Melton v. Precision Laser & Instrument, Inc.
Filing
41
MEMORANDUM OPINION AND ORDER denying plaintiff's 9 MOTION to Remand. Signed by Judge John T. Copenhaver, Jr. on 12/26/2012. (cc: attys) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
RANDY MELTON,
Plaintiff,
v.
Civil Action No. 2:12-cv-1697
PRECISION LASER & INSTRUMENT, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is the motion by plaintiff Randy Melton
(“Melton”) to remand, filed June 15, 2012.
For the reasons
below, the court finds that defendant Precision Laser &
Instruments (“Precision”) has established the jurisdictional
amount by a preponderance of the evidence, and the court denies
the motion.
I. Background
Melton commenced this action in the Circuit Court of
Kanawha County, West Virginia on April 24, 2012.
resident of Kanawha County, West Virginia.
He is a
Compl. ¶ 1.
Precision is a Pennsylvania corporation with a principal place
of business in Ambridge, Pennsylvania.
Id. ¶ 2.
The facts, as set forth in the complaint, are as
follows.
Precision hired Melton as “Survey/Mapping Sales and
Support Manager” of its Charleston, West Virginia office in June
2009.
Id. ¶ 5.
On June 16, 2009, the parties signed an
Employment Agreement which provided that Melton would receive a
yearly salary of $55,000.
Id. ¶¶ 6-7.
Additionally, the
Employment Agreement provided for “a 5% commission on all sales
from existing „Special Project Contract‟ sales that were derived
from existing contracts with GPS Innovations, Inc.”
Id. ¶ 6.
The complaint describes GPS Innovations (“GPSI”) as
“Melton‟s former company.”
Id.
On June 29, 2009, Melton,
acting on behalf of GPSI as its president, signed an Asset
Purchase Agreement with Precision.
Agreement 7.
Id. ¶ 14; Asset Purchase
The agreement transferred to Precision “all of
Seller‟s right, title, and interest in and to all the assets,
property rights (tangible and intangible), used in the operation
of GPS Innovations.”
Asset Purchase Agreement 1.
Melton claims
that he transferred the Special Project Contract sales to
Precision ownership -- presumably through the Asset Purchase
Agreement -- as a result of his promised 5% commission.
Compl.
¶ 23.
On June 30, 2009, Melton and Precision entered into a
Confidentiality and Non-Competition Agreement (“CNC Agreement”).
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The CNC Agreement stated that Melton‟s employment could be
terminated “at any time, with or without cause,” and it “d[id]
not create any obligations on the part of [Precision] to employ
Melton for a fixed period of time.”
Id. ¶¶ 8-9, 33.
The
agreement, nonetheless, indicated Precision‟s “intention” to
retain Melton for at least five years.
Id. ¶ 9.
Also on June
30, 2012, Melton and Precision entered into an Addendum to the
Employment Agreement (“Addendum”).
Id. ¶ 10.
The Addendum
reiterated Precision‟s intent to retain Melton for five years
and provided for a severance payment of one year‟s salary if
Precision terminated Melton‟s employment within the first nine
months.
Id. ¶¶ 11-12.
Precision terminated Melton‟s employment
on May 14, 2010, nearly eleven months after his hiring.
Id. ¶
16.
The complaint contends that Precision‟s intentions, as
represented in the CNC Agreement and the Addendum, altered
Melton‟s at-will status to that of an employee with an
employment term of no less than five years.
Id. ¶ 38.
Melton
entered into the agreements “under the assumption” that his
employment would last for that term.
Id. ¶ 13.
The complaint
further states that Precision “did not intend” to employ Melton
for five years, but rather made such representations to “induce
Melton to enter into the [Asset Purchase] Agreement.”
Melton asserts that he relied on Precision‟s false
3
Id. ¶ 15.
representations and that his reliance “was justified” due to
“the large amount of GPSI‟s assets” sold under the Asset
Purchase Agreement.
Id. ¶ 45.
The Asset Purchase Agreement is
itself a source of contention, as Melton alleges that Precision
has refused to pay him for certain assets or to remove the items
from his storage facility.
Id. ¶ 18.
Melton also claims that Precision has refused to pay
him a 5% commission on any sales from the Special Project
Contract.
Id. ¶ 19.
since May 14, 2010.
No commission payments have been made
Id. ¶ 29.
The complaint asserts that
payments should have been made for “all sales to any customer or
client referenced as a former GPSI customer or client, not just
for those sales made by Melton.”
Id. ¶ 26.
It states that
Precision “ignored many of the types of sales” which would have
resulted in commissions and consequently “failed to pay Melton
everything due to him under the Employment Agreement.”
¶¶ 24-25.
Id.
Melton claims that Precision owes commissions for the
sale of the West Virginia based “Machine Control Business,” as
well as for the “lost business” the Machine Control Business
would have generated had Precision not sold it.
Id. ¶¶ 27-28.
Melton‟s five-count complaint sets forth the following
claims: Count One, “Breach of Employment Contract”; Count Two,
“Breach of Confidentiality and Non-Competition Agreement and
4
Breach of Addendum to Employment Agreement”; Count Three,
“Fraudulent Inducement”; Count Four, “Violation of the Wage
Payment and Collection Act”; and Count Five, “Negligence.”
On May 25, 2012, Precision removed, invoking the
court‟s diversity jurisdiction, pursuant to 28 U.S.C.
§ 1332(a)(1).
On June 15, 2012, Melton moved to remand on the
ground that Precision has not met its burden of proof in
establishing the amount in controversy as being in excess of
$75,000.
II. The Governing Standard
“Except as federal law may otherwise provide, when a
defendant removes a state civil action to federal district
court, federal removal jurisdiction exists if the action is one
„of which the district courts of the United States have original
jurisdiction.‟”
In re Blackwater Sec. Consulting, LLC, 460 F.3d
576, 583 (4th Cir. 2006) (quoting 28 U.S.C. § 1441(a)).
Because
removal jurisdiction implicates significant federalism concerns,
it is strictly construed, and if federal jurisdiction is
doubtful, the case must be remanded.
See Palisades Collections
LLC v. AT&T Mobility LLC, 552 F.3d 327, 336 (4th Cir. 2008);
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th
Cir. 1994).
The party seeking removal bears the burden of
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establishing federal jurisdiction.
See Mulcahey, 29 F.3d at
151.
Pursuant to 28 U.S.C. § 1332(a)(1) diversity
jurisdiction, district courts possess original jurisdiction over
all actions between citizens of different states “where the
matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs.”
If a diversity jurisdiction
case is initially filed in federal court, the court will
consider the amount in controversy requirement satisfied unless
it “appear[s] to a legal certainty that the claim is really for
less than the jurisdictional amount.”
St. Paul Mercury Indem.
Co. v. Red Cab Co., 303 U.S. 283, 289 (1938).
When a defendant
removes a case with unspecified damages from state court,
however, the defendant “must prove by a preponderance of the
evidence that the value of the matter in controversy exceeds the
jurisdictional amount.”
Landmark Corp. v. Apogee Coal Co., 945
F. Supp. 932, 935 (S.D. W. Va. 1996); see also Bartnikowski v.
NVR, Inc., 307 F. App‟x. 730, 734 n.7 (4th Cir. 2009) (applying
a preponderance standard that “sister circuits have explicitly
adopted,” but reserving the right to consider “whether a more
stringent standard would be appropriate”).
The court considers the entire record and makes an
independent evaluation of whether the amount in controversy has
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been satisfied.
Weddington v. Ford Motor Credit Co., 59 F.
Supp. 2d 578, 584 (S.D. W. Va. 1999).
The court must conduct
that evaluation “on the basis of the record existing at the time
the petition for removal is filed.”
at 936.
Landmark Corp., 945 F. Supp
Important factors include the type and extent of the
plaintiff‟s injuries and the possible damages recoverable from
those injuries.
McCoy v. Norfolk S. Ry. Co., 858 F. Supp. 2d
639, 649 (S.D. W.Va. 2012).
A court can also consider as a
factor a plaintiff‟s settlement demands prior to removal.
Id.
at 649-50; see also Scaralto v. Ferrell, 826 F. Supp. 2d 960,
964 (S.D. W.Va. 2011) (collecting West Virginia federal court
decisions that treat settlement offers as “just one piece of
evidence”).
But see id. at 968-69 (adopting the rule that “a
demand in excess of the jurisdictional minimum should be treated
as the amount in controversy, unless the plaintiff shows that to
a legal certainty he cannot recover over $75,000”).
III. Discussion
The parties‟ diversity of citizenship is not disputed.
Precision need only establish that the $75,000 jurisdictional
amount is satisfied.
Precision‟s notice of removal highlights
the breadth of Melton‟s claims and states that Melton “is
assuredly seeking more than $75,000; indeed, well over $200,000
based on lost wages alone.”
Not. Removal 3.
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In his motion to remand, Melton contends that
Precision has not satisfied its burden of proof respecting the
$75,000 jurisdictional minimum.
He notes that Precision has
failed to present evidence that commissions exceed $75,000 and
has not accounted for mitigation in calculating lost wages.
Pl.‟s Mot. Remand 3.
He argues that Precision has not met its
burden for removal because damages are incapable of being
calculated without discovery and must be determined by a jury.
Id.
In response, Precision apprised the court of
settlement negotiations between the parties and attached the
relevant emails as exhibits.
Prior to suit, in a June 28, 2011
email, Melton‟s counsel offered to settle for $550,000, a figure
he described as “a realistic number and not filled with fluff to
leave room for negotiations.”
Def.‟s Opp‟n. Mot. Remand, Ex. 1.
In an October 2, 2011 email, Melton‟s counsel rejects
a $25,000 counteroffer from Precision as a “nuisance value
settlement.”
Def.‟s Opp‟n. Mot. Remand Ex. 2, at 1, 3.
In
support of his $550,000 demand, he gives specific examples of
Melton‟s damage claims.
He mentions a $2600 commission for
$52,000 of pending extended warranty sales and adds that the
amount “is quite small in comparison to the sales attributed to
servicing the warranties.”
Id. at 2.
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He notes a 5% commission
of $30,000 on $600,000 of equipment purchases by the “special
contracts client[]” Kanawha Stone Company, Inc., and he claims
to be “sure there will be numerous other instances of sales to
the special contract companies.”
Id. at 2-3.
Additionally, Melton‟s counsel states that feeshifting pursuant to Melton‟s Wage Payment Collection Act claim
is “certainly a significant consideration.”
Id.; see also Amick
v. C & T Dev. Co., 187 W.Va. 115, 118 416 S.E.2d 73, 76 (1992)
(“An employee who succeeds in enforcing a claim under [the Wage
Payment Collection Act] should ordinarily recover costs,
including reasonable attorney fees unless special circumstances
render such an award unjust.” (quoting Syl. Pt. 1, Farley v.
Zapata Coal Corp., 167 W.Va. 630, 630, 281 S.E.2d 238, 239
(1981.))).
He explains that he has “seen Kanawha County judges
award fee petitions over $30,000.00 on a recovery of $6,500,”
and that “the fee award alone could be in the neighborhood of
Mr. Melton‟s demand” if the case went to trial.
Def.‟s Opp‟n.
Mot. Remand Ex. 2, at 3.
Melton‟s counsel‟s most recent included email, dated
December 5, 2011, states that “Mr. Melton is not rigid in his
demand” and “would be willing to settle all claims for
$300,000.”
Id. at 1.
He also writes that the new $300,000
offer is “not a firm demand.”
Id.
9
In his briefing for the
pending motion, Melton mentions that Precision later increased
its offer to $30,000.
Pl.‟s Reply Supp. Mot. Remand 2.
Precision contends that these settlement communications show
that the amount in controversy “far exceeds” the requirement for
diversity jurisdiction.
Def.‟s Opp‟n. Mot. Remand 3-4.
Reviewing the record before it respecting the two key
factors in this case -- the nature of Melton‟s claims and the
settlement offers -- the court concludes that Precision has
established by a preponderance of the evidence that the amount
in controversy exceeds the jurisdictional threshold.
Regarding
the nature of the claims, Melton‟s Count Two assertion that
Precision breached his five-year employment agreement with over
four years remaining could alone eclipse the jurisdictional
requirement.
Precision points out that at Melton‟s stated
salary of $55,000, the total in controversy under Count Two is
$220,000.
Even if the court limited such damages to the period
between Melton‟s termination (May 14, 2010) and the removal (May
25, 2012), the figure remains over $110,000 and well in excess
of the jurisdictional amount.
The record does not support Melton‟s argument that the
amount in controversy must be discounted to account for
Precision‟s mitigation defense.
The court must make its
determination based on the record at the time of removal, and
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that record contains no evidence of mitigation.
Discussion of
mitigation is limited to the listing of mitigation as an
affirmative defense in Precision‟s answer and Melton‟s
unsupported contention that Precision “is fully aware that
Plaintiff mitigated his damages and obtained employment shortly
after his termination.”
Pl.‟s Mot. Remand 3.
Such bare
allegations provide no evidentiary basis for determining
mitigation.
In contrast, Melton‟s salary, the terms of the
employment agreement, and the date of his termination are all
supported in the record by Melton‟s own allegations and the
parties‟ contracts.
Melton‟s claims for past commissions and attorney fees
further augment the amount in controversy.
In his October 3,
2011 settlement correspondence, Melton‟s counsel expressly
references two sets of commissions amounting to $32,600.
The
full amount in controversy attributable to commissions is likely
significantly higher since Melton‟s counsel then notes that he
is “sure there will be numerous other instances of sales to the
special contract companies.”
Regarding attorney fees, this
court has in the past used $25,000 as a reasonable preliminary
estimate.
See Maxwell v. Wells Fargo Bank, N.A., 2009 WL
3293871, at *4 n.7 (S.D. W. Va. October 09, 2009).
That same
value seems appropriate, if not overly conservative, in this
case, given Melton‟s counsel‟s reference to $300,000 fee awards
11
and his view that attorney fees “alone could be in the
neighborhood of Mr. Melton‟s demand.”
With over $100,000 in
damages arising from breach of the employment term, at least
$32,600 in unpaid commissions, and an estimated $25,000 in
attorney fees, it is evident to the court that the combined
amount in controversy for Melton‟s claims exceeds the $75,000
jurisdictional amount.
The parties‟ settlement negotiations also weigh
strongly for conferring jurisdiction.
Melton‟s rejection of
Precision‟s $30,000 settlement offer creates a clear floor value
for the amount in controversy.
See Coleman v. Wicker, No. 2:11–
00558, 2012 WL 1111465, at *3 (S.D. W. Va. March 30, 2012).
Melton‟s own demands suggest the possible upper range for his
claims.
The $300,000 settlement demand, though a significant
concession from the original $550,000 demand, is still four
times the required jurisdictional amount.
The assertion that
the $550,000 offer was not “filled with fluff” lends some weight
to the conclusion that the $300,000 figure is much closer to
Melton‟s good-faith valuation of his claims.
That the $300,000
offer is “not a firm demand” does not justify the inference that
the true amount in controversy is less than $75,000.
Considering the record before it, and in particular
the nature of Melton‟s claims and the parties‟ settlement
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discussions,1 the court finds that Precision has established by a
preponderance of the evidence that the amount in controversy
exceeds the jurisdictional amount.
IV.
Based upon the foregoing discussion, it is,
accordingly, ORDERED that Melton‟s motion to remand be, and it
hereby is, denied.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record.
ENTER: December 26, 2012
John T. Copenhaver, Jr.
United States District Judge
Since these factors indicate that the jurisdictional amount is
met, the court need not further consider the bright-line
approach to settlement demands set forth in Scaralto. See 826
F. Supp. 2d at 963.
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