Nicholson v. Marine Corps West Fed. Credit Union, 97 C 25.

• Decision Date: 28 January 1997
• Docket Number: No. 97 C 25.,97 C 25.
• Citation: 953 F.Supp. 1012
• Parties: Alphonso NICHOLSON, Plaintiff, v. MARINE CORPS WEST FEDERAL CREDIT UNION, Defendant.
• Court: U.S. District Court — Northern District of Illinois

953 F.Supp. 1012

Alphonso NICHOLSON, Plaintiff, v. MARINE CORPS WEST FEDERAL CREDIT UNION, Defendant.

No. 97 C 25.

United States District Court, N.D. Illinois, Eastern Division.

January 28, 1997.

Cathleen M. Combs, Daniel A. Edelman, James O. Latturner, Charles Emil Petit, Edelman & Combs, Chicago, IL, for Alphonso Nicholson.

MEMORANDUM OPINION AND ORDER

ANN CLAIRE WILLIAMS, District Judge.

Plaintiff Alphonso Nicholson ("Nicholson") is suing Defendant Marine Corps West Federal Credit Union ("the Credit Union") over the repossession of Nicholson's car, which he purchased for less than $10,000. Because the amount in controversy falls far short of the $50,000 required to invoke federal diversity jurisdiction, Nicholson's complaint is dismissed.

Background

According to Nicholson's complaint, Nicholson resides at 7045 South Washtenaw in Chicago, Illinois; the Credit Union has its principal place of business at Camp Pendleton, California. (Complaint ¶¶ 3, 4.) In October of 1994, Nicholson purchased a car for slightly less than $10,000. (Id. ¶ 5 & Ex. A.) He put roughly $500 down and financed the balance with a loan from the Credit Union, which involved a total finance charge of about $2,600. (Id.) In October of 1996, the Credit Union had the car repossessed from Nicholson's residence in Chicago. (Id. ¶ 6.) At that time, the car was worth approximately $6,000. (Id. ¶ 12.) In November of 1996, the Credit Union sent Nicholson a Notice of Sale, which stated that the Credit Union would sell the car. The Notice of Sale did not state when the sale would occur. (Id. ¶¶ 7, 14 & Ex. B.) Nicholson demanded that the Credit Union return the car to him, but the car was not returned. (Id. ¶ 10.)

In Count I of his complaint, Nicholson alleges that the Credit Union violated the Illinois Uniform Commercial Code ("the UCC"). (Id. ¶ 14.) Specifically, Nicholson alleges that the notice of sale he received from the Credit Union violated the UCC by failing to specify when his vehicle would be sold. (Id. ¶¶ 7, 8, 9, 14, 15 & Ex. B.) Nicholson brings Count I on behalf of the class of all persons who received such defective notices of sale from the Credit Union. (Id. ¶ 16.) In Count II, Nicholson alleges that the Credit Union violated Section 17200 of the California Business and Professions Code ("the California Code"), which makes it unlawful for a business to engage in any "unfair or fraudulent business act or practice." (Id. ¶¶ 24, 27.) Nicholson brings Count II as a "private attorney general" enforcing the California Code. (Id. ¶¶ 23, 25.) In Count III, Nicholson alleges that the Credit Union committed the tort of conversion, by wrongfully repossessing his car. (Id. ¶¶ 30, 31.)

Nicholson claims that this court has diversity jurisdiction because he and the Credit Union are citizens of different states, and "[t]he amount in controversy for Count II is over $50,000." (Id. ¶ 2; emphasis added.) He states that venue is proper in the Northern District of Illinois because his "claim arose here." (Id.)

Analysis

A party filing a complaint in federal court has the burden of establishing federal jurisdiction over the subject matter of the suit. The Wellness Community-Nat'l v. Wellness House, 70 F.3d 46, 49 (7th Cir.1995) (citation omitted). "The first thing a federal judge should do when a complaint is filed is check to see that federal jurisdiction is properly alleged." Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280, 1282 (7th Cir.1986). Generally speaking, a court should not dismiss a complaint for lack of federal jurisdiction without notice and a hearing. Shockley v. Jones, 823 F.2d 1068, 1073 (7th Cir.1987). However, the court may dismiss a complaint sua sponte if the court lacks jurisdiction over the subject matter and "the jurisdictional defect is clearly incurable." Id. see, e.g., Controlled Env't Sys. v. Sun Process Co., 936 F.Supp. 520 (N.D.Ill. 1996) (dismissing complaint sua sponte for lack of subject-matter jurisdiction; no diversity of citizenship); BCGS, L.L.C. v. Fisher, No. 96 C 4314, 1996 WL 417585 (N.D.Ill. July 22, 1996) (same; amount in controversy insufficient); Janton v. MWRD of GC, No. 96 C 287, 1996 WL 22957 (N.D.Ill. Jan. 22, 1996) (same; no federal question).

Plaintiff Alphonso Nicholson alleges that the court has diversity jurisdiction because he and the Credit Union are citizens of different states and the amount in controversy for count II of his complaint exceeds $50,000. (Complaint ¶ 2.) A federal district court has diversity jurisdiction over an action between citizens of different states where the amount in controversy exceeds $50,000, "exclusive of interest and costs." 28 U.S.C. § 1332(a). As a general rule, "the amount in controversy claimed by a plaintiff in good faith will be determinative on the issue of jurisdictional amount, unless it appears to a legal certainty that the claim is for less than that required by the rule." NLFC, Inc. v. Devcom Mid-Am Inc., 45 F.3d 231, 237 (7th Cir.) (citations omitted), cert. denied, ___ U.S. ___, 115 S.Ct. 2249, 132 L.Ed.2d 257 (1995).

In this case, careful analysis of Nicholson's complaint reveals to a legal certainty that Nicholson's claim is for less than $50,000, and this jurisdictional defect is clearly incurable.

COUNT I: THE UNIFORM COMMERCIAL CODE

As noted above, Nicholson alleges in Count I that the Credit Union violated the Illinois Uniform Commercial Code ("the UCC"). (Complaint ¶ 14.) According to Nicholson, this violation makes the Credit Union liable for statutory damages "equal to the finance charge plus 10% of the cash price" of the car. (Id. ¶ 15.) The total finance charge was $2,617.28. (Id. ¶ 5.) The purchase price was $9,848.16 (id.), and ten percent of that amount is $984.82. Adding together the finance charge ($2,617.28) and ten percent of the purchase price ($984.28) produces a grand total of $3,602.10. This sum clearly falls short of the $50,000 amount required to invoke the diversity jurisdiction of this court.

It makes no difference that Nicholson brings Count I on behalf of the class of all persons who received defective notices of sale, since "multiple persons' claims cannot be combined to reach the minimum amount in controversy." Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928, 931 (7th Cir.1996) (citation omitted) (citing Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969)); Anthony v. Security Pac. Fin. Services, Inc., 75 F.3d 311, 315-16 (7th Cir.1996).

COUNT II: THE CALIFORNIA BUSINESS AND PROFESSIONS CODE

Perhaps recognizing that the allegations in Count I fail to satisfy the amount in controversy needed to invoke diversity jurisdiction, Nicholson asserts that "[t]he amount in controversy for Count II is over $50,000." (Id. ¶ 2.) In Count II, Nicholson alleges that the Credit Union violated Section 17200 of the California Business and Professions Code ("the California Code"), which makes it unlawful for a business to engage in any "unfair or fraudulent business act or practice." (Id. ¶¶ 24, 27.) Nicholson brings Count II as a "private attorney general" enforcing the California Code. (Id. ¶¶ 23, 25.) By way of relief he seeks restitution, an injunction, costs, and fees. (Id. ¶ 28.)

Unfortunately for Nicholson, the court cannot enforce the California Code. In diversity cases, whether the court applies the substantive law of California, Illinois, or some other state depends on the choice-of-law rules employed by Illinois courts. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Hystro Products, Inc. v. MNP Corp., 18 F.3d 1384, 1387 (7th Cir.1994).¹ Under Illinois choice-of-law rules, this court will apply Illinois substantive law unless a conflict of law exists and makes a difference in the outcome of the litigation. International Adm'rs, Inc. v. Life Ins. Co. of N. Am., 753 F.2d 1373, 1376 n. 4 (7th Cir.1985); Zurich Ins. Co. v. Heil Co., 815 F.2d 1122, 1123 (7th Cir.1987) (citing International Adm'rs). Thus, if there were no conflict between California law and Illinois law, the court would apply Illinois law.

In this case, the California Code lets a plaintiff file suit as a "private attorney general" acting on behalf of "the general public." (Complaint ¶¶ 23, 25.) See California Business and Professions Code § 17204 ("Actions for any relief pursuant to this chapter shall be prosecuted ... by any person acting for the interests of itself, its members or the general public."); However, Illinois does not let plaintiffs bring lawsuits in this manner. Hamer v. Kirk, 64 Ill.2d 434, 1 Ill.Dec. 336, 340, 356 N.E.2d 524, 528 (1976); City of Chicago v. Korshak, 276 Ill.App.3d 597, 213 Ill.Dec. 144, 149, 658 N.E.2d 1165, 1170 (1st Dist.1995), appeal denied, 167 Ill.2d 551, 217 Ill.Dec. 663, 667 N.E.2d 1056 (1996); Fischer v. Brombolich, 246 Ill.App.3d 660, 186 Ill. Dec. 553, 555, 616 N.E.2d 743, 745 (5th Dist.), appeal denied, 153 Ill.2d 559, 191 Ill.Dec. 618, 624 N.E.2d 806 (1993). Because there is a conflict between California law and Illinois law, the court turns to the specific choice-of-law principles employed by Illinois courts.

In making choice of law determinations, Illinois courts now employ the "most significant relationship" analysis described in the Restatement (Second) of Conflicts. Palmer v. Beverly Enterprises, 823 F.2d 1105, 1109-10, 1112 (7th Cir.1987); Balentine v. Union Mortgage Co., No. 91 C 8213, 1994 WL 34256, at *5 (N.D.Ill. Feb. 2, 1994). The factors involved in this analysis vary with the area of law at issue (e.g., contracts, torts, property). In an action that alleges fraud in connection with a contract, some courts employ a torts analysis, while other courts employ a contracts analysis. Compare Palmer, 823 F.2d at 1112 (torts analysis) with Sanders v. Lincoln Serv. Corp., No. 91 C 4542, 1993 WL 112543, at *3 (N.D.Ill. April 5, 1993) (contracts analysis). Following the Seventh Circuit's approach...