MB Auto Care Management, Inc. v. Plaza Carolina Mall, L.P. et al

Filing 15

OPINION AND ORDER. DENIED 13 MOTION to Remand to State Court for Lack of Diversity Jurisdiction filed by MB Auto Care Management, Inc. Plaintiff is also reminded that their response/opposition to Defendants' motion for judgment on the pleadings is due today, 3/17/2010. Signed by Judge Salvador E Casellas on 3/17/2010.(LB)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 v. IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO M B AUTO CARE MANAGEMENT, INC. D /B /A PRONTO WASH PLAZA CAROLINA, IN C . P la in tif f Civil No. 10-1095 (SEC) PLAZA CAROLINA MALL, L.P., SPG C A R O L IN A , L.P., SIMON, PC, INC. D e f e n d a n ts O P I N I O N AND ORDER T h is case is before the Court pursuant to a Notice of Removal filed by Defendants in the a b o v e captioned case, which was filed before the Puerto Rico Court of First Instance, Carolina P a rt. Docket # 1. Plaintiff moved to remand the case, arguing that the amount in controversy re q u ire m e n t is not met, and as a result, this Court lacks subject-matter jurisdiction. Docket # 13. 15 16 17 18 19 20 21 22 23 24 25 26 After reviewing the filings and the applicable law, Plaintiff's motion to remand is D E N IE D . Factual and Procedural Background P la in tif f filed suit against Defendants at the Commonwealth court, alleging breach of c o n tra c t, and seeking declaratory judgment. Docket # 1-6. According to the complaint, on J a n u a ry 8, 2008, the parties signed a three-year lease agreement worth $90,000, which was set to expire on December 31, 2010. Plaintiff allege that, notwithstanding their compliance with th e above-mentioned contract, Defendants ordered them to vacate the premises on January, 2 0 1 0 , prior to the conclusion of the lease agreement. As such, Plaintiff filed suit in the state c o u rt for declaratory judgment regarding the validity of the lease agreement, the terms of the s a m e , Plaintiff's compliance with the agreement's terms, and the parties' legal relationship. 1 2 3 4 5 6 7 8 9 Civil No. 10-1095 (SEC) Page 2 O n February 5, 2010, Defendants filed a notice of removal in this Court under diversity ju ris d ic tio n (Docket # 1). Shortly thereafter, Plaintiff moved to remand (Docket # 13), and D e f e n d a n ts ' opposed (Docket # 14). According to Plaintiffs, the amount in controversy re q u ire m e n t is not satisfied, insofar as they only seek declaratory judgment. In opposition, D e f e n d a n ts argue that pursuant to the complaint, the lease agreement was worth $90,000, that is , well beyond the $75,000 jurisdictional requirement. S ta n d a r d of Review S e c tio n 1441 states that "any civil action brought in a State court of which the district c o u rts of the United States have original jurisdiction, may be removed by the defendant or the 10 d e f e n d a n ts , to the district court of the United States for the district and division embracing the 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 p la c e where such action is pending..." 28 U.S.C. 1441(a). For a Defendant to remove an action f ro m state court to federal court, it must file a timely notice of removal in the district court w ith in thirty (30) days after the service of summons upon the defendant of the complaint, or a f te r the receipt by the defendant of any pleading from which it may be first ascertained that the c a s e is removable. 28 U.S.C. 1446 (a) & (b). The Supreme Court has held that, in order for the Court to hear a case, subject matter ju ris d ic tio n must "be established as a threshold matter." Steel Co. v. Citizens for a Better E n v iro n m e n t, 523 U.S. 83, 94 (1998). Therefore this Court must first address any jurisdictional is s u e s . It is well known that subject matter jurisdiction is granted to federal courts by either "28 U .S .C . 1331, which provides for `[f]ederal-question' jurisdiction, [or] 1332, which provides f o r `[d]iversity of citizenship' jurisdiction." Arbaugh v. Y&H Corp., 546 U.S. 500, 501 (2006). H is to ric a lly, diversity jurisdiction requires complete diversity of citizenship between all p la in tif f s and all defendants. Connectu LLC v. Zuckerberg, 522 F.3d 82, 91 (1 st Cir. 2008); 28 U .S .C . 1441(b). Ordinarily, Plaintiff must show that complete diversity exists, and that he m e e ts the amount in controversy requirement, that is, the matter in controversy exceeds $75,000, e x c lu d in g interests and costs. See 28 U.S.C. 1332. However, in case of removal, the removing 1 2 3 4 5 6 7 8 9 10 11 Civil Case No. 10-1095 (SEC) Page 3 p a rty bears the burden of showing that no plaintiff is a citizen of the same state as any of the d e f e n d a n ts ,1 and that the matter in controversy exceeds $75,000, excluding interests and costs. S e e 28 U.S.C. 1332. W h e n determining whether a party meets the amount-in-controversy minimum, the Court m u s t apply the long standing test established in St. Paul Mercury Indemnity Co. v. Red Cab Co., 3 0 3 U.S. 283 (1938). See Spielman v. Genzyme Corp., 251 F.3d 1, 5 (1st Cir. 2001); R e n a is s a n c e Mktg. v. Monitronics Int'l, Inc., 606 F. Supp. 2d 201, 210 (D.P.R. 2009). The test re q u ire s that in performing this inquiry, the court use the sum claimed by the plaintiff "if the c la im is apparently made in good faith." Spielman, 251 F. 3d at 5; see also Stewart v. T u p p e rw a re Corp., 356 F.3d 335 (1st Cir. 2004). This general allegation "suffices unless q u e s tio n e d by the opposing party or the court." Stewart, 356 F. 3d at 338. If the opposing party 12 c h a lle n g e s the damages allegation, then "the party seeking to invoke jurisdiction has the burden 13 o f alleging with sufficient particularity facts indicating that it is not a legal certainty that the 14 15 16 17 18 19 20 21 22 23 24 25 26 c la im involves less than the jurisdictional amount." Id. On the other hand, when a plaintiff does not allege a specific amount of damages, courts m u s t examine the complaint to determine whether "it is facially apparent that the claims exceed th e jurisdictional amount." St. Paul Reinsurance Co., Ltd. V. Greenberg, 134 F. 3d 1250, 1253 (5th Cir. 1998). In that case, courts may rely on "summary-judgment type evidence to ascertain t h e amount in controversy." Id. Thus, the "legal certainty test has limited utility - in fact is in a p p lic a b le - when the plaintiff has alleged an indeterminate amount of damages." Id. Applicable Law and Analysis In the present case, the diversity of the parties is not at issue, since Plaintiff is a resident o f Puerto Rico, and Defendants' principal place of business is in Delaware. As such, the first When removal is premised on diversity jurisdiction, defendants may remove a case from state to federal court only when none of the named defendants is a citizen of the state in which the action was originally brought. Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction, 3d 3723; see also 28 U.S.C. 1441(b). 1 1 2 3 4 5 6 7 8 9 10 11 Civil Case No. 10-1095 (SEC) Page 4 re q u is ite for diversity jurisdiction is met. However, Plaintiff alleges that remand is proper b e c a u s e the $75,000.00 jurisdictional amount is not met, depriving this Court of subject-matter ju ris d ic tio n . Specifically, Plaintiff argues that they only sought declaratory judgment in state c o u rt, not monetary compensation. Alternatively, Plaintiff's contend that considering that the th re e -ye a r lease agreement's total value is $90,000, and only one year remained, Plaintiff could n o t request more than one third of its value, to wit, $30,000. Because Defendants are seeking removal of the lawsuit to federal court, they bear "the b u rd e n of proving that it appears to a reasonable probability that the claim is in excess of the s ta tu to ry jurisdictional amount." NSI Int'l, Inc. v. Mustafa, No 09-CV-1536, slip op. 15, 2009 U .S . Dist. LEXIS 73909 (E.D.N.Y. Aug. 20, 2009). Accordingly, in opposition to Plaintiff's re q u e st to remand, Defendants point out that in actions seeking declaratory judgment, the 12 a m o u n t in controversy is measured by the value of the object of litigation, the protected right, 13 a n d the extent of the injury to be prevented. Defendants assert that in the complaint Plaintiff 14 15 16 17 18 19 20 21 22 23 24 25 26 a d m its that the lease agreement object of the complaint is worth $90,000. They further note that th e rights Plaintiff seeks to protect, specifically the value of Plaintiff's business, such as costs, p ro f its , and debts, also exceed the jurisdictional amount. Lastly, Defendants argue that a tto rn e y's fees, which are allowed in the lease agreement, should also be considered when d e te rm in in g the amount in controversy. Based on the foregoing, Defendants argue that the a m o u n t in controversy requirement is met, and thus removal is proper. C o u rts have held that when damages are not requested, "the value of the suit's intended b e n e f it or the value of the right being protected or the injury being averted constitutes the a m o u n t in controversy." DiTolla v. Doral Dental IPA of N.Y., LLC, 469 F.3d 271, 276-277 (2d C ir. N.Y. 2006) (citing Kheel v. Port of New York Authority, 457 F.2d 46, 49 (2d Cir. 1972)); s e e also Mustafa, slip op. at 22-23. Similarly, "the value to the plaintiff of the right sought to b e enforced" is considered. Advance Am. Servicing of Ark., Inc. v. McGinnis, 526 F.3d 1170, 1 1 7 3 (8th Cir. 2008) (citing Massachusetts State Pharm. Ass'n v. Fed. Prescription Serv., Inc., 1 2 3 4 5 6 7 8 9 10 11 Civil Case No. 10-1095 (SEC) Page 5 4 3 1 F.2d 130, 132 (8th Cir. 1970); Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 4 0 7 (6th Cir. 2007) (finding that "`[i]t is generally agreed in this circuit, that the amount in c o n tro v e rs y should be determined `from the perspective of the plaintiff, with a focus on the e c o n o m ic value of the rights he seeks to protect'"); see also Alicea v. Circuit City Stores, Inc., 5 3 4 F. Supp. 2d 432, 435 (S.D.N.Y. 2008). T h e Supreme Court has held that, in actions for declaratory or injunctive relief, which " a re equitable in nature, the amount in controversy is measured by the value of the object of the litig a tio n ," DiTolla, 469 F.3d at 276 (citing Hunt v. Washington State Apple Advertising C o m m iss io n , 432 U.S. 333, 347 (1977) (superseded on other grounds), "or the extent of the in ju ry to be prevented." St. Paul Reinsurance, 134 F.3d at 1252-1253 (citations omitted); see a ls o Correspondent Servs. Corp. v. First Equities Corp. of Fla., 442 F.3d 767, 769 (2d Cir. 12 2 0 0 6 ). That is, "the value of the requested relief is the monetary value of the benefit that would 13 f lo w to the plaintiff if injunctive or declaratory relief were granted." Mustafa, slip op. at 22-23 14 15 16 17 18 19 20 21 22 23 24 25 26 (c itin g Am. Standard, Inc. v. Oakfabco, Inc., 498 F. Supp. 2d 711, 717 (S.D.N.Y. 2007)). A lth o u g h it is true that the Complaint in this case seeks only possession of the leased p ro p e rty and not monetary damages, this alone does not entitle Plaintiff to remand the case to s ta te court. Federal courts "often are confronted with cases seeking various types of n o n -m o n e ta ry relief, such as declaratory judgments, confirmation or vacation of arbitration a w a rd s , injunctions, and other equitable remedies." MCC Mortg. LP v. Office Depot, Inc., Civ. N o . 10-191, slip op. at 9, 2010 U.S. Dist. LEXIS 12597 (D. Minn. Feb. 12, 2010). If we adopted P la in tif f 's argument on this front, subject-matter jurisdiction would be lacking in all claims for d e c la ra to ry relief where no money damages are sought, which is clearly not the law. Id. Instead, in these types of cases, the amount in controversy should be measured by the intended benefit to the plaintiff, that is, by the difference between the plaintiff's current economic position and its position if successful in the litigation. Id. at 8-9. Similarly, by filing suit, Plaintiff seeks to c o n tin u e its business as usual, and avoid loss of income. See Hunt, 432 U.S. at 347. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Civil Case No. 10-1095 (SEC) Page 6 F u rth e rm o re , courts have held that in actions seeking declaration that commercial lease h a d not been breached, "the value of the object of litigation was `not measured simply by the a m o u n t in alleged default, . . . but also by the value of the lease agreement if terminated.'" O f f ic e Depot, Inc., slip op. at 14 (citing Fitzgerald Railcar Servs. of Omaha, Inc. v. Chief In d u s ., 141 Fed. Appx. 491, 492-93 (8th Cir. 2005).2 As such, "[w]hen plaintiff has `a significant e c o n o m ic stake in continuing the lease that well exceeds the jurisdictional requirement,' d iv e rs ity is present." Id. Considering the above, in determining whether the amount in controversy requirement i s met in the present case, this Court must take into consideration the value of the lease a g re e m e n t, as well as Plaintiff's business costs, and possible losses or earnings depending on th e final decision regarding the agreement's validity. In so doing, we note that if the lease a g re e m e n t is no longer found to be valid, Plaintiff would lose a business that, combined with th e yearly $30,000 lease cost, plus the costs of operation, surely amounts to more than $75,000. Similarly, if this Court finds that the lease agreement is valid, Plaintiff would financially benefit f ro m the judgment in excess of said amount. In light of foregoing, it is reasonable to conclude 16 th a t Plaintiff's claims exceed the $75,000 jurisdictional amount. As a result, the second requisite 17 18 19 20 21 22 23 24 25 26 In Office Depot, slip op. at 14-15, the court noted that concern over the burden that would be imposed on the federal-court system if defendants were permitted to remove eviction actions, "are largely illusory, since most tenants are citizens of the same state as their landlords, do not pay tens of thousands of dollars per month in rent, and do not have multiple-year leases," therefore, "most eviction actions will not satisfy the prerequisites for diversity jurisdiction." (citing BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d 548, 553 (7th Cir. 2002)). 2 f o r diversity jurisdiction is also met. Conclusion Based on the foregoing, this Court finds that Defendants properly removed this case, th e re f o re , Plaintiff's motion to remand is DENIED. I T IS SO ORDERED. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Civil Case No. 10-1095 (SEC) In San Juan, Puerto Rico, this 17th day of March, 2010. Page 7 S /S A L V A D O R E. CASELLAS S a lv a d o r E. Casellas U .S . Senior District Judge

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