Bassett v. Toyota Motor Credit Corp.

• Decision Date: 06 January 1993
• Docket Number: Civ. A. No. 92-0694-P-S.
• Citation: 818 F. Supp. 1462
• Parties: Lynn Ruth BASSETT, on behalf of herself and all others similarly situated, Plaintiffs, v. TOYOTA MOTOR CREDIT CORPORATION, a California Corporation, World Omni Financial Corporation, a Florida Corporation, and American Security Insurance Company, a Delaware Corporation, Defendants.
• Court: U.S. District Court — Southern District of Alabama

818 F. Supp. 1462

Lynn Ruth BASSETT, on behalf of herself and all others similarly situated, Plaintiffs, v. TOYOTA MOTOR CREDIT CORPORATION, a California Corporation, World Omni Financial Corporation, a Florida Corporation, and American Security Insurance Company, a Delaware Corporation, Defendants.

Civ. A. No. 92-0694-P-S.

United States District Court, S.D. Alabama, S.D.

January 6, 1993.

Edward P. Turner, Jr., Tatum Turner, Halron W. Turner, Chatom, AL, Mark Ezell, John W. Sharbrough, III, Mobile, AL, for plaintiff.

Orrin K. Ames, William C. Tidwell, III, P. Russell Myles, Mobile, AL, for defendant Toyota Motor Credit Corp.

Richard T. Dorman, David R. Peeler, Mobile, AL, for defendant World Omni.

E.B. Peebles, Ray Morgan Thompson, James E. Robertson, Jr., Mobile, AL, for defendant American Security.

ORDER

PITTMAN, Senior District Judge.

After due and proper consideration of all portions of this file deemed relevant to the issues raised, and a de novo determination of those portions of the Recommendation to which objection is made, the Recommendation of the Magistrate Judge made under 28 U.S.C. § 636(b)(1)(B) is ADOPTED as the opinion of this Court.

It is ORDERED that Plaintiff's motion to remand be GRANTED and that this case be REMANDED to the Circuit Court of Washington County, Alabama for disposition.

RECOMMENDATION OF MAGISTRATE JUDGE

STEELE, United States Magistrate Judge.

This matter is before the Court on Plaintiff's Motion to Remand for Lack of Subject Matter Jurisdiction (Docs. 5 and 6) and Joint Brief of Defendants in Opposition to the Plaintiff's Motion to Remand for Lack of Subject Matter Jurisdiction (Doc. 14). These matters have been referred to the undersigned Magistrate Judge for a recommendation pursuant to Title 28 U.S.C. § 636 and Local Rule 26. Upon consideration, the following recommendation is entered.

Procedural History

This case was initiated on July 16, 1992, when the Plaintiff filed a class action complaint against Defendants, Toyota Motor Credit Corporation and World Omni Financial Corporation, in the Circuit Court of Washington County, Alabama. Plaintiff filed an amended complaint adding American Security Insurance Company as a party defendant on July 24, 1992. On August 17, 1992, this case was removed to the Southern District of Alabama after Defendants filed notice of removal pursuant to 28 U.S.C. § 1441. On August 28, 1992, Plaintiff filed the present motion to remand. There is no contention that either the notice of removal or the motion to remand are untimely.

In Plaintiff's complaint, Plaintiff alleges that Defendants have systematically force-placed insurance coverage on the class members in an amount equal to the total of remaining payments in violation of the contract between the parties and that the Defendants have force-placed insurance for coverages not authorized by the retail installment contract. The complaint asserts claims for breach of contract, breach of fiduciary duty, fraud by suppression (failure to disclose the true outstanding loan balance), fraud by suppression (failure to disclose additional insurance coverages), and civil conspiracy. Plaintiff claims actual damages of $500.00 or less and punitive damages of $40,000.00 for herself and for each class member.

Plaintiff asserts that her motion to remand is due to be granted because the amount in controversy does not exceed the jurisdictional limit of $50,000.00.¹ Alternatively, Plaintiff argues that this Court lacks jurisdiction because the parties are not diverse. Specifically, Plaintiff contends that Defendant, World Omni Financial Corporation, has its base of operations in Mobile, Alabama, and therefore is not a diverse party within the meaning of 28 U.S.C. § 1332.

Contrary to the assertions of Plaintiff, Defendants contend that the true amount in controversy exceeds the jurisdictional limit required by law. In support of this contention, Defendants offer the affidavits of Mobile attorneys Mack Binion and Danner Frazer which state that it is their professional opinions that the allegations of Plaintiff's complaint, if proved as alleged, could reasonably result in a jury award in favor of the Plaintiff and each member of the purported class in excess of $50,000.00 in both compensatory and punitive damages. Additionally, Defendants argue that for purposes of computing the amount in controversy, all claims for punitive damages by the individual class members should be aggregated and that the aggregated amount will exceed the $50,000.00 jurisdictional limit. Finally, Defendants dispute Plaintiff's assertion that World Omni Financial Corporation has its principal place of business in Mobile, Alabama. Defendants proffer that World Omni has its principal place of business in Florida and is therefore a diverse party within the meaning of 28 U.S.C. § 1332.

Discussion

There appears to be little question that when the jurisdiction of this Court is challenged after removal, the party seeking to invoke the jurisdiction of this Court has the burden of proving its existence by showing that it does not appear to a legal certainty that its claim is for less than the jurisdictional amount. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938). Thus, in removed cases, the burden is on the defendant. Lindsey v. Alabama Telephone Co., 576 F.2d 593 (5th Cir.1978). Generally, determination of the value of the matter in controversy for purposes of federal jurisdiction is determined by application of federal standards. See, e.g., Horton v. Liberty Mutual Insurance Co., 367 U.S. 348, 352, 81 S.Ct. 1570, 1573, 6 L.Ed.2d 890 (1961). However, in a diversity case, this Court is required to look to state law to determine the nature and extent of the damages to be awarded. Id., 367 U.S. at 352-53, 81 S.Ct. at 1573. This requirement directs the application of the forum state's rules regarding the measure of damages and the availability of punitive damages. It is undisputed that the law of the State of Alabama allows for an award of punitive damages where the plaintiff proves at least nominal injury. First Bank of Boaz v. Fielder, 590 So.2d 893, 898-900 (Ala.1991); see also, Ala. Code § 6-11-23(b) (1975).

In the case sub judice, the parties agree that the threshold issue before this Court in deciding whether it has jurisdiction to retain and hear this case, is whether aggregation of punitive damage claims among class members is appropriate to reach the jurisdictional amount in controversy. If aggregation is appropriate, the parties concede that this Court has jurisdiction. If aggregation is inappropriate, however, the parties disagree as to whether this Court has jurisdiction. Plaintiff contends that this Court's viewpoint is restricted to that of the Plaintiff's and that the Plaintiff, as master of her complaint, has prayed for relief in an amount below the jurisdictional limit of this Court and is therefore entitled to have this matter resolved by the state court. Defendants contend, however, that the Court should analyze the value of this case using the Defendants' viewpoint which would be the potential economic loss to these Defendants. Defendants contend that they have established that the value of this case exceeds the jurisdictional limit thus bringing this matter properly before this Court. The third jurisdictional issue to be resolved is whether the parties are truly diverse. These issues are discussed separately below.

Aggregation of Damage Claims

There appears to be little question that where actual and punitive damages are recoverable under a complaint, each must be considered to the extent claimed in determining jurisdictional amount. Bell v. Preferred Life Assur. Soc. of Montgomery, Alabama, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943). In St. Paul Mercury Indemnity Co. v. Red Cab Co., supra, the Supreme Court declared as follows:

The intent of Congress drastically to restrict federal jurisdiction in controversies between citizens of different states has always been rigorously enforced by the courts. The rule governing dismissal for lack of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the Plaintiff controls if the claim is apparently made in good faith.... But if, from the face of the pleadings, it is apparent, to a legal certainty, that the Plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the Plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.

303 U.S. at 288-89, 58 S.Ct. at 590 (citations omitted). Thus, a complaint is fatally defective, as far as diversity jurisdiction is concerned, unless the complaint contains a proper allegation of the amount in controversy. Schlesinger v. Councilman, 420 U.S. 738, 744, 95 S.Ct. 1300, 1306, 43 L.Ed.2d 591 (1975). See generally 14A Wright, Miller and Cooper, Federal Practice and Procedure § 3702 (1988).

The law in this Circuit as to aggregation of the claims of class members to achieve the jurisdictional limit, is set forth in Lindsey v. Alabama Telephone Co., 576 F.2d 593 (5th Cir.1978).² In that case, the Plaintiff filed suit against various telephone companies in state court seeking $2,000.00 compensatory damages for himself and $1,000,000.00 exemplary damages and unspecified compensatory damages on behalf of the entire plaintiff class. On motion of the defendants, the case was removed to federal district court as a federal diversity action and ultimately dismissed by that court on defendant's motion to dismiss for failure to state a claim upon which relief could be granted. In holding that the federal district court was without subject matter jurisdiction over plaintiff's claims, the Fifth Circuit Court of Appeals set forth the following precedent as to class action...