Azlin et al v. Silicon Valley, Inc

Filing 14

MEMORANDUM OPINION and ORDER... this action is hereby remanded to the state court from which it was removed. See Order for further specifics. (Ordered by Judge John McBryde on 11/18/2011) (krg)

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U.S. DISTRICT COURT
NORTHERN DISTRICT OF TEXAS

IN THE UNITED STATES DISTRIC
NORTHERN DISTRICT OF TE
FORT WORTH DIVISION

JUNIE S. AZLIN, ET AL.,

S

NOV J 8 2011
CLERK, U.S. DiSTRICT COURT

§

by

§

Plaintiffs,

FII.lED

COURT

-----nD~Cp~u7t)-,------

§
§

VS.

§

NO. 4:11-CV-688-A

§

SILICON VALLEY, INC., d/b/a
IVERSON BUSINESS SCHOOL AND
COURT REPORTING,

§
§
§
§

Defendant.

§

MEMORANDUM OPINION
and
ORDER
The court has not been persuaded that it has subject matter
jurisdiction over the above-captioned action.

Therefore, the

court is ordering the action be remanded to the state court from
which it was removed.
I.

Background
This action against defendant, Silicon Valley, Inc., d/b/a/
Iverson Business School and Court Reporting, was filed in the
236th District Court of Tarrant County, Texas in case No. 236254514 on August 10, 2011, by plaintiffs, Junie S. Azlin, Amanda
Cardenas, Gilbert Collier, Mark Gonzales, Jill Green, Corinthia
Hall, Melinda Humphreys, Vanetta Brown-Johnson, Kijakazi Tunu,
Tawanna Matassa-Baker, Zipporah Lucre, Jackie Molett, Allen

Phipps, Lucy Rodriguez, Norma Rodriguez, Shonda Renfro, Kayvon
Rodgers, Nicholas Roy, Sottana Shorts, Patronica Smith, Tiffany
Torres, Calisha Tucker, and Jose Valdivia.
case to this court on September 29, 2011.

Defendant removed the
On October 4, 2011,

the court ordered that defendant file an amended notice of
removal, and that plaintiffs file an amended complaint, properly
alleging the parties' state of citizenship.

On October 14, 2011,

the court ordered that the parties each submit a brief on the
subject of whether the amount in controversy exceeds $75,000.
Now before the court are an amended notice of removal, a document
titled "Defendant's Brief in Support of Diversity Jurisdiction"
filed by defendant, plaintiff's first amended complaint
("complaint"), and a document titled "Plaintiffs' Brief
Pertaining to Amount in controversy" filed by plaintiffs.
The complaint made the following allegations: In a prior
suit, originally filed in state court and subsequently removed to
federal court in case No. 4:08-CV-284-Y,l plaintiffs had alleged
claims against defendant for violations of the Texas Deceptive
Trade Practices Act and breach of contract.

The parties settled,

and all the plaintiffs and defendant signed and executed "a

Plaintiffs incorrectly referred to the prior action as case No. 4:08-CV-284-4 in their
pleadings. PIs.' Am. CompI. at 6. A review of court records confirms that case No. 4:08-CV284-Y is the correct docket number for the prior action.
1

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settlement agreement that was reduced to a valid contractual
document."

Pls.' Am. Compl. at 6.

The "settlement contract"

required payments from defendant in "periodic installments."

Id.

The contract provided that "if, on the date the payment is due,
making the payment would cause [defendant's] Federal Student Aid
Composite Score to decline to less than an agreed upon level, the
payment is not due at that time."

Id. at 6-7.

It is further

agreed that "[i]f such payment is excused under this scenario,"
then "interest begins to accrue."

Id. at 6.

After making the

first and second payment, defendant failed to make its third or
fourth payments, due January 15, 2011, and July 15, 2011,
respectively.

Id. at 6-7.

Defendant claimed that making such

payments would lower its score to less than 1.5.

Id. at 7.

Plaintiffs' counsel made several attempts, albeit unsuccessfully,
to gain "credible, verifiable" financial information and data
from defendant to support its assertion "that payment would cause
the ratio to be adversely affected to the degree that [d]efendant
asserts."

Id. at 7-8.

As of the date of the filing of the

complaint, plaintiffs had not received the requested information
or the past due installment payments from defendant.

Id. at 8.

The twenty-three named plaintiffs then filed the instant
action in state court, alleging claims of breach of contract

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against defendant.

As relief, in addition to attorney's fees,

plaintiffs seek:
1.

2.

Specific performance of the Contract by ordering
Defendant to provide the installment payments,
both past and present, according to the schedule
set out in the Contract;
A declaratory judgment of this Court, and
appropriate injunctive relief, requiring that
Defendant provide the calculation of ratios and
the underlying data relied upon to support any
future assertions of inability to perform under
the Contract at least two weeks prior to the due
date of future installment payments by Defendant
if such payments are to be delayed.

Id. at 9.
Defendant removed the case based on diversity jurisdiction.
See 28 U.S.C.

§

1332;

§

1441(a).

On October 31, 2011, defendant

filed an answer and a counterclaim for breach of contract, along
with a request for attorney's fees and a declaratory judgment
"stating that Plaintiffs are not entitled to review [defendant's]
private financial records."
and Countercl. at 10.

Def.'s Answer, Affirmative Defenses,

Additionally, defendant stated in its

answer that it had "entered into a settlement agreement with each
of the Plaintiffs (Settlement Agreements) and not one settlement
agreement as averred" in the complaint.

Id. at 3.

The issue the court has raised sua sponte is whether the
amount in controversy has been met for the court to exercise
subject matter jurisdiction over the action.

4

See Howery v.

Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001).

While

there is complete diversity of citizenship between the parties,
the court has not been persuaded that the amount in controversy
exceeds $75,000.

Both plaintiffs and defendants have had an

opportunity to address this issue in their briefs.

Whereas

plaintiffs argue that plaintiffs' claims may not be aggregated to
satisfy the minimum amount in controversy, defendant argues that
plaintiffs' claims, which seek recovery from identical settlement
contracts, should be aggregated to meet the jurisdictional
threshold.
II.
Analysis
The court begins by noting that U[t]he burden of
establishing subject matter jurisdiction in federal court rests
on the party seeking to invoke it."

st. Paul Reinsurance Co.,

Ltd. v. Greenberg, 134 F.3d 1250, 1253

(5th Cir. 1998).

Diversity jurisdiction requires that the "matter in controversy
exceed[] the sum or value of $75,000, exclusive of interest and
costs."

28 U.S.C.

§

1332(a).

Generally, the amount of damages

claimed by the plaintiff controls if it appears the claim is made
in good faith.

st. Paul Mercury Indem. Co. v. Red Cab Co., 303

U.S. 283, 288

(1938); Allen v. R & H Oil & Gas Co., 63 F.3d 1326,

1335 (5th Cir. 1995).

When the complaint does not state the
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dollar amount of damages sought, the defendant must prove by a
preponderance of the evidence that the damages claimed exceed
$75,000.

Allen, 63 F.3d at 1335.

Conclusory allegations by the

defendant concerning the amount in controversy are insufficient
to establish a basis for removal.

Id.

A defendant may establish that the amount in controversy
satisfies the jurisdictional minimum in two different ways.
First, it may show that it is "facially apparent" that the amount
in controversy exceeds $75,000, by demonstrating that the
plaintiff's claims, if vindicated, would yield damages greater
than this amount.
(5th Cir. 1995).

De Aguilar v. Boeing Co., 47 F.3d 1404, 1411
Second, if the amount in controversy is not

facially apparent, the defendant may produce summary
judgment-type evidence to show that the amount in dispute
satisfies the jurisdictional minimum.

Allen, 63 F.3d at 1335.

The court concludes that defendant fails under either method
to establish that amount in controversy exceeds $75,000 as
§

1332(a) requires.

First, defendant has not shown that it is

"facially apparent" that the amount in controversy satisfies the
jurisdictional minimum.

The amended notice of removal contains

the following statement concerning the amount in controversy:
. . . Because the matter in controversy exceeds the sum
of $75,000, exclusive of interests and costs, and
because the parties are citizens of different States,
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diversity jurisdiction over this matter exists pursuant
to 28 U.S.C. § 1332. Thus, this action is properly
removed to this Court pursuant to 28 U.S.C. §§ 1441(a)
and 1446.
In addition, this Court may properly
exercise continuing jurisdiction over the settlement
agreements which were reached when this case was
resolved and dismissed in 2009.
Am. Notice of Removal at 2.
Defendant's conclusory assertions are not supported by the
complaint's plain language, which contains no statement alleging
any amount in controversy in excess of $75,000.

For their

requested relief, plaintiffs do not pray for any specific dollar
amount of damages, but instead pray for specific performance of
the settlement contract and a declaratory judgment requiring
defendant to provide information to support its calculation of
the Federal Student Aid Composite score.
9.

See PIs.' Am. Compl. at

Likewise, in the section titled "Damages," plaintiffs allege

no dollar amount in their pleading:
. . . As a direct and proximate result of the
Defendant's breach[,] Plaintiffs have been damaged
through non-payment of the periodic settlement payments
agreed upon within the terms of the Contract.
Id. at 9.

In effect, there are no allegations of any kind

establishing the amount of damages in the complaint.
The court turns next to the summary judgment-type proof
addressing the amount in controversy.

Although plaintiffs'

complaint refers to the existence of one "settlement contract,"

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the evidence submitted by both parties shows the existence of
multiple settlement contracts; in other words, defendant entered
into a separate settlement contract with each plaintiff.

Akber

Mithani, President of Silicon Valley, Inc., stated that defendant
"entered into certain settlement agreements" with plaintiffs and
repeatedly refers to such settlement agreements in the plural.
Def.'s Br., Mithani Dec. 2, Ex. 1.

Julie Johnson, counsel for

plaintiffs, also stated that she "negotiated and approved
settlement agreements for each of [the plaintiffs] with
[d]efendant."2

PIs.' Br., Johnson Aff. 2.

with that in mind, the court turns to the parties' arguments
concerning the aggregation of plaintiffs' claims.

Plaintiffs

contend that the amounts may not be aggregated because each of
their claims are separate and distinct.

In response, defendant

argues that plaintiffs' claims have a common and undivided
interest--even though each plaintiff has a separate settlement
agreement with defendant--because each plaintiff's right to
payment is conditioned on payment to all of the plaintiffs.

The affidavit of Julie Johnson states, in relevant part:
Each of these settlement documents were distinct written agreement [sic] between the
individual Plaintiff and Defendant. No Plaintiff was a signatory on more than one
settlement agreement. No settlement agreement gave rights of collection or ownership to
more than one Plaintiff. No single settlement agreement involved total payments of over
$20,000.00 to any individual Plaintiff.
PIs.' Br., Johnson Aff. 2.
2

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As

support, defendant asserts that Section 2(c) of the settlement
agreements uniformly states:
None of the installments set forth in paragraph 2(b)
shall be due if, on the date the payment is due, making
the installment in the aggregate to all settling
Plaintiffs would render Iverson's Federal Student Aid
Composite Score less than [a confidential composite
score.]
Def.'s Br. at 4.

Defendant did not include a copy of the

settlement agreement itself but instead relied upon Mithani's
declaration and a spreadsheet to show that in the aggregate,
"[t]he total amount outstanding and for which Plaintiffs have
brought this breach of contract action is $170,850."
Dec. 2.

Mithani

The spreadsheet further shows that the individual

amounts outstanding for each plaintiff vary from a low of $3,800
for Amanda Cardenas to a high of $10,650 for Jackie Molett.
Mithani Dec. Ex. 1.
The Fifth Circuit has held that when multiple plaintiffs
have "separate and distinct" claims, those claims may not be
aggregated to satisfy the amount in controversy.
at 1330.

Allen, 63 F.3d

Aggregating claims is only permitted where "two or more

plaintiffs unite to enforce a single title or right in which they
have a common and undivided interest."

Id.

Plaintiffs have a

common and undivided interest if their claims arise from the same
source and they have one right of recovery.

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Id. at 1331.

Guided by the rule in Allen, the court concludes that
defendant may not aggregate plaintiffs' separate claims in order
to meet the minimum amount in controversy.

Here, plaintiffs

allege damages stemming from defendant's failure to make payments
on settlement agreements that each plaintiff had with defendant.
Such claims are separate and distinct because they arise out of
an alleged contract each individual plaintiff claims to have had
with defendant.

Plaintiffs do not have one shared right of

recovery; each plaintiff's recovery is independent of the rest,
and the presence of anyone of them is not necessary to the
claims of any other.

The court also remains unconvinced that the

language in Section 2(c) of the settlement agreement gives rise
to a shared right of recovery, especially given that defendant
has not provided the court with a copy of the entire agreement as
context for the section quoted in defendant's brief.

Thus, there

is nothing to show that each plaintiff is now seeking to recover
at least $75,000.
Finally, defendant's last argument--that this court may
exercise continuing jurisdiction because it had previous
jurisdiction over the parties' prior action--Iacks any merit.
The court concludes that defendant has failed to satisfy its
burden to show that the amount in controversy exceeds $75,000 as
required to establish this court's jurisdiction.
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Accordingly,

the court lacks subject matter jurisdiction over the action and
is remanding it to the state court from which it was removed.
III.
Conclusion
For the reasons given above,
The court ORDERS that the above-captioned action be, and is
hereby, remanded to the state court
SIGNED November 18, 2011.

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removed.