Cannon v. United Insurance Company of America, Civ. A. No. 72-1493.

• Court: United States District Courts. 4th Circuit. United States District Court of South Carolina
• Writing for the Court: Philip Wittenberg, Sumter, S. C., for defendant
• Citation: 352 F. Supp. 1212
• Parties: Lewis CANNON, Plaintiff, v. UNITED INSURANCE COMPANY OF AMERICA, Defendant.
• Docket Number: Civ. A. No. 72-1493.
• Decision Date: 10 January 1973

352 F. Supp. 1212

Lewis CANNON, Plaintiff,
v.
UNITED INSURANCE COMPANY OF AMERICA, Defendant.

Civ. A. No. 72-1493.

United States District Court, D. South Carolina, Greenville Division.

January 10, 1973.

352 F. Supp. 1213

Eston W. Page, Laurens, S. C., for plaintiff.

Philip Wittenberg, Sumter, S. C., for defendant.

ORDER

HEMPHILL, District Judge.

On November 30, 1972, the plaintiff, temporarily¹ removed to this court from the Family Court of Laurens County, South Carolina, served Notice of Motion to Remand the cause to the original State Court in which the Summons and Complaint were filed. The issue is jurisdictional amount under 28 U.S.C. § 1332.

A review of the record before this court shows the plaintiff to be a resident of South Carolina and the defendant to be an Illinois corporation. On November 6, 1972, the plaintiff served on the defendant, through the offices of the South Carolina Insurance

352 F. Supp. 1214

Commissioner². The original complaint alleges³ that the plaintiff has been damaged in the sum of $18,000.00 damages, actual and punitive. Before the time for answering had expired,⁴ on November 22, 1972, defnedant, through counsel, filed his petition and bond, together with the costs for same, in the United States District Court for the District of South Carolina, Greenville Division. At the same time the defendant filed with the Clerk an original and one copy of the answer. On November 21, 1972, again before the time for answering had expired, the plaintiff, through counsel, placed in the mail a proposed amended complaint, reducing the ad damnum therein from $18,000 to $8,000.⁵ Thereafter, on November 30, 1972, plaintiff's counsel filed the Motion to Remand, and, at the same time, filed, as an attachment to the Motion, the affidavit heretofore referred to. Counsel for defendants, on December 6, 1972, filed an affidavit in opposition to plaintiff's Motion to Remand, and enclosed as exhibits to that affidavit: the letter from defendant's counsel to the Clerk of Court for the United States District Court for the District of South Carolina, at Columbia, South Carolina; a certificate of the Clerk of the United States District Court to the effect that the petition and bond for removal, and copy of complaint and answer were filed on November 22, 1972; and a copy of a letter from defendant's counsel to the Clerk of Court for Laurens County, South Carolina, enclosing and filing a copy of the petition and bond for removal and a check for costs. Attached to defendant's supporting affidavit was a letter from counsel for defendant to counsel for plaintiff refusing to accept service on the Amended Complaint, and insisting that the matter had been removed to the United States District Court for the District of South Carolina. It is with this set of facts as a background that this court must determine whether this court has jurisdiction.⁶

It is obvious, from the above recitation, that the issue now to be decided arose before discovery had been

352 F. Supp. 1215

engaged in (and this court should not order extended discovery when jurisdiction is doubtful, for the obvious reason that the court might not have the authority to order or direct any further proceedings). The issue of jurisdiction is decisive insofar as further activity in this court is concerned

It is apparent that this case presents an anomaly in the fact that the defendant, seeking and claiming the jurisdiction of this court, will, if successful, be subject to claims and demands for damages in double the amount which the plaintiff, in his proposed Amended Complaint, now claims is due. But such fact does not simplify the issue here. McNutt v. General Motors Acceptance Corp. (1936), 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135, 1137, states essential requisites of jurisdiction to be: (1) in order to pitch its jurisdiction in the United States Courts, the plaintiff must properly allege the jurisdictional facts, according to the nature of the case; and, (2) where the jurisdictional issue is raised by either plaintiff or defendant, the burden of proving jurisdiction is on the party seeking to establish jurisdiction in the United States Courts. The reasoning of this opinion fully supports the comments on jurisdictional amounts as discussed in Volume 47, Number 2, New York University Law Review (May, 1972, edition) wherein it is pointed out that there is no constitutional limitation on federal jurisdiction, but that the Congress, fearful that federal courts would be overrun with insubstantial cases, limited the court's jurisdiction by imposing a minimum amount-in-controversy-requirement.⁷ A few years after McNutt, in St. Paul Mercury Indemnity Co. v. Red Cab Co. (1938), 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845, the Supreme Court of the United States decided that the success or failure of the suit to yield coverage of $10,000.00 is not the test of jurisdiction, but that:

The rule governing dismissal for want 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. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. 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 proof, 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. (Id. at 288-289, 58 S.Ct. at 590, 82 L.Ed. at 848)

Unfortunately, in this case, we cannot wait for the proof, unless we place the parties at an expense not justified in the light of the amount involved. The court has some responsibility to avoid those expenses which effectively would prevent a litigant from having the tenacity, or the means, to have his day in court.

In Hilton v. Dickinson (1883), 108 U. S. 165, 174, 2 S.Ct. 424, 430, 27 L.Ed. 688, 691, the court held:

It is undoubtedly true that until it is in some way shown by the record that the sum demanded is not the

352 F. Supp. 1216

matter in dispute, that sum will govern in all questions of jurisdiction, but it is equally true that when it is shown that the sum demanded is not the real matter in dispute, the sum shown, and not the sum demanded, will prevail.

The court is therefore constrained to hold that when the original complaint was filed in the Office of the Clerk of Court for Laurens County, the demand of the plaintiff for $18,000.00 controlled, but that sum would not necessarily control when and if it is apparent to a legal certainty that the plaintiff cannot recover, or is not entitled to recover, as much in damages as the jurisdictional requisite makes necessary to give this court jurisdiction. Nor should the court engage in extensive pretrial examinations on jurisdictional issues at the expense of depriving any party of his right to a trial on the merits in the federal court.⁸

Jurisdiction should never be dependent on the speculation of the trial court as to the final outcome, nor is a preliminary trial, to determine if jurisdictional amount exists, practical. It is equally obvious that jurisdiction could be frivolously created by sole dependence on what the plaintiff has demanded, thus clearly circumventing the congressional will as expressed in the diversity statute (supra). This court again relies on eminent authority: (Wright, Law of Federal Courts, 1970, § 33, Determination of the Amount in Controversy):

Even in the simpliest situations here discussed, the rules for measurement of the amount in controversy are complex. This is because of the two contradictory goals that the rules seek to achieve. The amount in controversy cannot be made dependent on the amount that plaintiff will ultimately recover. To do so would make jurisdiction turn on a guess by the trial court as to the final outcome, or would require preliminary trial on jurisdiction that would duplicate the regular trial on the merits, or would demand a wasteful jurisdictional dismissal, after the case has been fully heard on the merits, because a final award was less than the jurisdictional amount. All these considerations argue in favor of looking to the amount claimed, rather than the amount that will be recovered. At the same time, jurisdiction cannot be determined solely by what the plaintiff has asked for. To do so would destroy the jurisdictional amount requirement, and would permit the party to create jurisdiction by wholly frivolous claim. In short, the court should not entertain the suit if the claim for the jurisdictional amount is entirely without merit, but the court should not decide the merits of the case in making that determination.

In the case of George v. Lewis (D.C.Colo.1962), 204 F.Supp. 380, 382, Chief Judge Arraj wrote:

Before an action may be removed to a United States District Court, it must be one which could have been brought therein originally; 28 U.S.C. § 1441(a).⁹

The removal statutes were never intended or designed to enlarge Federal jurisdiction and it has generally been held that a case of doubtful jurisdiction should be processed, not by...