Watterson v. Gmri, Inc.

• Decision Date: 09 December 1997
• Docket Number: Civil Action No. 3:97-0760.
• Citation: 14 F.Supp.2d 844
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Jo Ann WATTERSON and Robert Watterson, Plaintiffs, v. GMRI, INC., d/b/a Red Lobster, a Florida Corporation, Defendant.

14 F.Supp.2d 844

Jo Ann WATTERSON and Robert Watterson, Plaintiffs, v. GMRI, INC., d/b/a Red Lobster, a Florida Corporation, Defendant.

Civil Action No. 3:97-0760.

United States District Court, S.D. West Virginia.

December 9, 1997.

C. Dallas Kayser, Matthew L. Clark, Point Pleasant, WV, for Plaintiffs.

W. Warren Upton, Scott H. Kaminski, Charleston, WV, for Defendant.

MEMORANDUM OPINION AND ORDER

STAKER, Senior District Judge.

The issue before the court is whether the defendant may contest the plaintiffs' allegation in their complaint of a specific sum, which is less than the minimum required for diversity jurisdiction, as the amount in controversy and thereby effectuate removal of the case from state court.

I. Introduction

The plaintiffs instituted this suit in the Circuit Court of Cabell County alleging that the plaintiff Jo Ann Watterson had slipped and fallen while she was a business invitee at defendant's premises. Her fall purportedly was caused by the unsafe condition of the floor at those premises. It is further alleged that as a result of that fall Jo Ann Watterson has suffered severe and permanent physical injuries for which she seeks to recover damages for medical expenses, physical pain and suffering, mental anguish and loss of capacity to enjoy life. Her husband Robert Watterson asserts a claim for the loss of consortium. In their Complaint, which was filed in the state court, they demand judgment against the defendant in the amount of $74,500.

The defendant timely filed a Petition of Removal asserting that this court has diversity subject matter jurisdiction. 28 U.S.C.A. §§ 1332(a)(West 1993 & Supp.1997) & 1441(a)(West 1994). Section 1332(a) confers jurisdiction on the district courts if the amount in controversy exceeds $75,000. Although the plaintiffs have alleged damages of only $74,500, in its Petition of Removal the defendant asserts that actual amount involved is in excess of $75,000. It states the proposition that in West Virginia the sum stated in the ad damnum clause of a complaint is not binding on a plaintiff but may be amended at any time to ask for a greater sum. See Landmark Corp. v. Apogee Coal Co., 945 F.Supp. 932, 938 (S.D.W.Va.1996). From this, it reasons that a defendant should be allowed to remove a suit from state court, regardless of the damage amount pled in the complaint, if the defendant has a "good faith" belief that the amount in controversy actually exceeds the jurisdictional minimum. The defendant contends that it has such a "good faith" belief in this case because prior to filing their Complaint in state court the plaintiffs had demanded $85,000 to settle their claims: furthermore, after the Complaint was filed, but before the Petition for Removal was filed, the plaintiffs refused to stipulate that they would not seek a judgment or demand a settlement in excess of the $74,500 amount pleaded. It argues that accordingly the removal was proper.

The plaintiffs have filed a Motion to Remand. It is their position that the amount pled in their complaint is controlling as to the amount in controversy; since they have demanded judgment for an amount less than $75,000, their suit is not subject to being removed. They argue that their settlement demand of $85,000 is irrelevant because it has been withdrawn and they have substituted in its stead an offer to settle for $74,500. (However, at a hearing on this matter, the plaintiffs' counsel again declined to stipulate that they would not seek damages in excess of $74,500.)

II.

The plaintiffs' argument that the amount of damages they pled in their complaint is determinative of the amount in controversy for purposes of removal is probably derived from statements of the Supreme Court in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938). Therein the Court said that "the status of the case as disclosed by the plaintiff's complaint is controlling in the case of a removal ...," id. at 291, 58 S.Ct. 586; "[i]f he does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove." Id. at 294, 58 S.Ct. 586 (footnote omitted). Some courts have interpreted these statements to mean that a defendant courts have interpreted these statements to mean that a defendant may never challenge the amount in controversy if the plaintiff has pled a specific sum. See Hicks v. Universal Housing, Inc., 792 F.Supp. 482, 483-84 (S.D.W.Va.1992) (Faber, J.).

However, the effect of those statements must be read in light of the circumstances of the case in which they were made. In Red Cab, the plaintiff had alleged in its state court complaint an amount in controversy which was in excess of the then minimum amount necessary for diversity jurisdiction. 303 U.S. at 284, 58 S.Ct. 586. The defendant removed the case to federal court. However, a trial to the court resulted in a judgment for an amount which was less than the jurisdictional minimum. Id. at 285, 58 S.Ct. 586. On appeal, the Seventh Circuit ruled that because the amount in controversy, as shown by the judgment, was less than the jurisdictional minimum the district court did not have jurisdiction. Id. It held that the district court should have remanded the action to the state court. Id.

The Supreme Court reversed. Id. at 296, 58 S.Ct. 586. It stated that the issue presented involved the construction of the statutes governing diversity jurisdiction and removal. Id. at 285-86, 58 S.Ct. 586. The Court began by discussing diversity cases which are filed originally in federal court. It said that "[t]he rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith." Id. at 288, 58 S.Ct. 586 (footnotes omitted). However, "[h]is good faith in choosing the federal forum is open to challenge not only be resort to the face of his complaint, but by the facts disclosed at trial, and if from either source it is clear that his claim never could have amounted to the sum necessary to give jurisdiction there is no injustice in dismissing the suit." Id. at 290, 58 S.Ct. 586. Such proof must be "to a legal certainty." Id. at 289, 58 S.Ct. 586. Thus, a plaintiff's allegation as to the amount in controversy is subject to challenge if the case is originally filed in federal court.

The Court then distinguished the situation where a case is filed originally in state court and then removed to federal court. Id. at 290, 58 S.Ct. 586. It said that when the state court complaint states an amount in controversy above the minimum required for federal court diversity jurisdiction "[t]here is a strong presumption ...", id., that the amount pled is accurate because it is unlikely that a plaintiff would falsely allege such an amount in order to get the case removed to federal court. Id. If he/she really wanted to be in federal court, it would be much simpler to file the case in federal court in the first place. Id. at 291, 58 S.Ct. 586 (footnote omitted). "Moreover, the status of the case as disclosed by the plaintiff's complaint is controlling in the case of a removal, since the defendant must file his petition before the time for answer or forever lose his right to remove." Id. (emphasis added) (footnote omitted). The Court then said that once the case is removed the plaintiff cannot reduce the amount in controversy in order to obtain a remand. Id. at 292-93, 58 S.Ct. 586. "If he does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove." Id. at 294, 58 S.Ct. 586 (emphasis added) (footnote omitted).

The Supreme Court's holding in Red Cab was that the fact that the ultimate judgment rendered was for an amount which was less than the minimum amount required for diversity jurisdiction (and thus removal) would not invalidate the district court's original assumption of jurisdiction if the amount in controversy at the time removal was had was sufficient to confer jurisdiction. The Court did not rule that a plaintiff's allegations in his/her state court complaint as to the amount in controversy is never subject to being questioned for removal purposes. Red Cab "is limited in utility to cases in which the plaintiff himself has placed the requisite jurisdictional amount in controversy by requesting damages in excess of the jurisdictional amount." Garza v. Bettcher Industries, Inc., 752 F.Supp. 753, 755 (E.D.Mich.1990); accord Sanchez v. Monumental Life Insurance Co., 102 F.3d 398, 402 (9th Cir.1996). In Red Cab, the Supreme Court was not presented with, nor did it decide, the issue of whether a defendant can contest the amount in controversy in order to establish that a federal court would have diversity jurisdiction.

III. Discussion

Although the Supreme Court has not addressed the issue sub judice, numerous lower courts have done so. However, they are splintered as to if and when a defendant may challenge a plaintiff's pleading as to the amount in controversy and consequently remove a suit to federal court. Gafford v. General Electric Co., 997 F.2d 150, 157-58 (6th Cir.1993).

A. Decisions of Other Courts

In cases where the plaintiff has not specified any monetary amount as damages he/she is seeking to recover or where a nonspecific sum is asserted, i.e., damages in excess of X dollars, courts have employed several different standards for determining whether the amount in controversy exceeds the jurisdictional minimum required for removal from state court. 14A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3725 at 212 (Supp. 1997). Some courts "require the [removing party] to prove to a ...