Drywall Elements, LLC v. Edward Wolff & Assocs.

• Decision Date: 30 March 2022
• Docket Number: Civil Action 4:21-CV-00537-CAN
• Court: U.S. District Court — Eastern District of Texas
• Parties: DRYWALL ELEMENTS, LLC, Plaintiff, v. EDWARD WOLFF & ASSOCIATES, LLC, ET AL., Defendants.

DRYWALL ELEMENTS, LLC, Plaintiff,
v.
EDWARD WOLFF & ASSOCIATES, LLC, ET AL., Defendants.

Civil Action No. 4:21-CV-00537-CAN

United States District Court, E.D. Texas, Sherman Division

March 30, 2022

MEMORANDUM OPINION AND ORDER

CHRISTINE A. NOWAK UNITED STATES MAGISTRATE JUDGE

Pending before the Court is Defendants Edward Wolff & Associates, LLC, and Mark Wolff's Motion to Dismiss Plaintiff's Third Amended Complaint for Lack of Jurisdiction Due to the Amount of Controversy [Dkt. 25]. Having considered Defendants' Motion, Plaintiff's Response [Dkt. 27], Defendants' Reply [Dkt. 28], and Plaintiff's Sur-reply [Dkt. 29], and all other relevant filings, the Court finds Defendants' Motion to Dismiss [Dkt. 25] should be DENIED. The Court finds the amount in controversy has been met.

BACKGROUND

Relevant Procedural History

On July 13, 2021, Plaintiff Drywall Elements, LLC (“Plaintiff” or “Drywall”) filed its original complaint against Defendants Edward Wolff & Associates, LLC, and Mark Wolff (collectively “Defendants”) [Dkt. 1]. Citing diversity jurisdiction, the original complaint pleaded only that Drywall is a “Florida corporation” with its principal place of business in Florida, and that Edward Wolff & Associates, LLC, is a “Texas corporation” with its principal place of business in Collin County, Texas; no amount in controversy was stated [Dkt. 1 at 1-2]. United States District Judge Sean D. Jordan ordered Plaintiff to file an amended complaint alleging facts sufficient to

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plead complete diversity [Dkt. 2 at 1-2]. On July 20, 2021, Plaintiff filed its First Amended Complaint again referring to the LLC parties as “corporations” [Dkt. 3]. Judge Jordan ordered a further amended complaint that clearly stated the correct corporate form for both Drywall and Edward Wolff & Associates [Dkt. 4]. Plaintiff filed a Second Amended Complaint, pleading that Drywall is a Florida limited liability company with two members: Kevin Cormier, who is “domiciled in, a citizen of, and residing in[] the State of Florida, ” and Gino Bernard, who is “domiciled in, a citizen of, and residing in[] the State of New Hampshire” [Dkt. 5 at 1]. Plaintiff pleads Edward Wolff & Associates is a Texas limited liability company with one member, Mark Wolff, who “is domiciled in, a citizen of, and residing in[] the State of Texas, ” and it further pleads “the damages sought by Plaintiff exceed $75, 000” [Dkt. 5 at 1]. After the filing of Defendants' initial Motion to Dismiss, on October 6, 2021, Plaintiff filed its Third Amended Complaint - the live pleading - which restates its diversity and amount in controversy allegations [Dkt. 13 at 3].

On September 2, 2021, this cause was referred to the undersigned for all pretrial proceedings [Dkt. 7]. On November 3, 2021, Judge Jordan entered an Order of Reference, referring this case to the undersigned for all further proceedings, including trial, entry of final judgment, and all post-judgment hearings, in accordance with 28 U.S.C. § 636(c) and the consent of the Parties [Dkt. 20]. After entry of the Order of Reference, on November 23, 2021, the undersigned conducted a Rule 16 Management Conference, during which Defendants' challenge to the amount in controversy, raised by the Joint Rule 26(f) Report, was discussed [Dkt. 17]. Defendants dispute whether Plaintiff has sufficiently pleaded diversity jurisdiction because “the true amount in controversy is less than $75, 000.00, ” citing a pre-suit demand letter from Plaintiff requesting $28, 000 [Dkt. 17 at 3]. The Court directed the Parties to proceed in filing jurisdictional briefing addressing the amount in controversy [Dkt. 24].

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Defendants' Motion to Dismiss Under Rule 12(b)(1) - Amount in Controversy

On December 3, 2021, Defendants filed the pending Motion to Dismiss [Dkt. 25].^[1] The pending Motion centers entirely on the amount in controversy; complete diversity of citizenship between the Parties is not challenged. Defendants primarily argue that Plaintiff cannot reach $75, 000.00 because each of Plaintiff's claims at their heart are all for breach of contract, for which the maximum amount of economic damages available is $24, 000.00, and because Plaintiff cannot recover attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code, the Texas Deceptive Trade Practices Act (“DTPA”), the Texas Theft Liability Act (“TTLA”), or for fraud under Texas law [Dkt. 25 at 3, 5, 8-9]. Plaintiff filed a Response [Dkts. 26; 27], ^[2] Defendants filed a Reply [Dkt. 28], and Plaintiff filed a Sur-reply [Dkt. 29].

APPLICABLE LEGAL STANDARDS

Federal Rule of Civil Procedure 12(b)(1)

A Rule 12(b)(1) motion to dismiss allows a party to challenge the exercise of the Court's subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Federal courts have subject matter jurisdiction to entertain causes of action only where a question of federal law is involved, or where there is diversity of citizenship between the parties and the amount in controversy exceeds $75, 000.00, exclusive of interest and costs. 28 U.S.C. §§ 1331, 1332; see Shiloh Enters., Inc. v. Cleveland Imaging & Surgical Hosp., LLC, No. 1:07-CV-588, 2007 WL 9724995, at *1 (E.D. Tex. Dec. 13, 2007). “The ‘amount-in-controversy threshold' is a necessary ‘ingredient of subject-

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matter jurisdiction.'” Jouett Invs. Inc. v. Intuit Inc., No. 3:14-CV-1803-L, 2015 WL 3770715, at *7 (N.D. Tex. June 15, 2015) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)).

Amount-in-Controversy Requirement

Determining the amount in controversy looks to the “value of the object of the litigation.” Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983). “Generally, penalties, statutory damages, punitive damages, and attorney's fees are included in the amount in controversy.” Theriot v. Transamerica Life Ins. Co., 354 F.Supp.3d 713, 719 (E.D. Tex. 2017). Exemplary damages allowed by state statute are also encompassed in the amount in controversy. U.S. Fire Ins. Co. v. Villegas, 242 F.3d 279, 283 (5th Cir. 2001). However, costs are excluded from calculating the amount in controversy, as is most interest. See 28 U.S.C. § 1332; Primerica Life Ins. Co. v. Martinez, No. CV SA-10-CA-660-FB, 2011 WL 13324194, at *9 (W.D. Tex. Apr. 7, 2011), report and recommendation adopted, No. CV SA-10-CA-660-FB, 2011 WL 13324203 (W.D. Tex. Apr. 25, 2011).

“It has long been recognized that ‘unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith.'” St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). Under Rule 12(b)(1), “the party invoking diversity jurisdiction must show by a preponderance of the evidence that the amount-in-controversy requirement is met.” Brand Servs., L.L.C. v. Irex Corp., 909 F.3d 151, 155 (5th Cir. 2018) (citing Greenberg, 134 F.3d at 1253). “This burden is met if: (1) it is apparent from the face of the complaint that the claims exceed $75, 000.00, or, alternatively, (2) summary judgment-like evidence supports a finding of the requisite amount.” Shiloh, 2007 WL 9724995, at *2 (citing Garcia v. Koch Oil Co. of Tex., Inc., 351 F.3d 636, 639 (5th Cir. 2003)). The Court must first determine whether it is

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“facially apparent” that Plaintiff's claims exceed the jurisdictional minimum. Greenberg, 134 F.3d at 1253 (quoting Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir. 1995)).^[3] The “facially apparent” inquiry is lenient - the Court “inquire[s] into the injuries asserted and use[s] judicial experience and common reason to prognosticate the total availability of damages based upon the relief sought, or in other words viability of the case in surpassing $75, 000 worth of damages.” Romero-Palacios v. Warren Elec., LLC, No. PE:21-CV-00042-DC-DF, 2022 WL 508342, at *3 (W.D. Tex. Feb. 18, 2022) (citing Hereford v. Carlton, No. 9:15-CV-26, 2016 WL 7042231, at *4 (E.D. Tex. May 26, 2016)). “If the amount in controversy is not apparent, we may then rely on ‘summary judgment' type evidence. In examining such evidence, ‘the jurisdictional facts must be judged as of the time the complaint is filed.'” Hartford Ins. Grp. v. Lou-Con Inc., 293 F.3d 908, 910 (5th Cir. 2002) (quoting Greenberg, 134 F.3d at 1252). “Once sufficient evidence is produced to establish that the amount in controversy likely exceeds $75, 000.00, ” the Court “may not decline to exercise federal diversity jurisdiction unless it appears ‘to a legal certainty that the claim is really for less than the jurisdictional amount.'” Shiloh, 2007 WL 9724995, at *3 (quoting St. Paul Mercury, 303 U.S. at 289).

ANALYSIS

Again, the sole issue raised by the instant Motion is whether Plaintiff has shown the requisite amount in controversy. The Third Amended Complaint asserts claims against Defendants for violations of the DTPA, breach of contract, liability under the TTLA, breach of fiduciary duty, conversion of property, and fraud and fraudulent inducement arising out of an alleged breach of contract by Defendants [Dkt. 13]. In connection with these claims, Plaintiff pleads damages that

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exceed $75, 000, the minimum amount in controversy required to invoke the Court's subject matter jurisdiction [Dkt. 13 at 3]. Specifically, Plaintiff alleges:

Pursuant to the Contract, Defendants owes Plaintiff $24, 000 in economic damages for unremitted payment, and statutory damages in the amount of an additional $48, 000 for knowingly false representations and knowingly deceptive trade practices, as permitted under Tex. Bus. & Comm. Code §17.50. Defendants are also liable, to Plaintiff, for exemplary damages pursuant to Tex. Bus. & Comm. Code §41.003. Additionally, Defendants are liable to Plaintiff for interest on all unpaid funds recovered, along with attorneys' fees and costs incurred in pursuing recovery of these

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