KARLBERG v. SANTANDER BANK, N.A.

Filing 15

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE HARVEY BARTLE, III ON 10/25/17. 10/25/17 ENTERED AND COPIES EMAILED.(rf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DREW KARLBERG, et al.
v.
SANTANDER BANK, N.A.

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CIVIL ACTION

NO. 17-3561

MEMORANDUM
Bartle, J.

October 25, 2017
Plaintiff Drew Karlberg, a Pennsylvania citizen,

individually and on behalf of others similarly situated,
originally filed this action against defendant Santander Bank,
N.A., a Delaware citizen, in the Court of Common Pleas of
Philadelphia County.

He alleges various state law causes of

action related to improper overcharges for private mortgage
insurance collected, held in trust, and distributed by
defendant.

The putative class consists only of Pennsylvania

citizens.
After plaintiff’s amended class action complaint was
docketed in the state court on July 11, 2017, the defendant
filed a Notice of Removal in this court on August 9, 2017.

The

Notice of Removal avers that the individual plaintiff and the
defendant are of diverse citizenship and that the other
jurisdictional requirements of the Class Action Fairness Act,
28 U.S.C. § 1332(d), have been met, including an aggregate

amount in controversy in excess of $5,000,000, exclusive of
interest and costs.

See § 1332(d)(2) and (6).

The plaintiff has now filed a Motion to Remand.

While

there is no dispute about the existence of diversity of
citizenship, plaintiff maintains that the jurisdictional amount
cannot be satisfied.

He also argues that the Notice of Removal

was untimely.
Removal of an action over which the district court has
original jurisdiction must occur “within 30 days after the
receipt by the defendant, through service or otherwise, of a
copy of the initial pleading setting forth the claim for
relief.”

§ 1446(b)(1); see also id. § 1441.

Section 1446(b)(3)

further provides:
Except as provided in subsection (c), if the
case stated by the initial pleading is not
removable, a notice of removal may be filed
within 30 days after receipt by the
defendant, through service or otherwise, of
a copy of an amended pleading, motion, order
or other paper from which it may first be
ascertained that the case is one which is or
has become removable. 1
Here, the original complaint was filed on April 26,
2017.

It sought damages for overcharges of premiums but the

amount was never quantified.

After careful review, the court

concludes that the amount in controversy could not reasonably be

1. The provisions of § 1446(c) relating to the timing of
removal are not applicable here.
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ascertained from that pleading.

The plaintiff, however, as

noted above, filed an amended class action complaint in the
state court on July 11, 2017.

That pleading contained more

detailed allegations of damages.

The Notice of Removal was

timely filed within thirty days thereafter.

The plaintiff’s

argument that defendant’s Notice of Removal was late is without
merit.
Plaintiff next contends that the amount in controversy
required under the Class Action Fairness Act has not been
satisfied.

See id. § 1332(d)(2).

Under the Act, “the claims of

the individual class members shall be aggregated to determine
whether the matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interest and costs.”

See id.

§ 1332(d)(6).
In the amended complaint, plaintiff alleges five state
law causes of action:

(1) Count I - violations of Pennsylvania

Unfair Trade Practices and Consumer Protection Law;
(2) Count II - breach of contract; (3) Count III - unjust
enrichment/restitution (pled in the alternative);
(4) Count IV - breach of fiduciary duty (pled in the
alternative); and (5) Count V - declaratory judgment.

Count I

pleads the following claim for actual and statutory damages for
plaintiff and the class:

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[F]or each instance of unfair or deceptive
acts including, but not limited to each
instance in which Santander overcharged its
mortgage borrowers in excess of the parties’
agreed-upon PMI, in an amount in excess of
$50,000, treble damages, . . . [and]
reasonable attorneys’ fees . . . .
Plaintiff also seeks punitive damages in the count for breach of
fiduciary duty in addition to the damages claimed for violation
of the Pennsylvania Unfair Trade Practices and Consumer
Protection Law.
Defendant’s Notice of Removal reads the amended
complaint as seeking damages in excess of $50,000 for each
instance of an alleged monthly mortgage insurance overcharge in
addition to seeking treble damages, punitive damages, and
attorneys’ fees.

In a declaration which accompanied the Notice

of Removal, an assistant vice president of defendant states that
defendant has reviewed its mortgage portfolio and that “[a]s a
result of this review, Santander has identified a total
potential population of 281 Pennsylvania loans that may satisfy
the alleged class criteria as pled in the Amended Complaint.”
If defendant’s reading of the amended complaint is correct, the
aggregate amount in controversy with appropriate multiplication
is clearly greater than $5,000,000.
Plaintiff does not challenge the number of loans which
equates to significantly more than the minimum of 100 class
members required for removal of a putative class action.
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See id. § 1332(d)(5)(B).

However, plaintiff maintains that

while the plaintiff and the putative class seek damages for each
monthly overcharge the amount of each overcharge is only a few
dollars as shown by the amended complaint and its exhibits.
plaintiff himself has alleged a loss of only $52.

The

The claim for

damages in excess of $50,000, plaintiff asserts, is in the
aggregate and was simply stated to conform to a local procedural
requirement in the Court of Common Pleas of Philadelphia County
to avoid having the case placed in the court’s mandatory
arbitration program.

See Phila. R. Civ. P. 1301.

In St. Paul Mercury Indemnity Co. v. Red Cab Co.,
303 U.S. 283 (1938), the Supreme Court many years ago outlined
the standard for determining whether the amount in controversy
requirement has been met.

The sum claimed by plaintiff controls

“if the claim is apparently made in good faith.

It must appear

to a legal certainty that the claim is really for less than the
jurisdictional amount to justify dismissal.”

Id. at 288-89.

In

making its decision, the court may review the face of the
pleadings.

Id.

It may also determine from the proofs whether

plaintiff to a legal certainty was never entitled to recover the
amount pleaded.

Id.

The parties cite more recent decisions of our Court of
Appeals.

In Morgan v. Gay, 471 F.3d 469 (3d Cir. 2006), the

Court expounded the standard and its application in determining
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whether the amount in controversy under 28 U.S.C. § 1332(d) has
been satisfied in a putative class action removed from the state
court.

There, the complaint explicitly stated that the

aggregate amount in controversy did not exceed $5,000,000.
Id. at 471. The Court noted that the good faith standard and the
legal certainty test are “entwined.”

Id. at 474.

It went on to

explain that the party invoking federal subject matter
jurisdiction “has the burden to prove to a legal certainty that
the amount in controversy exceeds the statutory threshold.”
at 474.

Id.

In addition, the court must determine whether

plaintiff’s actual monetary demand satisfies the jurisdictional
threshold even if plaintiff states a demand below the threshold
and under state law plaintiff may limit his claim to such an
amount.

Id. at 474-75.

Significantly, a plaintiff’s demand in

the complaint is “not dispositive under the legal certainty
test.”

Finally, the court must not only examine the plaintiff’s

dollar demand but also his or her “actual legal claims.”

Id. at

475.
The Court of Appeals in Frederico v. Home Depot,
507 F.3d 188, 193-97 (3d Cir. 2007) revisited the issue of the
amount in controversy requirement for removal of a class action.
It reiterated that the party invoking federal jurisdiction has
the burden of proving that the action belongs in the federal
court.

Id. at 193.

Frederico explained that the test set forth
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in Morgan applies only where the complaint expressly limits the
damages to an amount below the jurisdictional threshold.
196-97.

Id. at

In a case like Morgan, the defendant must establish to

a legal certainty that plaintiffs can recover at least the
threshold amount.

Id. at 197.

In contrast, where the complaint

as here and in Frederico does not specifically state that the
amount in controversy is less than the threshold sum, the case
must be remanded if it appears to a legal certainty that the
challenger, that is the plaintiff, cannot recover the requisite
jurisdictional amount.

Id. at 197.

In 2011, after Morgan and Frederico, Congress enacted
the Federal Court Jurisdiction and Venue Clarification Act.
Pub. L. No. 112-63, 125 Stat. 758 (2011).

There Congress

clarified the procedure and standard for determining if the
amount in controversy requirement has been met when an action is
removed from the state court.

See Dart Cherokee Basin Operating

Co. v. Owens, 135 S. Ct. 549, 554 (2014).

Section 1446(c)(2)

provides:
(2) If removal of a civil action is sought on
the basis of the jurisdiction conferred by
section 1332(a), the sum demanded in good faith
in the initial pleading shall be deemed to be
the amount in controversy, except that—
(A) the notice of removal may assert the
amount in controversy if the initial
pleading seeks—
(i) nonmonetary relief; or
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(ii) a money judgment, but the State
practice either does not permit demand
for a specific sum or permits recovery
of damages in excess of the amount
demanded; and
(B) removal of the action is proper on the
basis of an amount in controversy
asserted under subparagraph (A) if the
district court finds, by the
preponderance of the evidence, that the
amount in controversy exceeds the amount
specified in section 1332(a). 2
The Supreme Court explained in Dart, a case involving
the Class Action Fairness Act, that when the plaintiff invokes
federal jurisdiction, the statement in the complaint of the
jurisdictional amount must be accepted if made in good faith.
135 S. Ct. at 553.

On the other hand, if the defendant removes

the action, the plausible statement in the Notice of Removal
concerning the jurisdictional amount must be accepted unless
challenged by the plaintiff or questioned by the court.

Id.

When the amount in controversy is challenged by the
plaintiff or questioned by the court, “both sides submit proof
and the court decides, by a preponderance of the evidence,

2. While § 1446(c)(2) refers to removal of an action where
jurisdiction exists under § 1332(a), the Supreme Court in Dart
assumed without deciding that this provision also applies to the
removal of class action cases where jurisdiction is predicated
on § 1332(d)(2) and the amount in controversy must exceed
$5,000,000. As the court observed, there seems to be no logical
reason why the standard for removing § 1332(d)(2) cases should
be any more onerous than for § 1332(a) cases. Dart, 135 S. Ct.
at 554, n.1.
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whether the amount-in-controversy requirement has been
satisfied.”

Id. at 554.

The Supreme Court also quoted from the

Report of the House Judiciary Committee that “defendants do not
need to prove to a legal certainty that the amount in
controversy requirement has been met.”

Id.

It further cited

the Report that discovery may be taken to help resolve the
jurisdictional issue and that the district court is to apply the
preponderance of the evidence standard in making its findings.
Id.

To the extent that Morgan and Frederico are inconsistent

with Dart, we must of course follow Dart.
The plaintiff has challenged the defendant’s
contention in its Notice of Removal that this action meets the
requisite amount in controversy for federal subject matter
jurisdiction.

The plaintiff maintains that defendant misreads

the amended complaint and that even if the amended complaint can
be read to plead the requisite amount in controversy, the sum of
the damages he and the class seek in good faith do not allow for
removal.

Consequently, in accordance with Dart, the court held

a hearing to provide the defendant, the party invoking federal
jurisdiction, an opportunity to establish by a preponderance of
the evidence that the aggregate amount in controversy surpasses
$5,000,000, exclusive of interest and costs.
At the hearing, defendant chose to rest on its Notice
of Removal and the allegations in the amended complaint.
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The

plaintiff likewise did not present any evidence.

After careful

review of the amended complaint, the claims alleged, and the
Notice of Removal, the court finds that the defendant has not
established by a preponderance of the evidence that the amount
in controversy has been satisfied.

While the plaintiff’s

pleading is inartfully drafted, we find that the amount sought
in good faith by the plaintiff and each class member for each
monthly overcharge is only tens of dollars at most.

In light of

the facts pleaded and the legal claims asserted, it is not
plausible that the class can recover in excess of $5,000,000,
exclusive of interest and costs.
Accordingly, this action will be remanded to the Court
of Common Pleas of Philadelphia County for failure to meet the
jurisdictional amount in controversy.

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