First Guar. Bank & Trust Co. v. Reeves

• Decision Date: 11 February 2000
• Docket Number: No. 3:98-CV-1251-J-21A.,3:98-CV-1251-J-21A.
• Parties: FIRST GUARANTY BANK & TRUST COMPANY, as Successor Trustee U/T/A Dated May 3, 1993, wherein Mildred Frances McQueen was Grantor, Plaintiff, v. Ginger M. REEVES, Defendant, Counter-Claimant. Billy Wilkins and Angela Dale Carr, individuals, Intervening Plaintiffs, v. First Guaranty Bank & Trust Company, as Successor Trustee U/T/A Dated May 3, 1993, wherein Mildred Frances McQueen was Grantor, Defendant in intervention.
• Court: U.S. District Court — Middle District of Florida

86 F.Supp.2d 1147

FIRST GUARANTY BANK & TRUST COMPANY, as Successor Trustee U/T/A Dated May 3, 1993, wherein Mildred Frances McQueen was Grantor, Plaintiff, v. Ginger M. REEVES, Defendant, Counter-Claimant.

Billy Wilkins and Angela Dale Carr, individuals, Intervening Plaintiffs, v. First Guaranty Bank & Trust Company, as Successor Trustee U/T/A Dated May 3, 1993, wherein Mildred Frances McQueen was Grantor, Defendant in intervention.

No. 3:98-CV-1251-J-21A.

United States District Court, M.D. Florida, Jacksonville Division.

February 11, 2000.

Michael M. Naughton, Naughton Law Offices, Jacksonville, FL, Kevin Allan Schoeppel, Naughton & Schoeppel, Jacksonville, FL, for Billy Wilkins, Angela Dale Carr.

James L. Ade, Stephen D. Halker, Martin, Ade, Birchfield & Mickler, P.A., Jacksonville, FL, for 1st Guaranty Bank & Trust Company.

Michael M. Naughton, Naughton Law Offices, Jacksonville, FL, Kevin Allan Schoeppel, Naughton & Schoeppel, Jacksonville, FL, for Ginger M. Reeves.

Gary L. Wilkinson, Law Office of Gary L. Wilkinson, Jacksonville, FL, for 1st Guaranty Bank & Trust.

ORDER

NIMMONS, District Judge.

This cause comes before the Court sua sponte. The court has studied the parties' briefs addressing subject matter jurisdiction and has heard oral arguments. Upon due consideration, the Court determines, for the reasons set forth below, that it lacks subject matter jurisdiction over this case and remands the case to the state court from whence it came.

I. Procedural History

The controversies surrounding the present case have a long and painful history in the state courts. First Guaranty Bank and Trust Company ("First Guaranty") is the trustee of a trust established by the late Mildred Frances McQueen, who died in 1993. During the probate of Mildred McQueen's estate, questions arose concerning the billing of an attorney for the personal representatives and the trust. First Guaranty filed an objection to the fees and thus began years of litigation in the Florida State courts, both at the trial and appellate court levels. The probate estate has now been closed.

When the dust of litigation had settled, First Guaranty sought to terminate the trust under Florida law because its value is under $50,000.00. Fla.Stat. § 737.407(2) (1999). When First Guaranty could not reach a settlement with the beneficiaries of the trust, it filed a complaint in the Circuit Court, Fourth Judicial Circuit, in and for Duval County, Florida for approval of the accounts and termination of the trust.

On December 22, 1998, the Defendant and the third party intervenors filed a Notice of Removal (Dkt.1) to this Court. They simultaneously filed the Defendant's answer and counterclaim (Dkt.4) and the Intervenors' Motion to Intervene (Dkt.5). The Notice of Removal alleges jurisdiction based on diversity of citizenship. The Notice of Removal also states that the Defendant Reeves "incorporates her counterclaim which is in excess of $75,000.00 as against Plaintiff, Guaranty." The Notice further states, "That said action is a civil action for the distribution of a trust in an alleged amount less than $75,000.00, but Defendant, Reeves, claims is (sic) an amount in interest in excess of $75,000.00 prior to incorporation of Reeves (sic) counterclaim." (Dkt.1, ¶ 2).

Upon review of the parties' pretrial stipulation (Dkt.52), the Court became concerned that the amount in controversy in the Plaintiff's complaint was actually under $75,000.000 and that, consequently, the Court would not have subject matter jurisdiction over this case. See 28 U.S.C. § 1332(a). The Court questioned counsel regarding said issue during the pretrial conference held on February 2, 2000. (Transcript, Dkt.58). During the pretrial conference, Defendant and Intervenors admitted that the amount in controversy for the case was solely dependent on the amount stated in the Counterclaim (Dkt.4) and the Intervenors' Third Party Counterclaim (Dkt.26). The Court then ordered the parties to brief "the issue of whether a counterclaim can be considered by the Court in calculating the amount in controversy requirement of 28 U.S.C. § 1332." (Dkt.57). Defendant's and Intervenors' Brief Regarding Issue of Jurisdiction of Federal Court (Dkt.59) admits that Plaintiff's claim "does not exceed the jurisdictional requirements of 28 U.S.C.A. § 1332(a)." (Def. brief at 1).

II. Subject Matter Jurisdiction

A. Introduction

There is no Supreme Court¹ or Eleventh Circuit case addressing the issue of whether a counterclaim may be used by a court in calculating the amount in controversy for purposes of determining subject matter jurisdiction where a case has been removed from a state court. Likewise, there is no such case law in the other circuits.² There is, however, some circuit case law dealing with the issue of considering the counterclaim for determining the amount in controversy when the plaintiff has originally filed in the federal court.

Substantial case law also exists from district courts around the country dealing with the current issue. Apparently, this controversy has been present since before the Federal Rules of Civil Procedure. 14B Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice and Procedure § 3706 (3d ed.1998). Through the years, the district courts have decided both ways on the issue — either allowing or disallowing consideration of the counterclaim. See id. (collecting cases). The majority of courts, however, have held that the counterclaim may not be used to calculate the jurisdictional amount in controversy when a defendant removes a case from a state court. See id. See also Spectacor Management Group v. Brown, 131 F.3d 120, 125 (3d Cir.1997) ("[T]he cases to which Brown points appear to present the majority view that inclusion of counterclaims should not be permitted in the removal context"). Since opinions from the other district courts are persuasive — and not binding — the Court will look to established Eleventh Circuit precedent of jurisdictional principles in its determination of which is the proper view.

B. Established Principles of Subject Matter Jurisdiction

Federal courts have limited jurisdiction. Burns v. Windsor Ins. Co., 31 F.3d 1092 (11th Cir.1994). "They are `empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress." University of South Ala. v. American Tobacco Co., 168 F.3d 405, 409 (11th Cir.1999). A district court which exercises jurisdiction it does not have "unconstitutionally invades the powers reserved to the states to determine controversies in their own courts" and "offends fundamental principles of separation of powers." Id. at 410.

Because the subject matter jurisdiction of a federal court is constitutional and statutory in nature, it cannot be waived or otherwise conferred upon the court by the parties. University of South Ala., 168 F.3d at 410. See also Hurt v. Dow Chemical Co., 963 F.2d 1142, 1146 (8th Cir.1992) ("subject-matter jurisdiction is not a mere procedural irregularity capable of being waived"). Even if neither of the parties objects to a court's subject matter jurisdiction, the court may — indeed should — inquire into its jurisdiction sua sponte whenever it maybe lacking. 168 F.3d at 410. "[R]emoval jurisdiction is no exception to a federal court's obligation to inquire into its own jurisdiction." Id. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded" to the state court. 28 U.S.C. § 1447(c). This is true regardless of the existence of other motions pending before the court. 168 F.3d at 411.

The intent of Congress in passing the removal statutes was to restrict federal court jurisdiction. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941). Moreover, constitutional implications demand that the removal statute be strictly construed. "Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined." See id. (quoting Healy v. Ratta, 292 U.S. 263, 270, 54 S.Ct. 700, 703, 78 L.Ed. 1248 (1934)). Because of the significant federalism concerns, any doubts about jurisdiction are to be construed in favor of remand. Burns, 31 F.3d at 1095. In Burns, the Eleventh Circuit explained that different considerations come into play when determining removal jurisdiction as opposed to original jurisdiction. "[U]nlike the rules applied when plaintiff has filed suit in federal court with a claim that, on its face, satisfies the jurisdictional amount, removal statutes are construed narrowly." Burns, 31 F.3d at 1095.

Not only must a court construe the removal statute strictly, but it must also ensure that its application is uniform. In its reasoning under Shamrock, the Supreme Court stated that the federal removal statute is nationwide in its application and was intended to be applied uniformly. See 313 U.S. at 104, 61 S.Ct. at 870. The Court also explained that the removal statute established "its own criteria, irrespective of local law, for determining in what instances suits are to be removed from the state to the federal courts." See id. (emphasis added). Based in part on this strong mandate, the Eleventh Circuit has declared, "We are unwilling, without congressional guidance, to construe the removal statute in such a way that it would expand federal court jurisdiction or promote inconsistent application of the removal rule." Burns, 31 F.3d at 1097.

The Eleventh Circuit has also spoken of the rights of the parties in the context of removal. Most significantly, the Court has held that "[w]hile a defendant does have a right, given by statute, to remove in certain situations, plaintiff is...