
otherwise, plaintiffs motion to remand is granted. The Court notes that plaintiff may be estopped
from taking an inconsistent position as to the amount in controversy in the future.

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CONCLUSION
For the foregoing reasons, plaintiffs motion to remand is GRANTED [DE 12], and
defendant's motion to stay pretrial deadlines and discovery is DENIED AS MOOT [DE 16].
This matter is REMANDED to the Superior Court of Columbus County, North Carolina. The
clerk is DIRECTED to close the case.

SO ORDERED, this

)J_ day of June, 2016.
JUDGE

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