Rescuecom Corp. v. Chumley
| Decision Date | 21 November 2007 |
| Docket Number | No. 5:07-CV-0690.,5:07-CV-0690. |
| Citation | 522 F.Supp.2d 429 |
| Parties | RESCUECOM CORPORATION, Plaintiff, v. Jonathan CHUMLEY; and OSI Consulting, LLC, Defendants. |
| Court | U.S. District Court — Northern District of New York |
Law Offices of Ronald J. Kim (Ronald J. Kim, Esq., of counsel), Saratoga Springs, NY, for Defendants.
DECISION & ORDER
Presently before the Court is Magistrate Judge George H. Lowe's November 2, 2007 Report-Recommendation in which he recommends that Plaintiff's motion for remand (Dkt. No. 13; see also Docket Minute Entry for 7/18/07) be denied; that Defendants' cross-motion to dismiss for lack of personal jurisdiction, or in the alternative, to transfer this action to the Western District of Louisiana (Dkt.Nos. 18-19) be denied and that Defendants' alternative cross-motion to compel arbitration pursuant to the parties' Franchise Agreement (Dkt.Nos. 18-19) be DENIED without prejudice pursuant to 28 U.S.C. § 636(b)(1), and the Court having reviewed the Report-Recommendation and the entire file in this matter and no objections to said Report-Recommendation having been filed, the Court hereby
ORDERS, that the Report-Recommendation filed by Magistrate Judge George H. Lowe on November 2, 2007 is, for the reasons stated therein, ACCEPTED in its entirety; and the Court further
ORDERS, that Plaintiff's motion for remand (Dkt. No. 13; see also Docket Minute Entry for 7/18/07) is DENIED; that Defendants' cross-motion to dismiss for lack of personal jurisdiction, or in the alternative, to transfer this action to the Western District of Louisiana (Dkt.Nos. 18-19) is DENIED and that Defendants' alternative cross-motion to compel arbitration pursuant to the parties' Franchise Agreement (Dkt.Nos. 18-19) is DENIED WITHOUT PREJUDICE pursuant to 28 U.S.C. § 636(b)(1).
IT IS SO ORDERED.
REPORT-RECOMMENDATION
Currently pending before the Court are Plaintiff's motion for remand and Defendants' cross-motion for various forms of relief, including dismissal. Both motions have been referred to me for a Report and Recommendation by the Honorable Frederick J. Scullin, Jr., Senior United States District Judge, pursuant to 28 U.S.C. § 636(b) and Local Rule 72.1(a) of the Local Rules of Practice for this Court. For the reasons discussed below, I recommend that Plaintiff's motion for remand be denied, and that Defendants' cross-motion be denied.
On or about June 8, 2007, Plaintiff filed this action, sounding in contract, in Supreme Court for Onondaga County. (Dkt. No. 1, Part 2 [Plf.'s Compl.].) On or about July 3, 2007, Defendants removed this action to this Court. (Dkt. No. 1, Part 1 [Defs.' Notice of Removal].) In their Notice of Removal, Defendants asserted that the grounds for the removal included the fact that the Court has subject matter jurisdiction over Plaintiff's claims under 28 U.S.C. § 1332, since (1) the case involves claims between parties of diverse citizenship, and (2) the amount in controversy, as pled by Plaintiff, exceeds $75,000. (Id. at ¶ 1.)
On July 13, 2007, Plaintiff requested that the Court hold a pre-motion conference to assist the parties in resolving their disagreement over whether the matter should be remanded to state court because (as Plaintiff asserts) the amount in controversy — both as alleged by Plaintiff in its Complaint and as established by extrinsic evidence outside the four corners of that Complaint — does not exceed $75,000. (Dkt. No. 6.) On July 18, 2007, that conference was conducted, and it was decided that the parties would brief the issue, by letter, of whether remand was appropriate in this case. (See Docket Minute Entry for 7/18/07.)
On August 1, 2007, Defendants filed a letter brief opposing Plaintiff's request for remand. (Dkt. No. 10, Part 1.) In that letter brief, Defendants essentially employ a two-pronged argument. First, Defendants argue that, while attempting to meet their burden of proving that the referenced $75,000-amount requirement has been satisfied with a "reasonable probability," they are entitled to the same rebuttable presumption of proper subject-matter jurisdiction that a plaintiff filing its claim in federal court would enjoy. (Id. at 2.) And, here, Defendants argue, Plaintiff has failed to adduce evidence that rises to the level of "legal certainty" necessary to rebut that presumption. (Id.) Second, Defendants argue that, even if Plaintiff is correct in stating that the actual damages alleged are less than $75,000, the Court should conclude that Plaintiff is seeking money damages in the amount of $80,528,55, since Plaintiff requests, as part of its damages, attorney's fees in the amount of $16,105.71. (Id. at 2-4.)
On August 8, 2007, Plaintiff filed a letter brief replying to Defendants' arguments. (Dkt. No. 13 [Plf.'s Reply Letter].) In that letter brief, Plaintiff essentially argues that (1) Defendants are not entitled to the aforementioned rebuttable presumption, and they have not met their burden of proving that the referenced $75,000-amount requirement has been satisfied with a "reasonable probability," and (2) attorney's fees may not be considered as part of a plaintiff's claim for damages (for purposes of determining the jurisdictional amount) when, as here, those attorney's fees are not mandated by statute, but awarded pursuant to a court's discretion. (Id. at 2-5.)
Moreover, on August 28, 2007, Defendants filed a cross-motion requesting three forms of relief in alternative fashion. Specifically, Defendants' cross-motion requests (1) an Order dismissing Plaintiff's Complaint based on lack of personal jurisdiction, or, in the alternative, (2) an Order transferring this action to the United States District Court for the Western District of Louisiana, under 28 U.S.C. § 1404(a), or, in the alternative (3) an Order compelling Plaintiff to participate in arbitration with Defendants, as demanded by Defendants pursuant to the arbitration clause in the parties' agreement. (Dkt.Nos. 18-19.) On October 9, 2007, Plaintiff filed its opposition to Defendants' cross-motion. (Dkt.Nos. 25-27.) On October 16, 2007, Defendants filed their reply to Plaintiff's opposition to Defendants' cross-motion. (Dkt. No. 29.)
"Section 1441 of Title 28 of the United States Code allows for removal of an action filed in state court only if the action could have originally been filed in federal court." New York v. Stoddard, 06-CV-1320, 2006 WL 3423863, at *1 (N.D.N.Y. Nov.28, 2006) (Scullin, J.) ]. "A plaintiff may file a complaint in federal court only if that court has subject matter jurisdiction over the claims." Stoddard, 2006 WL 3423863, at *1. "The subject matter jurisdiction of the federal district courts is limited and is set forth generally in 28 U.S.C. §§ 1331 and 1332." Id. "Under these statutes, federal jurisdiction is available only when a federal question is presented, i.e., when the action `aris[es] under the Constitution, laws, or treaties of the United States,' 28 U.S.C. § 1331, or when the parties are of diverse citizenship and the amount in controversy, exclusive of interest and costs,' exceeds $75,000, 28 U.S.C. § 1332." Id.
As described above in Part I of this Report-Recommendation, in this case, Defendants, in removing this action to federal court, stated that the grounds for the removal included the fact that this Court has subject matter jurisdiction over Plaintiff's claims pursuant to 28 U.S.C. § 1332(a), the diversity jurisdiction statute, since (1) the case involves claims between parties of diverse citizenship, and (2) the amount in controversy, as pled by Plaintiff, exceeds $75,000.1 Furthermore, in challenging that removal, Plaintiff argues that the amount in controversy — both as alleged by Plaintiff in its Complaint and as established by extrinsic evidence outside the four corners of that Complaint — does not exceed $75,000. See, supra, Part I of this Report-Recommendation.
After carefully reviewing Plaintiff's letter brief (and the tape recording of the Court's teleconference on July 18, 2007), I liberally construe Plaintiff's attack on Defendants' removal of this action from state to federal court as challenging two different aspects of that removal: (1) whether Defendants complied with the removal procedure, as established by 28 U.S.C. § 1446, and (2) whether the Court has subject matter jurisdiction over Plaintiff's claims, as provided by 28 U.S.C. § 1332. While this distinction may be subtle, I believe that, it is clear from a close reading of the applicable statutes and rules. For example, 28 U.S.C. § 1446 establishes the procedure for removal, which includes a requirement that the defendant file a notice of removal containing a "short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a).2 On the other hand, 28 U.S.C. §§ 1331 and 1332 establish when a federal court actually has subject matter jurisdiction over a claim (including a claim that has been removed from federal court from state court).3
Here, the first issue (i.e., whether Defendants complied with the removal procedure, as established by 28 U.S.C. § 1446) is disposed of with relative case. In their notice of removal, Defendants stated, "The Court has original jurisdiction by virtue of 28 U.S.C. 1332, as this case involves claims between parties of diverse citizenship and the amount in controversy, as plead by plaintiff, exceeds $75,000, as required and set forth in Section 1332." (Dkt. No. 1, Part 1, ¶ 1 [emphasis added].) Defendants elaborated on the italicized assertion by citing the portions of Plaintiff's Complaint in which Plaintiff claimed damages in excess of $75,000. (Id. at ¶ 5....
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