Notting Hill, LLC v. Kornhauser

Filing 17

REPORT AND RECOMMENDATIONS - Because this Court lacks subject matter jurisdiction, IT IS RECOMMENDED that this case be remanded to state court, pursuant to 28 U.S.C. § 1447(c), without further consideration of the pending motion to dismiss certain counterclaims. Objections to R&R due by 5/16/2017. Signed by Magistrate Judge Stephanie K. Bowman on 5/2/2017. (km)(This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

NOTTING HILL, LLC,

Case No. 1:17-cv-16

Plaintiff,
v.

Black, J.
Bowman, M.J.

SAMUEL KORNHAUSER,
Defendant.

REPORT AND RECOMMENDATION
Plaintiff Notting Hill, LLC (“Notting Hill”) filed a complaint for breach of contract in
the Hamilton County Court of Common Pleas on December 9, 2016, seeking return of
$25,000.00 in earnest money under a real estate contract.

Defendant Samuel

Kornhauser (“Kornhauser”), proceeding pro se, removed the action to this Court, and
thereafter filed an Answer and Counterclaim against Notting Hill, as well as its
members, William Skillman, III (“Skillman”) and other unidentified members in their
individual capacities. 1 The case has been referred to the undersigned magistrate judge
for initial consideration.
Currently pending is Notting Hill’s motion to dismiss three of the seven
Counterclaims, for failure to state a claim upon which relief can be granted, as well as a
motion to dismiss the members of Notting Hill who have been named by Kornhauser in
their individual capacities. Although Kornhauser has explicitly requested oral argument,
the undersigned declines that request as unnecessary.

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See Whitescarver v. Sabin

Although Kornhauser identifies the Defendants as including “William Skillman III” and other unspecified
individual “members of Notting Hill” as additional Defendants to his Counterclaims within the body of his
Answer and Counterclaim, they are not included in the caption of that pleading and have not yet been
added to the docket sheet in this Court.

Robbins Paper Co., Case No. C–1–03–911, 2006 WL 2128929, at *3, 2006 U.S. Dist.
LEXIS 51524, at *7 (S.D.Ohio July 27, 2006) (exercising discretion under Local Rule
7.1(b)(2) to deny request for oral argument).
For the reasons that follow, the undersigned recommends that this case be
REMANDED to state court for lack of federal jurisdiction, without consideration of the
merits of the pending motion to dismiss.
I.

Background

This case involves a real estate contract (“Contract”) for a six-story building
located at 607 Main Street in Cincinnati, Ohio (“the Property”). Notting Hill is a limited
liability company located in Warren County, Ohio 2 and Kornhauser is an individual
domiciled in California.
Kornhauser owns the Property.

On or about October 6, 2016, Notting Hill

entered into a contract to purchase the Property for $900,000.00. Notting Hill placed
$25,000.00 in earnest money into a trust account pending closing. Notting Hill alleges
that, on November 5, 2016, after due diligence revealed that the Property was not
satisfactory for its intended use by Notting Hill, it timely provided Notice of Termination
of the Contract to Purchase. However, Kornhauser refused to refund its earnest money.
Notting Hill responded by filing suit in the Hamilton County Court of Common
Pleas for breach of contract, seeking a return of its $25,000.00, pre- and post-judgment
interest, attorney’s fees and costs, and a declaratory judgment under Ohio law
interpreting the Contract in Notting Hill’s favor. (Doc. 2, Complaint).
On January 9, 2017. Kornhauser removed to this Court on the basis of diversity
2

Kornhauser’s Answer denies that Notting Hill is a duly organized limited liability company, asserting
instead that it “is or may be the alter ego for its members.” However, since Kornhauser also asserts that
all members are Ohio residents, the factual dispute is irrelevant to determine diversity jurisdiction.

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jurisdiction, simultaneously filing an Answer and Counterclaim that sought over $75,000
in damages.

In lieu of filing an Answer, Notting Hill has filed a motion to partially

dismiss some of Kornhauser’s counterclaims.
II. Threshold Jurisdictional Issue Precludes Further Review
Prior to turning to the merits of Notting Hill’s motion, this Court is confronted by
the question of whether it has subject matter jurisdiction over this case, considering that
Plaintiff’s underlying complaint sought damages in the amount of $25,000,00 – an
amount well below the $75,000.00 threshold required for federal diversity jurisdiction.
See 28 U.S.C. § 1332.
Pursuant to 28 U.S.C. § 1441(a), a defendant may remove a case to this Court
only if the federal court would have had diversity jurisdiction at the time of removal.
Even though Notting Hill has not moved to remand, this Court has an obligation to
review its jurisdiction sua sponte. See Page v. City of Southfield, 45 F.3d 128, 133 (6th
Cir.1995) (“We hold, therefore, that there is a distinction in the statute [28 U.S.C. §
1447(c) ] between defects in removal procedure, which are waived unless raised in a
plaintiff's motion within thirty days after removal, and lack of subject matter jurisdiction,
which requires the court to remand at any time prior to final judgment.”); see also
generally Travelers Indem. Co. v. Bowling Green Prof. Assocs., 495 F.3d 266, 271 (6th
Cir.2007) (“Neither party raised jurisdictional issues in their appellate briefs.
Nevertheless, we appropriately raised subject-matter jurisdictional issues at oral
argument ....”) (citing Ohio v. Doe, 433 F.3d 502, 506 (6th Cir.2006)).
As the party removing this action, Kornhauser has the burden of showing by a
preponderance of the evidence that the amount in controversy requirement has been

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met. See Hayes v. Equitable Energy Resources Co., 266 F.3d 560, 572 (6th Cir. 2001).
“Significantly, ‘all doubts should be resolved against removal.’” CMS North America, Inc.
v. De Lorenzo Marble & Tile, Inc., 521 F.Supp.2d 619, 621 (W.D. Mich. 2007)(internal
citations omitted); Her Majesty The Queen In Right of the Province of Ontario v. City of
Detroit, 874 F.2d 332, 339 (6th Cir. 1989) (“The removal petition is to be strictly
construed, with all doubts resolved against removal.”)
Kornhauser asserts that federal jurisdiction is created by his counterclaims,
which seek damages well in excess of $75,000.00 insofar as he seeks specific
performance of a $900,000.00 real estate contract. However, the undersigned finds
persuasive the view of a majority of courts in the Sixth Circuit that counterclaims should
not be considered in determining removal jurisdiction. See, e.g., CMS North America,
Inc., 521 F. Supp.2d at 627-630 (extensive analysis of issue, collecting cases from
district courts within Sixth Circuit); McMahon v. Alternative Claims Service, Inc., 521 F.
Supp.2d 656, 658 (N.D. Ohio 2007)(same, citing “majority view”); Firestone Financial
Corp. v. Syal, 327 F.Supp.2d 809, 810 (N.D. Ohio 2004). Accordingly, subject matter
jurisdiction is lacking over this case.
II. Conclusion and Recommendation
Because this Court lacks subject matter jurisdiction, IT IS RECOMMENDED that
this case be remanded to state court, pursuant to 28 U.S.C. § 1447(c), without further
consideration of the pending motion to dismiss certain counterclaims.

s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
NOTTING HILL, LLC,

Case No. 1:17-cv-16

Plaintiff,

Black, J.
Bowman, M.J.

v.

SAMUEL KORNHAUSER,
Defendant.

NOTICE
Pursuant to Fed. R. Civ. P 72(b), any party may serve and file specific, written
objections to this Report and Recommendation (“R&R”) within FOURTEEN (14) DAYS
of the filing date of this R&R. That period may be extended further by the Court on
timely motion by either side for an extension of time. All objections shall specify the
portion(s) of the R&R objected to, and shall be accompanied by a memorandum of law
in support of the objections. A party shall respond to an opponent’s objections within
FOURTEEN (14) DAYS after being served with a copy of those objections. Failure to
make objections in accordance with this procedure may forfeit rights on appeal. See
Thomas v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir.
1981).

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