Jth Tax v. Frashier, No. 09-2262.

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Writing for the CourtDIANA GRIBBON MOTZ, Circuit Judge:
Citation624 F.3d 635
PartiesJTH TAX, INCORPORATED, d/b/a Liberty Tax Service, Plaintiff-Appellant, v. Harry F. FRASHIER, II, Defendant-Appellee.
Decision Date10 November 2010
Docket NumberNo. 09-2262.

624 F.3d 635

JTH TAX, INCORPORATED, d/b/a Liberty Tax Service, Plaintiff-Appellant,
v.
Harry F. FRASHIER, II, Defendant-Appellee.

No. 09-2262.

United States Court of Appeals,Fourth Circuit.

Argued: Sept. 23, 2010.
Decided: Nov. 10, 2010.


624 F.3d 636

ARGUED: David Andrew Lindley, Jr., Liberty Tax Service, Virginia Beach, Virginia, for Appellant. Dannielle C. Hall-McIvor, Taylor & Walker, PC, Norfolk, Virginia, for Appellee. ON BRIEF: Joseph Knowles, Liberty Tax Service, Virginia

624 F.3d 637

Beach, Virginia, for Appellant. Todd M. Gaynor, Taylor & Walker, PC, Norfolk, Virginia, for Appellee.

Before MOTZ, KING, and DAVIS, Circuit Judges.

Reversed by published opinion. Judge MOTZ wrote the opinion, in which Judge KING and Judge DAVIS joined.

OPINION
DIANA GRIBBON MOTZ, Circuit Judge:

JTH Tax, Inc. (“Liberty”) appeals from an order dismissing its complaint for lack of subject matter jurisdiction. Liberty contends that the district court erred in holding that its complaint failed to meet the $75,000 amount in controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332(a). We agree and so reverse.

I.

Liberty franchises thousands of tax preparation offices nationwide. The dispute before us arises from its relationship with Harry Frashier, one of its franchisees. In 2006, Frashier signed a franchise agreement with Liberty granting him the right to operate Liberty Tax Service franchises in a designated area of West Virginia. In return, Frashier agreed to several post-termination provisions, including a covenant not to compete and a requirement that he return all customer lists and equipment to Liberty.

Frashier operated a Liberty franchise tax office without incident until 2008. On August 26 of that year, after Liberty had filed, but then dismissed, a lawsuit alleging Frashier's breach of the agreement, Frashier offered to sell Liberty a right of first refusal for the purchase of Frashier's franchise territory for $80,000. When the parties failed to agree on the terms of a sale, Frashier closed his franchise, which prompted Liberty to terminate its agreement with Frashier.

This dispute centers on what happened next. On January 28, 2009, Liberty filed a complaint in the Eastern District of Virginia, seeking $80,000 in damages and a permanent injunction compelling Frashier's compliance with the post-termination provisions of the franchise agreement. Specifically, Liberty claimed that Frashier breached his post-termination duties by using his former office to support a competing tax enterprise and by failing to return the requisite materials to Liberty. Frashier responded that he merely leased office equipment and furniture to a different tax venture, actions he described as consistent with the agreement. He further claimed that he now offers only free tax preparation services to the indigent.

Liberty never amended its complaint, but in its subsequent motion for summary judgment, Liberty refined its damages calculation, seeking $60,456.25 in money damages and injunctive relief. The district court sua sponte dismissed Liberty's complaint for failure to meet the $75,000 amount in controversy requirement for diversity jurisdiction. When Liberty timely moved for alteration of the judgment under Federal Rule of Civil Procedure 59(e), the court denied the motion.

Liberty then noted this appeal. We review de novo the judgment of the district court dismissing the complaint for lack of subject matter jurisdiction. See Pitt Cnty. v. Hotels.com, L.P., 553 F.3d 308, 311 (4th Cir.2009). *

624 F.3d 638

II.

In most cases, the “sum claimed by the plaintiff controls” the amount in controversy determination. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 82 L.Ed. 845 (1938). If the plaintiff claims a sum sufficient to satisfy the statutory requirement, a federal court may dismiss only if “it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed.” Id. at 289, 58 S.Ct. 586 (emphasis added).

Defendants, seeking dismissal of diversity actions for lack of a sufficient amount in controversy, must therefore shoulder a heavy burden. They must show “the legal impossibility of recovery” to be “so certain as virtually to negative the plaintiff's good faith in asserting the claim.” Wiggins v. N. Am. Equitable Life Assurance Co., 644 F.2d 1014, 1017 (4th Cir.1981) (internal quotation omitted). A mere dispute over the mathematical accuracy of a plaintiff's damages calculation does not constitute such a showing. See McDonald v. Patton, 240 F.2d 424, 425 (4th Cir.1957) (noting that plaintiffs may secure federal jurisdiction even when “it is apparent on the face of the claim” that the claim to the requisite amount is...

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198 practice notes
  • Gilmore v. Jones, Case No. 3:18-cv-00017
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Western District of Virginia)
    • March 29, 2019
    ...dismiss only if it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed." JTH Tax, Inc. v. Frashier , 624 F.3d 635, 638 (4th Cir. 2010). Parties seeking dismissal for an insufficient amount in controversy "shoulder a heavy burden" of demonstrating that the......
  • Betskoff v. Enter. Rent a Car Co. of Baltimore, Civil Action No. ELH-11-2333
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • January 4, 2012
    ...only if 'it is apparent, to a legal certainty, that the plaintiff cannotPage 20recover the amount claimed.'" JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010) (quoting St. Paul Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)) (emphasis in Frashier). Here, however, plaintiff h......
  • Osborne v. Carey, CIVIL ACTION NO. 2:16-cv-01651
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • March 8, 2017
    ...dismiss these claims. When determining the amount in controversy, the "sum claimed by the plaintiff controls." JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010) (citing St. Paul Mercury Indent. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). The difficulty here is that Plaintiff h......
  • Daimler Trust v. Prestige Annapolis, LLC, Civil Action No.: ELH-16-544
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 7, 2016
    ...assertion to a "'legal certainty.'" Id. (emphasis added) (citation omitted). The Fourth Circuit stated in JTH Tax, Inc. v. Frashier, 624 F.3d 635 (4th Cir. 2010): "If the plaintiff claims a sum sufficient to satisfy the statutory requirement, a federal court may dismiss only if 'it is appar......
  • Request a trial to view additional results
197 cases
  • Gilmore v. Jones, Case No. 3:18-cv-00017
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Western District of Virginia)
    • March 29, 2019
    ...dismiss only if it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed." JTH Tax, Inc. v. Frashier , 624 F.3d 635, 638 (4th Cir. 2010). Parties seeking dismissal for an insufficient amount in controversy "shoulder a heavy burden" of demonstrating that the......
  • Betskoff v. Enter. Rent a Car Co. of Baltimore, Civil Action No. ELH-11-2333
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • January 4, 2012
    ...only if 'it is apparent, to a legal certainty, that the plaintiff cannotPage 20recover the amount claimed.'" JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010) (quoting St. Paul Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)) (emphasis in Frashier). Here, however, plaintiff h......
  • Osborne v. Carey, CIVIL ACTION NO. 2:16-cv-01651
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • March 8, 2017
    ...dismiss these claims. When determining the amount in controversy, the "sum claimed by the plaintiff controls." JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th Cir. 2010) (citing St. Paul Mercury Indent. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)). The difficulty here is that Plaintiff h......
  • Daimler Trust v. Prestige Annapolis, LLC, Civil Action No.: ELH-16-544
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 7, 2016
    ...assertion to a "'legal certainty.'" Id. (emphasis added) (citation omitted). The Fourth Circuit stated in JTH Tax, Inc. v. Frashier, 624 F.3d 635 (4th Cir. 2010): "If the plaintiff claims a sum sufficient to satisfy the statutory requirement, a federal court may dismiss only if 'it is appar......
  • Request a trial to view additional results
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