McKenzie v. Auction.com
| Decision Date | 08 December 2022 |
| Docket Number | Civil Action 2:22cv426-MHT (WO) |
| Parties | MARTHA McKENZIE and DAN McKENZIE, Plaintiffs, v. AUCTION.COM, et al., Defendants. |
| Court | U.S. District Court — Middle District of Alabama |
In response to a lawsuit brought by plaintiffs Martha and Dan McKenzie in state court, defendants Auction.com, Inc., First American Data Tree, LLC, and First American Financial Corporation removed the case to federal court. The McKenzies now ask this court to remand the case to the state court. For the reasons set out below, their motion for remand is denied.
The McKenzies filed suit against the defendants in April 2022 in state court, asserting claims of slander of title defamation, negligence, and wantonness, and seeking compensatory, punitive, and injunctive relief. On June 29, 2022, the McKenzies' counsel sent the defendants a demand letter offering to settle all claims for $ 125,000 plus additional nonmonetary relief. Less than a month later, the defendants removed the case to federal court, attaching (among other documents) the complaint and the June 29 demand letter. In response, the McKenzies filed a motion to remand, which has been fully briefed. The court held a videoconference hearing on that motion in September 2022.
Defendants are authorized to remove a case to federal court when subject-matter jurisdiction exists. See 28 U.S.C. § 1441(a). Removal may occur “within thirty days after receipt ... of a copy of an ... other paper from which it may first be ascertained that the case is one which is or has become removable.” Id. § 1446(b)(3). This court has made clear, following guidance from the Eleventh Circuit Court of Appeals that settlement letters constitute “other paper” within the meaning of § 1446. See, e.g., McCullough v. Plum Creek Timberlands, L.P., 2010 WL 55862, at *3 (M.D. Ala. Jan. 4, 2010) (Thompson, J.); Bankhead v. Am. Suzuki Motor Corp., 529 F.Supp.2d 1329, 1333 (M.D. Ala. 2008) (Thompson, J.); see also Lowery v. Ala. Power Co., 483 F.3d 1184, 1213 n.62 (11th Cir. 2007). It is undisputed that the defendants timely filed a notice of removal within 30 days of receiving the McKenzies' June 29 settlement letter.
The defendants removed the case based on the existence of diversity-of-citizenship jurisdiction, 28 U.S.C. § 1332. See Notice of Removal (Doc. 1) at 2-5. Complete diversity of citizenship exists between the parties and has not been disputed,[1] such that subject-matter jurisdiction hinges on the amount in controversy. See 28 U.S.C. § 1332(a). To be removable, the amount in controversy must “exceed[] the sum or value of $ 75,000, exclusive of interest and costs.” Id.
When removal is based on diversity jurisdiction, a statutory scheme governs the amount in controversy. In general, “the sum demanded ... in the initial pleading shall be deemed to be the amount in controversy.” Id. § 1446(c)(2). However, the defendants' “notice of removal may assert the amount in controversy if the initial pleading seeks” either (i) nonmonetary relief or (ii) “a money judgment” in a State where “practice ... permits recovery of damages in excess of the amount demanded.” Id. § 1446(c)(2)(A). Removal is “proper on the basis of an amount in controversy [so specified in defendants' notice of removal] if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds” the $ 75,000 threshold for federal diversity jurisdiction. Id. § 1446(c)(2)(B).
The McKenzies' initial pleading--that is, their state-court complaint--seeks “nonmonetary relief,” including an injunction against defendants, id. § 1446(c)(2)(A)(i); see Complaint (Doc. 1-2) at 5, and the defendants' removal notice asserts that the “amount in controversy exceeds $ 75,000.00,” Notice of Removal (Doc. 1) at 4.[2] Removal is therefore proper--and remand unwarranted--if the court finds “by the preponderance of the evidence, that the amount in controversy exceeds” $ 75,000. 28 U.S.C. § 1446(c)(2)(B).
Jurisdiction thus turns on the amount in controversy in the McKenzies' suit. The Eleventh Circuit has detailed the proper standard for the court's analysis, such that “a removing defendant is not required to prove the amount in controversy beyond all doubt or to banish all uncertainty about it.” Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010). Indeed, “[t]he law does not demand perfect knowledge or depend any less on reasonable inferences and deductions than we all do in everyday life.” Id. The court need not “suspend reality [n]or shelve common sense in determining whether the face of a complaint, or other document, establishes the jurisdictional amount.” Id. at 770 (quoting Roe v. Michelin N. Am., Inc., 637 F.Supp.2d 995, 999 (M.D. Ala. 2009) (Thompson, J.)).
To support removal, “defendants may submit a wide range of evidence in order to satisfy the jurisdictional requirements of removal,” so long as “that removal is procedurally proper.” Id. at 755. Importantly, the court's “analysis of the amount-in-controversy requirement focuses on how much is in controversy at the time of removal, not later.” Id. at 751.
Here, the defendants attached the McKenzies' state-court complaint and June 29 demand letter to their notice of removal. This is thus not a case that contains “only ‘naked pleadings,'” with “no specific factual details ... and no exhibits other than the complaint[].” Id. at 753. In filing their notice of removal alongside the June 29 letter, the defendants properly submitted “specific factual allegations establishing jurisdiction” supported by “evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations” as to the amount in controversy. Id. at 754; see Notice of Removal (Doc. 1) at 4; June 29 Letter (Doc. 1-3).
To begin, the court considers the total value of the McKenzies' claims, with reference to both the settlement demand letter and the underlying state-court complaint.
The McKenzies' four-page June 29 demand letter was written by counsel and seeks both money and certain nonmonetary conduct by defendants. The letter states that the McKenzies “have agreed to accept $ 125,000 plus a retraction that is disseminated in the same manner and method as the original emails” and is “sent out the same number of times as the original email[s]” to settle their suit. June 29 Letter (Doc. 1-3) at 4.[3] The letter also expressly provides that the McKenzies “have not spent the money to hire experts to quantify any loss of business or other damages that may be available” to them. Id. Based on this letter, the McKenzies' own valuation of their claims must exceed $ 125,000, insofar as they “request valuable non-cash consideration in addition to the demanded payment,” namely a retraction disseminated according to their specifications. McCullough, 2010 WL 55862 at *5.
Moreover, the letter notes that this offer is made “in an effort to resolve this issue without further litigation costs,” suggesting that the actual amount at stake is worth even more than the McKenzies' demand for $ 125,000 plus additional nonmonetary relief. June 29 Letter at 4; see McCullough, 2010 WL 55862 at *5 (). The benefits of early settlement are not limited to the financial costs of litigating that must be excluded from any calculation of the amount in controversy. See 28 U.S.C. § 1332(a). Plaintiffs receive benefits from settling a legal dispute early in the process--for instance, by saving the time otherwise spent on litigating--and so are incentivized to settle at that stage for less than what they deem to be the full value of their claims (even if the financial costs of litigation are not considered).
While the McKenzies suggest that their June 29 letter should be dismissed as puffery and posturing, see Pls.' Br. in Support of Remand (Doc. 7) at 9-10, their cursory analysis “does nothing to support or explain this assertion, and the court views it as little more than an effort to avoid federal jurisdiction,” McCullough, 2010 WL 55862 at *5.
Reading the June 29 demand letter in conjunction with the state-court complaint does not displace the McKenzies' valuation of their claim at $ 125,000 plus additional nonmonetary relief. To be sure, the original complaint contained an ad damnum clause specifying that “in no event do the plaintiffs seek more than $ 74,999, exclusive of interest and costs.” Complaint (Doc. 1-2) at 6. But if the McKenzies intended this clause to limit the amount in controversy below $ 75,000 and preclude federal subject-matter jurisdiction, several issues arise.
First, the ad damnum clause states only that the McKenzies do not “seek” more than $ 74,999. The complaint does not specify that they would each categorically refuse to accept any award above that amount, nor had the plaintiffs furnished any filings to that effect when the defendants removed the case to this court. “It is well settled that a litigant seeking general damages for personal injuries ... may recover an amount in excess of the amount contained in the ad damnum clause of the complaint.” Breland v. Ford, 693 So.2d 393, 397 (Ala. 1996). That is, the McKenzies were not bound by their commitment not to seek more than $ 74,999 and could recover well in excess of that amount.
Second the affidavits filed after removal by Martha McKenzie and (still later) by Dan McKenzie do not cabin the total amount in controversy at the time the case was removed. In their affidavits, the McKenzies each state that they “have never...
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