McCraw v. Lyons

• Decision Date: 19 September 1994
• Docket Number: No. C94-0112-P(H).,C94-0112-P(H).
• Parties: Harvey E. McCRAW, Plaintiff, v. Thomas B. LYONS, Jr., Defendant.
• Court: U.S. District Court — Western District of Kentucky

863 F. Supp. 430

Harvey E. McCRAW, Plaintiff, v. Thomas B. LYONS, Jr., Defendant.

No. C94-0112-P(H).

United States District Court, W.D. Kentucky, Paducah Division.

September 19, 1994.

William G. Deatherage, Jr., Deatherage, Myers & Self, Hopkinsville, KY, for plaintiff.

Kenneth R. Haggard, Hopkinsville, KY, for defendant.

MEMORANDUM OPINION

HEYBURN, District Judge.

This case is before the Court on Plaintiff's Motion to Remand. Defendant removed this case from Christian County Circuit Court. Plaintiff contends that removal was improper because Defendant failed to file his Notice of Removal within thirty days of receipt of Plaintiff's Amended Complaint, as required by 28 U.S.C. § 1446(b). This case highlights the predicament facing defense attorneys who must determine the proper timing for removal of cases from state to federal court when faced with pleadings containing indeterminate amounts, as directed by Rule 8.01, Ky.R.Civ.P. Unfortunately, Defendant, who in the best of faith attempted to apply the abstract principles governing removal to the circumstances in this case, will have his case remanded. Mindful of the quandary which the rules of removal impose, the Court will try to provide some practical guidance for practitioners. For the reasons set forth herein, the Court will remand this case to Christian Circuit Court.

I.

On February 15, 1994, Plaintiff filed an action in Christian Circuit Court, asserting various state tort claims including assault, battery, harassment, and outrageous conduct against Defendant. Plaintiffs Amended Complaint¹ prayed for compensatory and punitive damages, but, in accordance with Kentucky Rule of Civil Procedure 8.01(2), did not specify an amount of unliquidated damages. Defendant did not learn of the amount of damages Plaintiff demanded until April 25, 1994, when Plaintiff filed an Answer to Interrogatories. In the Answer, Plaintiff stated that he was seeking $75,000 as compensatory damages for physical pain and mental suffering, $100,000 as punitive damages, and court costs. Realizing that Plaintiff's claim exceeded $50,000 in value and thereby merited diversity jurisdiction, Defendant petitioned for removal on May 17, 1994, within 30 days of his receipt of the Plaintiff's Answer to Interrogatories. The case was removed to this Court on the following day.

Plaintiff contends that the Amended Complaint provided adequate notice that the amount in controversy exceeded the $50,000 required for diversity jurisdiction in federal court. Therefore, Plaintiff argues that Defendant's petition for removal was untimely because it was filed more than thirty days after Defendant's receipt of the Amended Complaint. Defendant contends that he could not ascertain the potential amount of damages from the Amended Complaint. Accordingly, the case did not become removable until Plaintiff specified the amount of his claim in the Answer to Interrogatories. Thus, Defendant argues that the petition for removal was proper because it was filed within thirty days after the Answer to Interrogatories, the first time Defendant was apprised of the amount of damages.

II.

Generally, a defendant may remove a civil case brought in state court to federal court if it could have been brought in federal court originally. 28 U.S.C. 1441(a). A federal district court has diversity jurisdiction over any civil action where the matter in controversy exceeds $50,000, exclusive of interests and costs, and is between citizens of different states.² 28 U.S.C. 1332(a). A defendant desiring to remove a case has the burden of proving the diversity jurisdiction requirements. Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 612 n. 28, 99 S.Ct. 1905, 1913 n. 28, 60 L.Ed.2d 508 (1979); McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936). When a plaintiff alleges a specific amount of damages in the complaint, that amount controls unless it appears to a legal certainty that the plaintiff in good faith cannot claim the jurisdictional amount. Klepper v. First American Bank, 916 F.2d 337, 340 (6th Cir.1990) citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-289, 58 S.Ct. 586, 590-591, 82 L.Ed. 845 (1938).³ If the plaintiff seeks to recover some unspecified amount of damages that is not self-evidently greater or less than the federal amount-in-controversy requirement, the defendant must prove by a preponderance of the evidence, i.e., it is "more likely than not," that the plaintiff's claims meet the federal amount in controversy requirement. Gafford v. General Elec. Co., 997 F.2d 150, 158 (6th Cir.1993); Garza v. Bettcher Industries, Inc., 752 F.Supp. 753 (E.D.Mich.1990).⁴

The removal procedure requires a defendant to file a Notice of Removal within thirty days after he receives a copy of the initial pleading setting forth the claim for relief upon which the action is based. 28 U.S.C. § 1446(b). Section 1446(b) allows a time extension only for cases where removability cannot be ascertained until the defendant receives subsequent information from the plaintiff.⁵

Determining whether grounds for removal are present is complicated where, as here, state rules prohibit plaintiffs from specifying an amount of damages in the pleadings.⁶ Plaintiff followed the Kentucky rule and as a result, his Amended Complaint set forth a claim for relief without specifying damages. Such state rules create a quandary for defense counsel. If the defense petitions for removal promptly, it runs some risk of allowing the plaintiff to assert an amount just less than the $50,000 amount-in-controversy requirement in order to remain in state court.⁷ On the other hand, if the defense waits and uses discovery to ascertain the plaintiff's demand, it risks waiving the right to remove after the expiration of the thirty-day time limit. Defendant chose the latter course of action, deciding to remove only after he inquired into and discovered the amount of damages claimed.⁸

Defendant's actions, though intuitively prudent, run contrary to the letter of 28 U.S.C. § 1446(b) and to its policy rationale. Congress developed the statutory right of removal as a solution to the situation of dual jurisdiction of state and federal courts. Removal offers the defendant thirty days to determine if dual jurisdiction exists and to choose, as of right, which court will hear the case. For reasons of efficiency and comity, federal courts should construe this time limitation strictly against the extension of federal power in order to avoid encroachment on state court jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941). The time limitation has two purposes. First it precludes a defendant from adopting a "wait and see" approach in the state court; specifically it "prevents a second bite at the jurisdictional apple if a defendant (belatedly) perceives that the case is proceeding other than to his liking." Gorman v. Abbott Laboratories, 629 F.Supp. 1196, 1199 (D.R.I.1986). Secondly, the time limit minimizes the delay and waste of resources involved in starting a case over in federal court after substantial proceedings have taken place in state court. Id.

To permit a defendant to remove a case to federal district court "based on an untimely, though substantively valid, petition would completely emasculate the effect of the thirty-day limitation." Sanborn Plastics v. St. Paul Fire and Marine Ins., 753 F.Supp. 660, 664 (N.D.Ohio 1990). Therefore, a defendant's failure to comply with the statute's thirty-day limitation is an absolute bar to removal regardless of whether the removal would have been proper if timely filed. Id.

When a defendant has missed the thirty-day deadline imposed by § 1446(b) and asserts that he is entitled to an extension, the relevant question becomes whether the defendant could have removed the case within the time limit. Keller v. Carr, 534 F.Supp. 100, 103 (W.D.Ark.1981); Mielke v. Allstate Ins. Co., 472 F.Supp. 851, 853 (E.D.Mich. 1979). Because state courts are well-equipped to handle diversity cases, there is no reason to allow a defendant additional time if the presence of grounds for removal is unambiguous given the defendant's knowledge and the claims made in the initial complaint. Mielke, at 853. In other words, even where the amount of damages is not specified, if the defendant is able to ascertain from a fair reading of the complaint or other papers filed that the minimum jurisdictional amount exists, he cannot "sit idly by" while the statutory period runs. Keller, at 102-103.⁹

III.

In this case, Defendant could have removed the case within thirty days from receipt of Plaintiff's Amended Complaint. Plaintiff alleged various tort claims and asked for damages to compensate for physical injury, medical expenses, mental suffering, and emotional distress as well as punitive damages and costs. Regardless of the merit of these claims, their nature and the relief demanded should have alerted Defendant that Plaintiff was seeking an amount in excess of the $50,000 required to attain federal court jurisdiction.

Furthermore, because Defendant need only establish by a preponderance of the evidence that Plaintiff's claims meet the $50,000 requirement, limiting Defendant's time to petition for removal to thirty days after receipt of the Amended Complaint is appropriate. The preponderance standard is a moderate burden that balances the defendant's right to remove and the federal interest in limiting diversity jurisdiction. It does not place upon the defendant the daunting burden imposed by the legal certainty test, to research, state, and prove the plaintiff's claim for damages. Gafford, 997 F.2d at 159. Rather, the standard requires that Defendant allege facts sufficient to establish that Plaintiff would more likely than not recover more than the jurisdictional amount, assuming the failure of Defendant's affirmative defenses. Garza,...