Cleartrac, L. L.C. v. Lanrick Contractors, L. L.C.
| Decision Date | 17 November 2022 |
| Docket Number | 20-30072, No. 20-30076 |
| Citation | 53 F.4th 361 |
| Parties | CLEARTRAC, L.L.C.; Russell Kent Moore, Plaintiffs—Appellants, v. LANRICK CONTRACTORS, L.L.C.; Lanrick Real Estate, L.L.C.; Southeast Dirt, L.L.C.; Hudson Holdings, L.L.C.; Hudson Holdings Equipment, L.L.C.; Thomas P. McKellar, Defendants—Appellees, Cleartrac, L.L.C.; Russell Kent Moore, Plaintiffs—Appellees, v. Lanrick Contractors, L.L.C.; Lanrick Real Estate, L.L.C.; Southeast Dirt, L.L.C.; Hudson Holdings, L.L.C.; Hudson Holdings Equipment, L.L.C.; Thomas P. McKellar, Defendants—Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Brett Michael Bollinger, Treadaway Bollinger, L.L.C., Covington, LA, Jeffrey Everett McDonald, Attorney, Jeffrey E. McDonald, Covington, LA, for Plaintiffs—Appellants in No. 20-30072 and Plaintiffs—Appellees in No. 20-30076.
Frank Joseph DiVittorio, DiVittorio Law Firm, Hammond, LA, for Defendants—Appellees in No. 20-30072 and Defendants—Appellants in No. 20-30076.
Before Dennis, Higginson, and Willett, Circuit Judges.
These consolidated appeals involve a dispute over the enforceability of a Texas state court judgment after it had been made executory by a Louisiana state court and the judgment creditors then sought to make it executory in the United States District Court for the Eastern District of Louisiana. That federal court dismissed the case on res judicata grounds, but we conclude instead that the district court lacked subject-matter jurisdiction over the case because Plaintiffs failed to satisfy 28 U.S.C. § 1332(a)'s amount-in-controversy requirement for diversity of citizenship jurisdiction. Accordingly, we VACATE and REMAND with instructions for the district court to dismiss the case for lack of jurisdiction.
Section 1332(a) requires that "the matter in controversy exceed[ ] the sum or value of $75,000, exclusive of interest and costs." While the statute as a general matter excludes interest and costs, under recognized exceptions, § 1332(a) does not prevent a plaintiff from using costs or interest that his principal claim includes at the time it arose, such as those accrued in a prior case. Here, however, Plaintiffs rely crucially on interest that had not yet accrued at the time their claim to enforce their prior judgment arose. Because that interest is excluded by § 1332(a), Plaintiffs failed to establish subject-matter jurisdiction over the present case.
On August 26, 2010, a Texas state court rendered a default judgment (the "Texas Judgment") in favor of Cleartrac, LLC ("Cleartrac") and against Lanrick Contractors Corp. ("Lanrick Contractors").1 The Texas Judgment provided the following awards to Cleartrac:
On November 16, 2011, following entry of the Texas Judgment, Cleartrac filed a "Petition to Make Judgment Executory" against Lanrick Contractors in Louisiana state court, and, on November 21, 2011, that state court ordered that the Texas Judgment be made executory and made the judgment of the Louisiana court. On June 25, 2014, Cleartrac was dissolved.2 Several years later, on August 3, 2017, Cleartrac filed a "Petition to Enforce Judgment" in Louisiana state court, seeking to enforce the Texas Judgment against Lanrick Contractors. On July 9, 2018, Cleartrac amended its state court petition, adding as defendants Lanrick Real Estate, LLC; Southeast Dirt, LLC; Hudson Holdings, LLC; Hudson Holdings Equipment, LLC; Thomas P. McKellar; and Lisa C. McKellar. On August 5, 2019, the Louisiana state district court granted defendants' exception of no right of action, holding that, under Texas law, Cleartrac had no right to enforce the Texas Judgment. Two weeks later, on August 19, 2019, the Louisiana state court entered a judgment dismissing Cleartrac's action. Cleartrac was initially granted a suspensive appeal to the Louisiana court of appeal on December 9, 2019, which delayed execution of the judgment pending appeal. As of August 6, 2020, Cleartrac no longer had a suspensive appeal pending, but only a devolutive appeal. Ultimately, on March 4, 2022, the Louisiana First Circuit Court of Appeal reversed the judgment of the Louisiana state district court due to lack of evidence of Cleatrac's dissolution. Cleartrac, LLC v. Lanrick Contractors, LLC , 2021-0413 (La. App. 1 Cir. 3/4/22), 2022 WL 630897.3
In the interval between the Louisiana state court's grant of the exception of no right of action and its entry of judgment dismissing the case, Cleartrac and its sole member, Russell Kent Moore, (collectively, "Plaintiffs") filed a complaint in the United States District Court for the Eastern District of Louisiana ("EDLA") seeking to invoke the court's diversity jurisdiction. Plaintiffs again sought to enforce the Texas Judgment and make it executory. They named as defendants Lanrick Contractors; Lanrick Real Estate, LLC; Southeast Dirt, LLC; Hudson Holdings, LLC; Hudson Holdings Equipment, LLC; and Thomas P. McKellar (collectively, "Defendants").
Defendants filed two motions to dismiss. First, Defendants argued that the EDLA lacked subject-matter jurisdiction under 28 U.S.C. § 1332(a). Defendants did not challenge that there was complete diversity between the parties but instead contended that the diversity statute's amount-in-controversy requirement was not met. Specifically, Defendants argued that 28 U.S.C. § 1332(a) bars the inclusion of post-judgment interest in computing the jurisdictional amount and that, without post-judgment interest, the dispute involves less than $75,000. The EDLA, they argued, therefore lacked jurisdiction. That district court rejected Defendants' argument and denied their motion. Second, Defendants asserted in a separate motion that the doctrine of res judicata precluded the federal action because the Louisiana state district court in its August 19, 2019, judgment already decided Plaintiffs had no right to bring this action. Agreeing with Defendants, the EDLA granted their res judicata motion under Federal Rule of Civil Procedure 12(b)(6) and dismissed the case.
Defendants timely appealed the district court's ruling on subject-matter jurisdiction, while Plaintiffs timely appealed the court's order dismissing on the basis of res judicata.
"Federal courts are courts of limited jurisdiction." Howery v. Allstate Ins. Co. , 243 F.3d 912, 916 (5th Cir. 2001). "The burden of establishing federal jurisdiction rests on the party seeking the federal forum." Id. at 919. This court, moreover, has "an independent obligation" to assure itself of its jurisdiction. MidCap Media Finance, L.L.C. v. Pathway Data, Inc. , 929 F.3d 310, 313 (5th Cir. 2019).
Plaintiffs sought to invoke the district court's diversity jurisdiction under 28 U.S.C. § 1332. Relevant here, § 1332(a) permits the exercise of federal jurisdiction only when (1) the dispute is between citizens of different states and (2) the amount in controversy "exceeds the sum or value of $75,000, exclusive of interests and costs." 28 U.S.C. § 1332(a). Because we find that Plaintiffs have not met the amount-in-controversy requirement, we need not address whether there is diversity of citizenship. As to the amount in controversy, it "should be determined at the time of filing" of the complaint. White v. FCI USA, Inc. , 319 F.3d 672, 674 (5th Cir. 2003).
Plaintiffs argue that the amount in controversy is $85,180.97, consisting of the following awards from the Texas Judgment: $51,519.47 in principal; $1,313.16 in pre-judgment interest; $3,000 in attorneys' fees for filing and prosecuting the case; $2,500 in post-judgment collection efforts; $500 in court costs; and 5.00% interest per annum from the date of the Judgment until paid in full. Because the $51,519.47 principal by itself is clearly insufficient, the question, then, is whether the other awards in the Texas Judgment must be included in calculating the amount in controversy or are excluded as interest or costs.
We first address costs. By its language, § 1332(a) plainly excludes "costs" from the amount in controversy. However, as leading commentators have noted, courts have considered costs in computing the amount in controversy "when the subject matter of the controversy happens to be or include the costs awarded in an earlier lawsuit." 14AA CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 3712 & n.3 (4th ed.), Westlaw (database updated Aug. 2022) (citing Spann v. Compania Mexicana Radiodifusora Fronteriza, S. A. , 131 F.2d 609 (5th Cir. 1942) ; Richard C. Young & Co. v. Leventhal , 389 F.3d 1 (1st Cir. 2004) ). One of the cases these commentators cite in support is our early case, Spann v. Compania Mexicana Radiodifusora Fronteriza, S. A. , 131 F.2d 609 (5th Cir. 1942). In that case, Spann sued for $50,000 in a Mexican court and lost both his lawsuit and appeals. Id. at 610. Under Mexican law, as the losing party, Spann was assessed the costs of the litigation; specifically, he was ordered by Mexican courts to pay the defendant 12% of the $50,000 sum requested—that is, $6,000—consisting of 8% to reimburse attorney fees and 4% to reimburse appeal costs. Id. The prevailing party in the Mexican litigation sued Spann in U.S. federal court to enforce the Mexican judgment. Attempting to resist the federal court's jurisdiction, Spann "insist[ed] that the suit was not for a sum or value in excess of $3,000.00"—the jurisdictional amount then in effect under § 1332—and thus the...
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