Murray County Board of County Commissioners et al v. Homesales, Inc. et al

Filing 109

ORDER by Judge Frank H. Seay granting 27 Motion to Remand; granting 8 Motion to Remand to State Court. (case terminated) (trl, Chambers)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
MURRAY COUNTY, OKLAHOMA,
)
COUNTY COMMISSIONERS, ex rel., )
MURRAY COUNTY OKLAHOMA, et. al.,)
)
Plaintiffs,
)
)
v.
)
)
HOMESALES, INC., et al.,
)
)
Defendants.
)

No. CIV-11-84-FHS

ORDER
Plaintiffs filed this Class Action on February 7, 2011, in the
District Court for the Twelfth Judicial District, City of Sulphur,
County of Murray, State of Oklahoma. The lawsuit concerns recovery
of funds related to documentary stamps which are connected to the
sale of property in the three counties. Defendants are sixteen
financial institutions involved in the sale of property.

On March

9, 2011, Defendant Homesales1, Inc. filed a Notice of Removal in
this court.

On April 6, 2011, defendant JP Morgan Chase Bank

joined in the Notice of Removal. The Notice of Removal argued this
court has federal question jurisdiction as well as diversity
jurisdiction.
meet

the

Plaintiff objected arguing this lawsuit does not

requirements

for

removal.

Before

Plaintiff’s Motion to Remand (Doc. 8)

the

court

is

the

and Plaintiff’s Second

Motion to Remand (Doc. 27) filed on April 19, 2011.
1

Defendant Homesales, Inc.’s right to do business has been
suspended by the Oklahoma Tax Commission. Pursuant to 68 O.S.A.
Sec. 1212 (c), defendant Homesales, Inc.’s right to defend itself
in this suit has been denied. However, the defendant JP Morgan
Chase Bank joined in the Notice of Removal on April 6, 2011.
1

A civil action is removable only if the plaintiffs could have
originally brought the action in federal court.
1441

(a).

Because

federal

courts

are

28 U.S.C. Sec.

courts

of

limited

jurisdiction, there is a presumption against federal jurisdiction.
Basso v. Utah Power & Light, Co., 495 F.2d 906, 909 (10th Cir.
1974). As a result, the court strictly construes the removal
statutes and, as a general matter, must resolve all doubts against
removal. Fajen v. Found, Reserve Ins. Co., Inc., 683 F.2d 331, 333
(10th Cir. 1982).

The court now turns to the merits of the motions

to remand.
I. Federal Question
Defendants removed this lawsuit pursuant to the provisions of
28 U.S.C. Sec. 1331, 1332 and 1441.

First, the defendants argue

this court has jurisdiction because the case invokes a question
which arises under the laws of the United States. Defendants argue
that under 12 U.S.C. Sec. 1819 (b)(2)(A) any case involving the
FDIC

must

be

brought

in

federal

court.

12

U.S.C.

Sec.

1819

(b)(2)(A) states that “except as provided in subparagraph (D), all
suits of a civil nature at common law or in equity to which the
Corporation [the FDIC] in any capacity is a party shall be deemed
to arise under the laws of the United States.” Defendants argue the
FDIC became a party to this action for the purposes of federal
jurisdiction when it was appointed receiver of defendant Millennium
State Bank of Texas.
being

appointed

as

Defendants contend as a result of the FDIC
a

receiver

for

a

party,

this

court

has

jurisdiction over this matter.
The

court

finds

this

argument

fails

because

defendant

Millennium State Bank of Texas has never been served. Under
Oklahoma law, plaintiff had 180 days to serve the defendant
2

Millennium State Bank.

12 O.S.A. 2004 (I). Oklahoma law provides

the defendant can be dismissed without prejudice if plaintiff fails
to serve them during this time-frame. The 180 day time-frame would
have expired in early August.

Thus, defendant Millennium State

Bank was never properly brought into the lawsuit. As a result, the
court finds it cannot base federal jurisdiction on this premise.
II.

Diversity Jurisdiction

Defendants also removed this case under 42 U.S.C. Sec. 1331.
Defendants allege diversity jurisdiction is appropriate because the
defendants are diverse from the plaintiffs and the requisite amount
in controversy has been met.

Plaintiffs argue that diversity

jurisdiction is not appropriate because under the Class Action
Fairness Act defendants must establish that at least 5 million
dollars is in controversy.

Plaintiffs argue defendants clearly

cannot meet that requirement.
First, the court should note that the Class Action Fairness
Act is not applicable in this case.
case under this provision.
and Diversity jurisdiction.

Defendants did not remove the

They removed it under Federal Question
Thus, the 5 million dollar threshold

does not need to be met by defendants.
Second, it appears undisputed there is in fact diversity among
the parties. The only remaining question for this court is whether
the requisite amount in controversy has been met.

The “amount in

controversy” has been defined by the Tenth Circuit Court of Appeals
as “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).

“The burden is on the party requesting

removal

in

to

set

forth,

the

notice
3

of

removal

itself,

the

‘underlying facts supporting the assertion that the amount in
controversy exceeds $75,000.00.’” Laughlin v. Kmart Corp., 50 F.3d
871, 873 (10th Cir. 1995). “Where the face of the petition does not
affirmatively establish that the amount in controversy exceeds
$75,000.00,

the

rationale

of

Laughlin

contemplates

that

the

removing party will undertake to perform an economic analysis of
the alleged damages supported by the underlying facts.” Archer v.
Kelly, 271 F.Supp. 2d 1320, 1322 (N.D. Okla. 2003).

The removing

defendant bears the burden of proving these underlying facts
supporting the assertion that the amount in controversy exceeds
$75,000.00 by a preponderance of the evidence. McPhail, 529 F.3d at
955.

In order for jurisdiction to be proper in this court,

defendants as the removing party have the burden of showing that
the requisite amount in controversy is met as to each plaintiff.
Lovell v. State Farm Auto Insurance Co., 466 F.3d 893, 897 (10th
Cir. 2006)(noting that in multiple plaintiff cases, each plaintiff
must individually satisfy the amount in controversy requirement.)
The requisite amount in controversy is $75,000.00.

28

U.S.C. Sec. 1332 (a). In the state court petition, Murray County
simply alleges that it has been damaged by the defendants in
excess of $10,000.00.

According to the statutory fees defendant

could be liable to plaintiff for at least $1,000.00 for each
violation where a documentary stamp tax was not paid.

According

to the records submitted with the Notice of Removal, Murray
County appears to be alleging at least 60 incidents of possible
failure to pay the tax.

Thus, Murray County appears to be

seeking at least $60,000.00 in damages. Regarding statutory
penalties, Oklahoma law provides for at least two. First, a 50%
penalty is imposed on any tax deficiency due to fraud.
Sec. 217 (F).

68 O.S.A.

Because Murray County is seeking more than

$10,000.00 in allegedly unpaid taxes, more than $5,000.00 in

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potential statutory penalties could also be at issue.

Second,

Oklahoma law provides a penalty of up to 10% of the tax, and no
more than $200.00 per defendant, on “each tax debtor who
neglects, refuses or fails to pay delinquent taxes.” 68 O.S.A.
Sec. 231.1.

Because Murray County is seeking more than

$10,000.00 in alleged delinquent taxes the statutory penalty puts
at least another $1,000.00 in penalties at issue.
plaintiffs seek punitive damages.

Further,

In the Notice of Removal,

defendants state that punitive damages would likely exceed
$10,000.00 given the amount of actual damages.

The defendant

however, fails to provide any economic analysis to justify this
amount. Defendants are required to provide detailed estimates or
economic analysis to assist in establishing the potential amount
in controversy. Herndon v. American Commerce Insurance Company,
651 F. Supp. 2d 1266, 1269-70 (N.D. Okla. 2009). Defendants
simply failed to do this.

The record is completely void of

evidence concerning the amount in controversy as to the other
plaintiffs.

The court finds that the defendant has not met its

burden to establish that the requisite amount in controversy has
been met as to any of the three plaintiffs by a preponderance of
the evidence. McPhail, 529 F.3d at 955. Accordingly, the court
grants the plaintiffs’ motions to remand.

IT IS SO ORDERED this 31st day of October, 2011.

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