Bem I, L.L.C. v. Anthropologie, Inc.

• Decision Date: 20 August 2002
• Docket Number: No. 01-1679.,01-1679.
• Citation: 301 F.3d 548
• Parties: BEM I, L.L.C., Plaintiff-Appellant, v. ANTHROPOLOGIE, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

301 F.3d 548

BEM I, L.L.C., Plaintiff-Appellant, v. ANTHROPOLOGIE, INC., Defendant-Appellee.

No. 01-1679.

United States Court of Appeals, Seventh Circuit.

Argued April 2, 2002.

Decided August 20, 2002.

COPYRIGHT MATERIAL OMITTED

James A. Flesch (argued), Don E. Glickman, Gordon, Glickman, Flesch & Woody, Chicago, IL, for Plaintiff-Appellant.

Frederic R. Klein (argued), Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Chicago, IL, for Defendant-Appellee.

Before: POSNER, MANION, and KANNE, Circuit Judges.

POSNER, Circuit Judge.

Anthropologie, a chain of pricey retail clothing stores, wanted to open a store in the wealthy Chicago suburb of Highland Park. So in 1996 it leased 13,000 square feet in a building, owned by BEM, that was under construction. The lease was to run for 10 years, at an annual rental of almost a quarter of a million dollars. Under the terms of the lease, Anthropologie's obligation to pay rent did not arise until 90 days after "substantial completion," defined as the date of completion of the landlord's work, pursuant to the lease, in making the premises fit for occupancy, "all as certified by the Landlord's Architect." The architect certified the work as complete on June 20, 1997, but in fact the work was not complete until August 19, and Anthropologie could not occupy the premises during this period. BEM insisted nevertheless, that Anthropologie owed it rent from September 18, 90 days after June 20, rather than from 90 days after the actual (as distinct from the architect-certified) date of completion, a difference of some $48,000. BEM sued Anthropologie under Illinois law in an Illinois state court seeking damages in that amount plus an order of eviction. Anthropologie removed the case to federal district court, the parties being of diverse citizenship. Pursuant to a clause in the lease, the judge referred the parties' dispute to a panel of arbitrators, which found in favor of Anthropologie, awarding it more than half a million dollars in damages and attorneys' fees. The judge confirmed the arbitrators' award and so Anthropologie remains in possession under the lease. BEM claims that the removal of the case to federal court was improper, and, alternatively, that the arbitrators' awards were improper and should not have been confirmed.

Removal was proper only if the amount in controversy exceeded $75,000 on the date of removal. In re Shell Oil Co., 970 F.2d 355, 356 (7th Cir.1992) (per curiam); Hayes v. Equitable Energy Resources Co., 266 F.3d 560, 573 (6th Cir. 2001); Journal Publishing Co. v. General Casualty Co., 210 F.2d 202, 204-05 (9th Cir.1954). Before the case was removed, when it was still in state court, BEM had filed a motion to increase its claim for rent from $48,000 to $88,000, but when it discovered that Anthropologie intended to remove the case, it immediately withdrew the motion, which the state court judge had not acted on. It did this because it wanted to prevent removal. Nevertheless it did not object to removal or flag any issue concerning the district court's jurisdiction. Not until 21 months later, after the district judge had on her own initiative raised the issue, did BEM contend that the requirement of a minimum amount in controversy of $75,000 had not been satisfied.

BEM reminds us that the subject-matter jurisdiction of a federal court may be questioned at any time until the litigation becomes final, and sometimes even later. True; but deliberately to avoid raising the issue is improper, indeed sanctionable, In re Brand Name Prescription Drugs Antitrust Litigation, 248 F.3d 668, 670 (7th Cir.2001); First National Bank v. A.M. Castle & Co. Employee Trust, 180 F.3d 814, 819 (7th Cir.1999); Richmond v. Chater, 94 F.3d 263, 267 (7th Cir.1996); Minority Police Officers Ass'n v. City of South Bend, 721 F.2d 197, 199 (7th Cir.1983); Aves By & Through Aves v. Shah, 997 F.2d 762, 767 (10th Cir.1993); Tuck v. United Services Automobile Ass'n, 859 F.2d 842, 844-46 and n. 3 (10th Cir. 1988); see Board of License Commissioners v. Pastore, 469 U.S. 238, 240, 105 S.Ct. 685, 83 L.Ed.2d 618 (1985) (per curiam); Missouri ex rel. Nixon v. Craig, 163 F.3d 482, 484 n. 3 (8th Cir.1998), and quite possibly unethical. See United States v. Shaffer Equipment Co., 11 F.3d 450, 457-58 (4th Cir.1993). As officers of the court, lawyers who practice in federal court have an obligation to assist the judges to keep within the boundaries fixed by the Constitution and Congress; it is precisely to impose a duty of assistance on the bar that lawyers are called "officers of the court." Lawyers also owe it to the judge and the opposing lawyer to avoid subjecting them to the burdens of a lawsuit that they know or think may eventually be set at naught, and have to be started over again in another court, because of a jurisdictional problem of which the judge and the opposing lawyer may be unaware. As reference to such unawareness should make clear, we acknowledge that jurisdictional problems may be overlooked in all innocence. E.g., Maguire Oil Co. v. City of Houston, 143 F.3d 205, 210-12 (5th Cir.1998). But BEM's lawyer acknowledged at the argument before us that he was aware of a jurisdictional problem even before the case was removed; it was that awareness that motivated him to withdraw his motion to increase the amount of damages he was seeking.

What makes BEM's conduct at once egregious and harmless is that its challenge to the district court's subject-matter jurisdiction was frivolous, quite apart from the fact that even while withdrawing its motion for the additional rent it continued to claim that the additional rent was owed it. Illinois practice, like that of the federal courts, does not limit the plaintiff's possible recovery to the amount of damages stated in its complaint, 735 ILCS § 5/2-604; Barbers, Hairstyling for Men & Women, Inc. v. Bishop, 132 F.3d 1203, 1205 (7th Cir.1997); see Fed. R.Civ.P. 54(c); EEOC v. Massey-Ferguson, Inc., 622 F.2d 271, 277 (7th Cir. 1980) — even if that amount is zero. See Z Channel Limited Partnership v. Home Box Office, Inc., 931 F.2d 1338, 1341 (9th Cir.1991); Columbia Nastri & Carta Carbone, S/p/A v. Columbia Ribbon & Carbon Mfg. Co., 367 F.2d 308, 312 (2d Cir.1966). And so reducing the ad damnum had no effect on the actual stakes in the case. Had BEM wanted to make sure that its stake was less than $75,000, it should have stipulated to that effect. Workman v. United Parcel Service, Inc., 234 F.3d 998, 1000 (7th Cir.2000); In re Shell Oil Co., supra, 970 F.2d at 356; De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995). If Illinois, like some states, had a rule limiting the plaintiff's recovery to the amount asked for in the complaint, that would have the same effect as a stipulation, Barbers, Hairstyling for Men & Women, Inc. v. Bishop, supra, 132 F.3d at 1205, and then the plaintiff who asked for less than $75,000 in damages (and no other relief — the importance of this qualification will appear shortly) would prevent removal. But Illinois does not have such a rule.

A further complication is that the additional $40,000 in rent that BEM was seeking was the rent due on January 1, which was several days after the suit was filed, and there are cases (none appellate, however) which are said to hold "that in a suit to recover accrued installments, those payments that become due between the date of filing the state court complaint and the date on which removal is sought cannot be considered." 14C Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3725, p. 115 (3d ed.1998). Unless the payor had repudiated his future obligations (and we are given no reason to suppose that Anthropologie was unwilling to pay the January rent, since it had been in occupancy of the leased premises for well over 90 days at that point), the amount would not be in controversy on the date the complaint was filed. But the Wright and Miller treatise is wrong; the relevant date for determining whether the minimum amount in controversy is present is the date of removal, not the date of the original complaint in state court, as Workman, Shell, and De Aguilar make clear. The cases Wright and Miller cite are ones in which the installment was due after removal, not, as the treatise implies, before.

Events subsequent to removal that merely reveal whether the required amount was in dispute on the date of filing, rather than alter the current amount in controversy, can be considered in deciding what that original amount in controversy was. State Farm Mutual Automobile Ins. Co. v. Powell, 87 F.3d 93, 97 (3d Cir.1996); Watson v. Blankinship, 20 F.3d 383, 387-88 (10th Cir.1994); Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781, 782-86 (2d Cir.1994). Although Anthropologie did not pay the January rent until January 27, and thus was technically in default when the case was removed, there is no indication that it denied owing the rent or that the delay in payment was an actual breach of contract rather than being, instead, consistent with trade usage.

The question how much damages BEM was seeking is anyway a red herring, since the jurisdictional minimum in diversity cases is not the amount sought by the plaintiff but the amount at stake to either party to the suit. Not all courts take this view but ours certainly does. Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977 (7th Cir.2000); In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599, 609 (7th Cir.1997). For illustrative cases in other circuits, see Justice v. Atchison, Topeka & Santa Fe Ry., 927 F.2d 503, 505 (10th Cir.1991); Smith v. Washington, 593 F.2d 1097, 1099 (D.C.Cir.1978), and for approval by a leading, if, as we have noted, occasionally mistaken, treatise see 14B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, supra, § 3703, pp. 121-25. The division of authority is summarized in Brittain Shaw McInnis, Comment, "The $75,000.01 Question:...