Payne v. Homes

• Decision Date: 22 April 2020
• Docket Number: SA-20-CV-00296-XR
• Parties: DON ALBERT PAYNE, GLORIA JEAN PAYNE, Plaintiffs v. OAKWOOD HOMES, OAKCREST POINTE, Defendants
• Court: U.S. District Court — Western District of Texas

DON ALBERT PAYNE, GLORIA JEAN PAYNE, Plaintiffs v. OAKWOOD HOMES, OAKCREST POINTE, Defendants

SA-20-CV-00296-XR

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

April 22, 2020

REMAND ORDER

On this date, the Court considered its jurisdiction over this removed case. After careful consideration, the Court finds that it lacks subject matter jurisdiction and remands this case.

Background

Plaintiffs Don Albert Payne and Gloria Jean Payne, acting pro se, filed this lawsuit in state court against Defendants Oakwood Homes and Oakcrest Pointe. Plaintiffs' "Original Petition Request for Declaratory Relief" asserts three causes of action: (1) revocation of acceptance and breach of express warranty, (2) violations of the DTPA, and (3) a claim under the Magnuson-Moss Warranty Act ("MMWA"). Each claim arises from Plaintiffs' purchase of a manufactured home and alleged defects therein and failures to cure by Defendants. Despite Plaintiffs assertion within the petition that the $50,000 amount-in-controversy requirement was not met for purposes of the MMWA, Defendants removed the case on March 11, 2020, alleging federal question jurisdiction under the MMWA, or alternatively, under the HUD Code, and supplemental jurisdiction over the state-law claims.

Jurisdictional Analysis

The Court must first examine its jurisdiction over this case. No motion to remand has been filed, but the Court has a duty to examine its jurisdiction sua sponte when necessary. Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001). "Federal courts are courts of limited jurisdiction, having only the authority endowed by the Constitution and that conferred by Congress. Scarlott v. Nissan N.A., Inc., 771 F.3d 883, 887 (5th Cir. 2014). "The party seeking to remove bears the burden of showing that federal jurisdiction exists and that removal was proper." Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013).

Magnuson-Moss Warranty Act (MMWA)

The MMWA was enacted in 1974 to "improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products." 15 U.S.C. § 2302(a). In addition to establishing standards governing the content and availability of warranties, the MMWA creates a statutory cause of action for consumers "damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation [imposed by the Act] or under a written warranty, implied warranty, or service contract." Id. § 2310(d)(1). The provisions of the MMWA that create a private cause of action permit a "consumer" to sue a warrantor for (1) a violation of the substantive provisions of the Act, or (2) breach of a written or implied warranty. Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1062-63 (5th Cir. 1984). The consumer who is damaged "may bring suit for damages and other legal and equitable relief." 15 U.S.C. § 2310(d)(1). Suit may be brought in state or federal court, but the Act sets an amount-in-controversy requirement for federal courts, providing,

(3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection [i.e., in an appropriate district court of the United States] --

(A) if the amount in controversy of any individual claim is less than the sum or value of $25;(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or

(C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.

Id. § 2310(d)(3). "Accordingly, federal question jurisdiction under the MMWA is limited to breach-of-warranty claims for which the amount in controversy is at least $50,000." Scarlott, 771 F.3d at 887.

The MMWA is virtually silent as to the amount and type of damages that may be awarded for breach of warranty. Mackenzie v. Chrysler Corp., 607 F.2d 1162, 1166 (5th Cir. 1979). However, the statute provides that nothing in the Act "shall invalidate or restrict any right or remedy of any consumer under State law . . . ." 15 U.S.C. s 2311(b)(1). Thus, courts look to state law to determine the applicable measure of damages, which informs the amount in controversy under the MMWA. Scarlott, 771 F.3d at 887. The Fifth Circuit, however, has recognized several limitations in calculating the amount in controversy under the MMWA. First, personal injury damages for breach of warranty, which are not recoverable under the MMWA, may not be counted to satisfy the jurisdictional amount. Id. Second, attorney's fees may not be used to satisfy the jurisdictional amount, because the MMWA requires that the amount in controversy be calculated "exclusive of interests and costs," and attorney's fees are viewed as costs for this purpose. Id. Third, punitive damages are recoverable under the MMWA for breach of warranty only if they may be recovered in a breach-of-warranty action brought under state law, but Texas law does not allow for punitive damages for breach-of-warranty claims; it permits them only for an independent accompanying tort. Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1070-71 (5th Cir. 1984). Last, damages for any pendent state-law claims should not be included to satisfy the jurisdictional amount. Scarlott, 771 F.3d at 887-88.

Thus, in determining whether the amount in controversy is satisfied for the MMWA breach-of-warranty claim, the Court may look only to the amount in controversy for that claim, and must look to Texas law to determine the applicable measure of damages. Texas law allows recovery for the diminished value of the good caused by the breach of warranty. In particular, Texas law states: "The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount." TEX. BUS. & COM. CODE § 2.714(b). Texas law additionally allows recovery of "incidental and consequential damages." §§ 2.714(c), 2.715. Accordingly, under Texas law, the amount in controversy for Plaintiffs' MMWA breach-of-warranty claim equals the diminished value of the mobile home plus incidental and consequential damages. See Scarlott, 771 F.3d at 888 ("Accordingly, under Texas law, the amount in controversy for Scarlott's breach-of-warranty claims equals the diminished value of the car plus incidental and consequential damages.").

The standard for determining the amount in controversy depends on whether Plaintiffs demanded a specific amount of damages in the complaint. Scarlott, 771 F.3d at 888. If Plaintiffs did demand a specific amount, "[t]he amount stated in the complaint is itself dispositive of jurisdiction if the claim is apparently made in good faith." Id. If Plaintiffs did not demand a specific amount, the removing defendants have the burden of proving, by a preponderance of the evidence, that the amount in controversy exceeds $50,000. Id. (citing De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993)) ("When the plaintiff's complaint does not allege a specific amount of damages, the removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds [the jurisdictional requirement]."). There are two ways thatthis burden can be met. "First, a court can determine that removal was proper if it is facially apparent that the claims are likely above [the jurisdictional amount]." Id. (citing Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995)). Second, "[i]f it is not thus apparent, the court may rely on 'summary judgment-type' evidence to ascertain the amount in controversy." Id. (citing White v. FCI USA, Inc., 319 F.3d 672, 675 (5th Cir. 2003) (quoting St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir.1998)).

Plaintiff's state-court petition expressly alleges that federal district courts lack jurisdiction over this matter because the amount in controversy is insufficient for jurisdiction under the MMWA. Further, in a section of the petition headed "Magnuson-Moss Warranty Act," the petition alleges, "PLAINTIFFS remit any recovery above $49,999.99 Dollars above the jurisdictional threshold." Pet. ¶ 42. Plaintiffs contend that Defendants will try to remove, but the jurisdictional minimum is not satisfied because "PLAINTIFFS seek 'an amount of $49,999.99.'" Pet. ¶ 46. Last, within Count III, the MMWA count, the petition states that "PLAINTIFFS are entitled to recovery of all monies paid on the manufactured home and to damages in the form of all out-of-pocket expenses and all other damages, including exemplary and consequential damages as determined by the trier of fact, but not exceeding $49,999.99, plus all costs and actual consumer-attorney-fees as provided for by statute and for whatever other legal and equitable relief the [C]ourt may deem proper." Pet. ¶ 88. The only money they alleged they paid on the home is the $2895 down payment. Pet. ¶ 10. There is nothing on the face of the petition indicating the amount of out-of-pocket expenses, the diminished value of the manufactured home, or any incidental or consequential damages.

Plaintiffs are pro se and are attempting to limit their recovery below the jurisdictional threshold by pleading damages under the MMWA at $49,999.99. The Court does not find thePlaintiffs to be engaging in "artful pleading." Rather, that sum should be accepted unless Defendants can show that the amount in controversy actually meets or exceeds $50,000. See Keys v. Riverside Trading Co., No. A.204CV127LTSJMR, 2005 WL 1523383 (S.D. Miss. June 28, 2005) (remanding case where the plaintiff alleged an MMWA claim but expressly limited the recovery sought to no more than $49,999.00, finding that the assertion was made in good faith and the statute is designed to restrict access to federal courts for claims under...