Texar Fed. Credit Union v. Wells Fargo Bank

• Docket Number: Civil Action 5:23-CV-56-RWS-JBB
• Decision Date: 08 November 2023
• Parties: TEXAR FEDERAL CREDIT UNION v. WELLS FARGO BANK, N.A., ET AL.
• Court: U.S. District Court — Eastern District of Texas

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TEXAR FEDERAL CREDIT UNION v. WELLS FARGO BANK, N.A., ET AL.

Civil Action No. 5:23-CV-56-RWS-JBB

United States District Court, E.D. Texas, Texarkana Division

November 8, 2023

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

J BOONE BAXTER UNITED STATES MAGISTRATE JUDGE

The above-referenced case, though originally filed in state court, was removed to this Court on the purported basis of federal diversity jurisdiction. The case was then referred to the undersigned United States Magistrate Judge for pretrial purposes in accordance with 28 U.S.C. § 636. Before the Court is the following pending motion:

Plaintiff's Motion to Remand and Brief in Support of Motion (Dkt. No 6).

The Court, having reviewed the relevant briefing, recommends Plaintiff's motion be DENIED.^[1]

As explained herein, removal is proper because Defendant has met its burden by setting forth summary judgment-type evidence showing the facts in controversy support a finding of damages in excess of $75,000. Furthermore, Plaintiff has not shown it is legally certain its recovery will not exceed $75,000.

I. BACKGROUND

On April 28, 2023, Texar Federal Credit Union (“Plaintiff”) initiated this case in the Bowie County Court at Law of Bowie County, Texas, raising claims against Wells Fargo Bank, N.A. (“Defendant”) and WellsFargo Capital Management LLC^[2] for breach of warranties pursuant to Texas Business & Commerce Code § 4.207, money had and received, conversion, and negligence. The allegations in the state court petition relate to a cashier's check in the amount of $59,450.00 drawn on an account of Plaintiff's customer, which Plaintiff alleged was unlawfully altered and deposited to an account at Wells Fargo. According to Plaintiff, Defendant denied Plaintiff's request to return the check and enforced payment of the altered instrument, asserting Plaintiff did not timely take all actions necessary to recover payment. See Plaintiff's Original Petition (Dkt. No. 3), ¶¶ 7-14.

Plaintiff specifically alleged its damages are in the “sum or value of $59,450.00, exclusive of interest and costs.” Id., ¶ 37. Plaintiff further alleges it is entitled to recover all costs and reasonable and necessary attorneys' fees incurred by and on behalf of Plaintiff as provided by Chapter 38 of the Texas Civil Practice and Remedies Code. Id., ¶ 39.

Defendant removed the case to this Court based on diversity jurisdiction, alleging that Plaintiff is a citizen of Texas, Defendant is a citizen of South Dakota, and the amount in controversy, exclusive of interest and costs, exceeds $75,000.00. Dkt. No. 1 at 3. Plaintiff now moves to remand, asserting Defendant has not met its burden to establish the amount in controversy exceeds $75,000.00, required to support diversity jurisdiction. Dkt. No. 6 at 2.

II. LEGAL STANDARD

“Federal courts are courts of limited jurisdiction,” possessing “only that power authorized by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 256 (2013) (citation omitted). With certain exceptions, “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. California, 463 U.S. 1, 7-8, 103 S.Ct. 2841, 2845, 77 L.Ed.2d 420 (1983) (quoting 28 U.S.C. § 1441).

Removal of an action to a federal court is proper when a civil action brought in state court would otherwise be within the original jurisdiction of the federal courts. Sowell v. W. Mut. Ins. Co., No. SA-22-CV-01283-JKP, 2023 WL 157791, at *1 (W.D. Tex. Jan. 11, 2023) (citing 28 U.S.C. § 1441). Following removal, an opposing party may move to remand the action to state court. Kaiser v. State Farm Mut. Auto. Ins. Co., No. A-21-CV-01099-RP, 2022 WL 2719631, at *1 (W.D. Tex. Jan. 21, 2022), report and recommendation adopted, No. 1:21-CV-1099-RP, 2022 WL 2761369 (W.D. Tex. Feb. 17, 2022) (citing 28 U.S.C. § 1447(c)). Upon examination of a motion to remand, any doubt as to the propriety of removal and any ambiguities should be resolved in favor of remand to state court. Id. (citing Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013); also citing Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (quoting In re Hot-Hed, Inc., 477 F.3d 320, 323 (5th Cir. 2007))). The party seeking to assert federal jurisdiction, in this case the defendant, has the burden of proving by a preponderance of the evidence that subject matter jurisdiction exists. New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321, 327 (5th Cir. 2008). “[O]perative facts and pleadings are evaluated at the time of removal.” In re Deepwater Horizon, 745 F.3d 157, 163 (5th Cir. 2014) (citation omitted).

III.DISCUSSION

A. Notice of Removal

Defendant filed its Notice of Removal, alleging that removal was proper on diversity jurisdiction grounds under 28 U.S.C. § 1332(a). Dkt. No. 1, ¶ 8. The general diversityjurisdiction statute provides in relevant part that “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs and is between . . . citizens of different States.” Durbois v. Deutsche Bank Nat'l Tr. Co. as Tr. of Holders of AAMES Mortg. Inv. Tr. 20054 Mortg. Backed Notes, 37 F.4th 1053, 1056 (5th Cir. 2022) (quoting 28 U.S.C. § 1332(a)). Because the parties do not dispute diversity of citizenship and the Court is satisfied that complete diversity exists, the only issue is whether the amount in controversy is satisfied.^[1]

B. Applicable law

“There is a framework for resolving disputes over the amount in controversy. If the plaintiff's state court petition specifies a dollar amount of damages, that amount controls if made in good faith.”^[2] Guijarro v. Enter. Holdings, Inc., 39 F.4th 309, 314 (5th Cir. 2022); see also Durbois v. Deutsche Bank Nat'l Tr. Co. as Tr. of Holders of AAMES Mortg. Inv. Tr. 20054 Mortg. Backed Notes, 37 F.4th 1053, 1056 (5th Cir. 2022) (28 U.S.C. § 1446(c)(2) “thus sets a general rule that ‘the sum demanded in good faith in the initial pleading' is ‘the amount in controversy'” (quoting 28 U.S.C. § 1446(c)(2))). But 28 U.S.C. § 1446(c)(2) “provides two exceptions to that general rule: (i) the plaintiff's operative state-court pleading at the time of removal seeks nonmonetary relief; or (ii) that pleading seeks a money judgment, and the State ‘does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded.'” Durbois, 37 F.4th at 1056 (quoting 28 U.S.C. § 1446(c)(2)(A)).

If either exception is shown, then the defendant's [plausible] amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court. When the defendant's allegation is questioned, both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied. Feinberg v. Costco Wholesale Corp., No. 3:23-CV-1157-BN, 2023 WL 5604179, at *3 (N.D. Tex. Aug. 29, 2023) (quoting Durbois, 37 F.4th at 1056 (cleaned up in Feinberg)).

Further, “[i]f the petition is silent (as is often the case in state courts in our jurisdiction), the defendant must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000.” Feinberg, 2023 WL 5604179, at *3 (quoting Guijarro, 39 F.4th at 314 (cleaned up in Feinberg)).

As noted, the removing defendant bears the burden of proof, and

[t]he defendant can meet that burden in one of two ways: (1) by establishing that it is “facially apparent” that the claims are likely to exceed $75,000, or (2) by setting forth the facts in controversy that support a finding of the requisite amount.

Id. (quoting Guijarro, 39 F.4th at 314 (cleaned up in Feinberg)). The defendant may meet its burden by this second route if it “sets forth ‘summary judgment type evidence' of facts in controversy that support a finding of the requisite amount.” Id. (quoting Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (cleaned up in Feinberg)).

“If the defendants can produce evidence sufficient to show by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional threshold, the plaintiff can defeat diversity jurisdiction only by showing to a legal certainty that the amount in controversy does not exceed the sum or value of $75,000, exclusive of interest and costs.” Id. (quoting McCauley v. Kroger Co., No. 3:19-cv-2673-D, 2020 WL 208816, at *2 (N.D. Tex. Jan. 14, 2020) (citation omitted); accord In re 1994 Exxon Chem. Fire, 558 F.3d 378, 387 (5th Cir. 2009) (explaining that “a plaintiff is required to establish legal certainty whenever the [removing] defendant has established by a preponderance of the evidence that the amount in controversy is greater than the jurisdictional amount” (cleaned up in Feinberg))).

C. Analysis

1. Whether it is “facially apparent” that the claims are likely to exceed $75,000

Plaintiff has stated a specific amount of damages in the “sum or value of $59,450.00, exclusive of interest and costs.” Dkt. No. 1, ¶ 37. Defendant does not argue that Plaintiff's specific damages allegation is not permitted under Texas state law or that Plaintiff's petition seeks nonmonetary relief that would alter the analysis. See 28 U.S.C. § 1446(c)(2)(A)(i)-(ii). Thus, if Plaintiff made only the good faith demand for $59,450.00 that would control. However, Plaintiff also pleads it is entitled to recover an unspecified amount of attorneys' fees as provided...