Darden v. Ford Consumer Finance Co., No. 98-9412

• Decision Date: 12 January 2000
• Docket Number: No. 98-9412
• Citation: 200 F.3d 753
• Parties: (11th Cir. 2000) Ralph C. DARDEN, Otis Lee Ivory, and Cora J. Ivory, and all others similarly situated, Plaintiffs-Counter-Defendants-Appellants, v. FORD CONSUMER FINANCE COMPANY, INC., a Georgia Corporation and Associates Financial Life Insurance Company, a Foreign Corporation, Defendants-Counter-Claimants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 753

200 F.3d 753 (11th Cir. 2000)

Ralph C. DARDEN, Otis Lee Ivory, and Cora J. Ivory, and all others similarly situated, Plaintiffs-Counter-Defendants-Appellants, v. FORD CONSUMER FINANCE COMPANY, INC., a Georgia Corporation and Associates Financial Life Insurance Company, a Foreign Corporation, Defendants-Counter-Claimants-Appellees.

No. 98-9412.

United States Court of Appeals, Eleventh Circuit.

Jan. 12, 2000.

Appeal from the United States District Court for the Northern District of Georgia. (No. 97-03557-1-CV-JOF), J. Owen Forrester, Judge.

Before BIRCH and HULL, Circuit Judges, and HODGES^*, Senior District Judge.

HULL, Circuit Judge:

Appellants-Plaintiffs Ralph C. Darden, Otis Lee Ivory, and Cora J. Ivory brought this class action in state court against Appellees-Defendants, Ford Consumer Finance Company, Inc. and Associates Financial Life Insurance Company, Inc., for Georgia Insurance Code violations by selling credit life insurance for fifteen-year loans. After Defendants' removal to federal court, Plaintiffs moved to remand this case for lack of subject matter jurisdiction. Plaintiffs now appeal the district court's denial of their motion to remand and dismissal of their complaint without prejudice for failure to exhaust administrative remedies. After review, we find that the district court lacked subject matter jurisdiction over Plaintiffs' class action. Thus, we vacate the district court's dismissal of the complaint and remand this case to the district court for it to remand this case to the Superior Court of Fulton County, Georgia.

I. FACTUAL AND PROCEDURAL BACKGROUND

As Georgia residents, Plaintiffs Ralph C. Darden, Otis Lee Ivory and Cora J. Ivory ("Plaintiffs") purchased credit life insurance from the Defendant, Associates Financial Life Insurance Company ("AFLIC"), a Tennessee corporation with its principal place of business in Texas. Plaintiffs purchased the insurance in connection with their fifteen-year loans obtained from Defendant Ford Consumer Finance Company ("Ford"), a New York corporation with its principal place of business in Texas. Darden's loan agreement with Ford financed $62,783.10 with 13.4% interest per annum for fifteen years. A $3,584.80 premium was charged for credit life insurance with a ten-year term and added into the principal amount borrowed. Thus, through Ford, Darden paid the premium in full to AFLIC.

Similarly, the Ivorys' loan agreement with Ford financed $56,086.24 with 15.1% interest per annum for fifteen years. A $4,692.74 premium was charged for credit life insurance with a ten-year term and added into the principal amount borrowed. Thus, through Ford, the Ivorys paid the premium in full to AFLIC.

Plaintiffs contend that the Defendants violated Georgia law by AFLIC's selling and Ford's financing credit life insurance for fifteen-year loans without the necessary authorizations or licenses from the Georgia Department of Insurance. See Ga.Code. Ann. 33-31-2(c). Plaintiffs' complaint contains four counts: (a) Count One for breach of legal and private duty; (b) Count Two for money had and received, (c) Count Three for conversion, and (d) Count Four for violation of Georgia's Racketeer Influenced and Corrupt Organizations Act ("RICO"). Although requesting damages in all counts, Plaintiffs stipulated that their damages will not exceed $75,000 exclusive of interest, costs, and attorneys' fees. In Count Four, Plaintiffs also seek to recover attorneys' fees under Georgia's RICO statute, Ga.Code. Ann. 16-14-6(c).

Plaintiffs filed suit in the Superior Court of Fulton County, Georgia. Defendants moved to dismiss and simultaneously removed this case to federal court alleging diversity jurisdiction. Plaintiffs then moved to remand to state court, asserting that the amount in controversy did not exceed $75,000. Defendants opposed the remand motion, contending that the attorneys' fees sought by Plaintiffs and potential members of the putative class may be aggregated to satisfy the jurisdictional amount-in-controversy requirement.

The district court denied Plaintiffs' motion to remand, granted Defendants' motion to dismiss based on Plaintiffs' failure to exhaust administrative remedies, and denied Plaintiffs' motion for class certification as moot. Plaintiffs timely appealed.

II. STANDARD OF REVIEW

The issue of whether the district court had subject matter jurisdiction over Plaintiffs' complaint is a question of law subject to de novo review. Mutual Assurance, Inc. v. United States, 56 F.3d 1353, 1355 (11th Cir.1995). The district court's decision to dismiss Plaintiffs' claims for failure to exhaust administrative remedies involves the interpretation and application of the Georgia Insurance Code, Ga.Code. Ann. 33-2-17, and we review de novo questions of statutory interpretation. Gonzalez v. McNary, 980 F.2d 1418, 1419 (11th Cir.1993).

III. DISCUSSION

A.Subject Matter Jurisdiction

Several well-established principles frame and inform the jurisdiction issue in this case. Removal jurisdiction exists only when the district court would have had original jurisdiction over the action. See 28 U.S.C. 1441(a); Wisconsin Dep't of Corrections v. Schacht, 524 U.S. 381, 118 S.Ct. 2047, 2051, 141 L.Ed.2d 364 (1998); Davis v. Carl Cannon Chevrolet-Olds, Inc. 182 F.3d 792, 794 (11th Cir.1999). Original jurisdiction may be based on complete diversity of the parties' citizenship and an amount in controversy exceeding $75,000. See 28 U.S.C. 1332(a).¹ Neither party disputes the existence of complete diversity of the parties' citizenship. Therefore, the only jurisdictional issue is whether the amount in controversy exceeds $75,000.

This issue is further narrowed because all Plaintiffs stipulate that each individual class member will neither request nor accept damages in excess of $75,000 exclusive of interests, costs and attorneys' fees. Furthermore, the claims for compensatory damages of the individual Plaintiffs here cannot be aggregated to establish the required amount in controversy. Snyder v. Harris, 394 U.S. 332, 336, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969) (upholding "[t]he doctrine that separate and distinct claims could not be aggregated"); Zahn v. International Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973); Davis, 182 F.3d at 794 ("[T]he compensatory damage claims of individual class members may not be aggregated to satisfy the amount [in controversy]"). At least one individual plaintiff in a class action must have a damage claim greater than $75,000 for a federal court to have diversity jurisdiction over the case. Zahn, 414 U.S. at 299, 94 S.Ct. 505 ("[T]he federal court was without jurisdiction where none of the plaintiffs presented a claim of the requisite size"). Furthermore, no one asserts that any individual Plaintiff's damage claim, added to that individual Plaintiff's share of attorneys' fees under the RICO statute would be enough to satisfy the amount in controversy.² Thus, the sole jurisdictional issue left for this Court to decide is whether all of the Plaintiffs' shares of any potential attorneys' fees awarded under Georgia's RICO statute may be aggregated to satisfy the amount-in-controversy requirement for diversity jurisdiction.

To help us answer that question, we first review the general rules regarding when aggregation is permissible to satisfy the jurisdictional amount-in-controversy requirement. In Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969), the Supreme Court held that aggregation is permissible to meet the amount-in-controversy requirement where "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest." 394 U.S. at 335, 89 S.Ct. 1053. See also Zahn v. International Paper Co., 414 U.S. 291, 294, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973); Clark v. Paul Gray, Inc., 306 U.S. 583, 588, 59 S.Ct. 744, 83 L.Ed. 1001 (1939); Shields v. Thomas, 58 U.S. 3, 5, 17 How. 3, 15 L.Ed. 93 (1854); Davis v. Carl Cannon Chevrolet-Olds, Inc., 182 F.3d 792, 796 (11th Cir.1999); Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1357 (11th Cir.1996). This Court has held that "[t]he corollary" to this holding "is that 'separate and distinct' claims may not be aggregated to satisfy the jurisdictional requirement." Tapscott, 77 F.3d at 1357 (11th Cir.1996) (citing Snyder, 394 U.S. at 336, 89 S.Ct. 1053).

While the Supreme Court has relied on this rule only to determine if joint plaintiffs may aggregate the entire value of their claims, "this circuit has extended the application of the 'single title or right' principle to address the aggregation of discrete portions of each plaintiff's claim for relief." Davis, 182 F.3d at 796; see also Tapscott, 77 F.3d at 1358, n. 11. On two occasions, this Court has examined whether discrete portions of each plaintiff's claim to relief can be aggregated for purposes of satisfying the jurisdictional amount-in-controversy requirement.

First, in Tapscott, this circuit addressed whether punitive damages sought in a putative class action may be aggregated to satisfy the amount-in-controversy requirement. Although the Plaintiffs here have not sued for punitive damages, the discussion of aggregation in Tapscott informs our analysis here. In Tapscott, this Court determined that the nature and purpose of punitive damages under Alabama law is "to deter wrongful conduct and punish those responsible." 77 F.3d at 1358 (citing Reserve Nat'l Ins. Co. v. Crowell, 614 So.2d 1005, 1009 (Ala.1993)). Thus, this Court also found under Alabama law (a) that "[a]n injured party is not entitled to punitive damages as a matter of right," (b) that the "state and not the victim is considered the true party plaintiff because punitive damages do not compensate a victim for loss but serve to punish and deter," and (c) that "Alabama punitive damages are awarded for the public benefit-the collective good." Id. (citing Maryland Cas. Co. v. Tiffin, 537 So.2d 469, 471 (Ala.198...