Bedell v. HRC LTD., Civ. A. No. 81-94.
Decision Date | 24 September 1981 |
Docket Number | Civ. A. No. 81-94. |
Citation | 522 F. Supp. 732 |
Parties | Mr. and Mrs. Robert BEDELL, Mr. and Mrs. Danny Sharp, Mr. and Mrs. Ray Ferrell, Mr. and Mrs. John Piper, Mr. and Mrs. Robert Matt, Mr. Jerry Tucker, Mrs. Reita Tumbelson, Mr. and Mrs. O. New, Mrs. A. Rushman, Mr. and Mrs. Henry A. Meyer and Kenton County Fiscal Court. v. H.R.C. LIMITED, a partnership, Robert Stern, Kerr Construction Company, Harold Clayton and Rel S. Wayman. |
Court | U.S. District Court — Eastern District of Kentucky |
John Elfers, County Atty., Clyde Middleton, Covington, Ky., for plaintiffs.
Kurt A. Philipps, Covington, Ky., C. Francis Barrett, Charles C. Bissinger, Jr., Cincinnati, Ohio, for defendants.
The motion to remand filed in this removed action presents this court with a variety of issues related to federal removal jurisdiction. Having carefully considered the various issues raised, the court is of the opinion that jurisdiction is proper and that the motion to remand must be denied.
On August 7, 1981, this action was filed in the Kenton Circuit Court, the trial court of general jurisdiction in Kenton County, Kentucky. The plaintiffs were the Kenton County Fiscal Court, which under Kentucky local government law may be thought of as a county commission rather than a court in the traditional sense, and several individual plaintiffs, all of whom are residents of a suburban street, Jimae Court, which is located in the unincorporated area of Kenton County.
The complaint alleges that a low-income housing development being constructed by the defendants is in violation of certain provisions of applicable zoning ordinances and building codes, and seeks temporary and permanent injunctive relief against the construction of the project. The defendants are H.R.C. Limited, a limited partnership, Robert Stern, one of the partners, and Kerr Construction Company, another of the partners, which is also the contractor of the project. All of the above, as well as the other partners of H.R.C., are citizens of Ohio. All of the plaintiffs are citizens of Kentucky.
However, there were named in addition to the above-mentioned defendants, Rel S. and Ada Wayman and Harold R. and Sarah Clayton, who are citizens of Kentucky. The allegations of the complaint concerning the Waymans are that they "are adjacent landowners to the apartment project, over whose land other defendants are gaining access to the construction site." The allegations against the defendants Clayton, as supplemented by testimony at the hearing on the motion to remand, is to the effect that Clayton sold to H.R.C. Limited the land on which the project rests and has cooperated with it, even acting as an uncompensated agent, in its dealings with local authorities. The testimony at the hearing on the motion to remand was that no financial benefit or detriment would inure to either the Waymans or the Claytons whether or not the project was permitted to be completed. The testimony was that neither the Waymans or Claytons were receiving or going to receive any compensation for their cooperation with the defendants. Not named as a defendant in the state court was the Kentucky Housing Corporation, which made a construction loan secured by a mortgage on the project.
On August 13, 1981, a motion for temporary injunction under Kentucky C.R. 65.04 was filed in the state court in open court. On the same date the defendants filed a motion to abate and dismiss alleging the plaintiffs had failed to state a claim for injunctive relief and that the suit was substantially the same as another related suit pending in the state court.
On August 14, 1981, the state court entered a temporary injunction with findings of fact and conclusions of law. The state court found that the defendants were in violation of a stop-work order issued by the Kenton County Building Inspector, describing five conditions not complied with by the defendants. Principally, the stop-work order and the injunction were based on the fact that the site plan approved for the project contemplated access thereto over Jimae Court, and in a previous action in the state court, brought by the residents of Jimae Court, it had been held that that street could not be used for such access. Therefore, the site plan originally approved had been ordered cancelled by the building inspector.
On August 21, 1981, the defendants sought interlocutory relief in the Kentucky Court of Appeals under Ky.C.R. 65.07 from the granting of the temporary injunction.
On August 28, 1981, the defendants, with the exception of the Claytons and Waymans, filed their petition for removal in this court, accompanied by an appropriate bond, and meeting the other statutory requirements. 28 U.S.C. § 1441 et. seq.
On August 28, 1981, defendants filed herein their motion to dismiss in this court, and on August 31, 1981, filed herein a motion to dissolve the temporary injunction entered in the state court.
On September 4, 1981, the plaintiffs filed in this court their motion to remand, a hearing on which, including oral testimony, was held in this court on September 8, 1981. It is this motion to remand which is now before the court and is the subject of this opinion.
The motion to remand, when considered in the light of the above facts, presents this court with the following issues:
1. Has the requisite jurisdictional amount been established, considering the fact that only injunctive relief was sought in the state court?
2. Does the fact that the defendant limited partnership was registered in Kentucky defeat diversity?
3. Since the Clayton defendants and Wayman defendants are citizens of Kentucky, can their citizenship be ignored for diversity purposes because they are only nominal parties?
4. Does the fact that the Kentucky Housing Corporation, a corporation chartered under KRS 198A.030, has made a construction loan to the defendants, secured by a mortgage, defeat diversity jurisdiction, even though that corporation was not named as a defendant in the state court?
5. Did the defendants waive their right to remove by filing a motion to dismiss and by resisting the granting of the temporary injunction in the state trial court and seeking interlocutory relief from the granting of such injunction in the Kentucky Court of Appeals?
A problem is presented in determining the proper jurisdictional amount in diversity cases involving only injunctive relief. Determination of the appropriate amount is sometimes a difficult matter in such cases, where frequently "the benefit to the plaintiff will have a different value than the loss to the defendant should relief be granted."1 As in many aspects of case law concerning federal removal jurisdiction, including some of the other issues raised in this case, the authorities on the issue are not entirely consistent. Generally, three lines of cases manifest themselves. First, some courts follow the plaintiff's viewpoint rule, which tests the sufficiency of the amount in controversy from the perspective of the plaintiff on the theory that such an approach is likely to produce greater certainty of result and promote simplicity.2
Other federal courts, however, have declined to follow the plaintiff's viewpoint and have found jurisdiction if, from the viewpoint of either the plaintiff or the defendant, more than the statutory amount was involved.3 The second viewpoint is the one favored by Wright, Miller & Cooper.4
A third viewpoint is the one that prevails in this district, and probably the Sixth Circuit. Courts following this approach "view the amount in controversy from the point of view of the party seeking to invoke federal jurisdiction and thus would look to the plaintiff's viewpoint in a case within the federal courts' original jurisdiction, and to the defendant's viewpoint in a case brought to the federal courts by removal from a state court."5 The Eastern District of Kentucky follows this last view, which upon re-examination this court still finds to be the most preferable from the standpoint of logic, practicality and achieving the policies of the statutes creating removal jurisdiction.
In Family Motor Inn, Inc. v. L-K Enterprises Division Consolidated Foods Corporation,6 the late Judge Swinford of our court held that in a removal case, such as the one presented here, the complaint should not be the sole criterion of jurisdictional amount. Judge Swinford quoted an Arkansas case expressing the rationale underlying this view, as follows:
7
When this approach is invoked here, it is clear that the requisite jurisdictional amount exists, for the defendant has already expended more than $400,000 in the construction project involved, most of which will be lost, if it is terminated.
This issue is easily resolved. Although a limited partnership has many of the aspects of a corporation, for the purposes of determining federal diversity jurisdiction it is treated as a partnership rather than a corporation. The state where the limited partnership is registered or has its principal place of business is not considered.8
As may be ascertained from the statement of facts above, neither the defendants Clayton nor the defendants Wayman have any interest in this case in a genuine legal sense. No relief is sought against any of them in the complaint. Their interest in the action is...
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