Aurora Loan Services v. Wong et al

Filing 27

ORDER MEMORANDUM DECISION granting 7 Motion to Remand; adopting Report and Recommendations re 24 Report and Recommendations.; re 24 REPORT AND RECOMMENDATIONS re 7 MOTION to Remand to Third Judicial District Court, Salt Lake County, Salt Lake Department filed by Aurora Loan Services. Magistrate Judge Samuel Alba no longer assigned to case. Signed by Judge Clark Waddoups on 11/7/11. (jmr)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
AURORA LOAN SERVICES,

ORDER and MEMORANDUM
DECISION

Plaintiff,
Case No. 2:11-cv-492-CW
v.
WAYNE WONG, MARIA WONG and JOHN
DOES I-V,
Defendants.

Now before the court is an objection to a Report and Recommendation by Magistrate Judge
Alba (“R & R”) recommending that Plaintiff’s motion to remand be granted. Because the Wongs
are acting pro se in this matter, the court will liberally construe their pleadings. See, e.g.,
Ledbetter v. City of Topeka, 318 F.3d 1183, 1187 (10th Cir. 2003) (providing that pro se parties’
pleadings should be construed liberally).
The Wongs purported to remove this action on the basis of diversity jurisdiction. The R &
R reasoned that the Wongs had not established that over $75,000 was at issue in the removed
action, which was a Utah state law eviction action. In their objection, the Wongs do not dispute
that on its face, the complaint in the eviction action against them did not put over $75,000 at issue
at the time of removal. Rather, the Wongs contend that for various reasons, the Plaintiff in the
eviction action did not have standing to bring that action and that the foreclosure sale leading to
the eviction action was void. The Wongs have filed a counterclaim seeking $2,000,000 in
damages related to these factual assertions. The Wongs contend that the alleged defects in the
proceedings leading up to the action put over $75,000 at issue.

In the Tenth Circuit, when calculating the amount in controversy for purposes of diversity
jurisdiction in an action filed in federal court, a counterclaim exceeding the jurisdictional amount
can create the jurisdictional amount even if the amount in the original complaint is insufficient.
See State Farm v. Narvaez, 149 F.3d 1269, 1271 (10th Cir. 1998) and Geoffery E. Macpherson,
Ltd. v. Brinecell, Inc., 98 F.3d 1241, 1245, n. 2 (10th Cir. 1996). There is no Tenth Circuit case,
however, that addresses whether the value of a counterclaim can serve to establish the
jurisdictional amount in a case removed from state court. In both State Farm and Macpherson, the
Tenth Circuit relied on Federal Practice and Procedure § 3706 in support of its reasoning.
According to that treatise, the modern trend and majority position is for courts to disallow
consideration of the counterclaim as establishing the jurisdictional amount. See 14AA Fed. Prac.
& Proc. Juris. § 3706 (4th ed.).
The court sees no compelling reason to reject the majority position on this subject.
Accordingly, there was no error in the R & R’s analysis. The R & R is therefore APPROVED and
ADOPTED. This case is REMANDED to the Utah state court from which it was removed.
DATED this 7th day of November, 2011.
BY THE COURT:

__________________________
CLARK WADDOUPS
United States District Judge

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