Zacharia v. Harbor Island Spa, Inc.

• Decision Date: 25 June 1982
• Docket Number: D,No. 611,611
• Parties: Sarah ZACHARIA, Plaintiff-Appellant, v. HARBOR ISLAND SPA, INC., Defendant-Appellee. ocket 81-7558.
• Court: U.S. Court of Appeals — Second Circuit

Page 199

684 F.2d 199

Sarah ZACHARIA, Plaintiff-Appellant, v. HARBOR ISLAND SPA, INC., Defendant-Appellee.

No. 611, Docket 81-7558.

United States Court of Appeals,

Second Circuit.

Submitted Feb. 19, 1982.

Decided June 25, 1982.

Kenneth A. Reiver, Cedarhurst, N. Y., for plaintiff-appellant.

Alan J. Reardon, Mineola, N. Y. (Deegan & Reardon, Mineola, N. Y., of counsel), for defendant-appellee.

Before NEWMAN, CARDAMONE and WINTER, Circuit Judges.

RALPH K. WINTER, Circuit Judge:

This appeal of a diversity case raises issues as to the meaning of a Florida statute limiting the liability of hotels for losses of valuables entrusted to them by guests. Plaintiff's action for damages resulting from the loss of jewelry was dismissed by Judge Neaher for lack of jurisdiction. That opinion is reported at 519 F.Supp. 456 (E.D.N.Y.1981).

We reverse.

BACKGROUND

Florida provides hotels with a statutory method of limiting their liability for the loss of valuables which they accept for safekeeping from guests. The pertinent statutory language reads:

liability ... shall be limited to $1,000 for such loss, if the (hotel) gave a receipt for the property (stating the value) on a form which stated, in type large enough to be clearly noticeable, that the (hotel) was not liable for any loss exceeding $1,000 and was only liable for that amount if the loss was the proximate result of fault or negligence of the operator.

Fla.Stat. § 509.111(1) (1979).

On November 17, 1979, the plaintiff, Mrs. Sarah Zacharia, checked into defendant's On some 36 occasions Zacharia sought access to the safe deposit box and signed the reverse side of Card (2) in order to verify her identity. Neither on the first nor on any later occasion was she given any document evidencing either a deposit of valuables or the potential limitation on the Hotel's liability.

                Harbor Island Spa Hotel in Miami Beach.  She signed a registration card which stated "HOTEL'S LIABILITY IS LIMITED AS PROVIDED IN POSTED 'IMPORTANT NOTICE TO GUESTS'."  Soon thereafter, she sought the use of a Hotel safe deposit box to store her valuables.  At the Hotel's request, she signed two cards.  The first, Card (1), was entitled "Harbor Island Spa, Inc.-Statement of Value."  The second, Card (2), was entitled "Safe Deposit Box-Statement of Value."  These are set out in the margin.  1  Both cards state that the Hotel's liability is limited to $1,000 for loss of valuables deposited in a safe deposit box.  Each contains language certifying that the aggregate value of items on deposit will at no time exceed $1,000.  The limitation provisions of Card (1), however, were crossed out and Zacharia was not asked to fill in the blanks on Card (2) for her name, the Hotel's name and the date of deposit.  The parties dispute what she was told by Hotel employees, Zacharia claiming the desk clerk told her not to worry about the cards which were merely for the Hotel's record, the Hotel denying such statements were made
                

On December 7 or 8, 1979, many safe deposit boxes, including Zacharia's, were emptied by a thief, apparently a desk clerk who vanished at the same time as the contents of the boxes. Zacharia's claim of loss Alleging diversity of citizenship and an amount in controversy exceeding $10,000, Zacharia brought an action in the Eastern District of New York. The District Court granted the Hotel's motion for summary judgment, holding that on the undisputed facts the Hotel satisfied the requirements of § 509.111(1) and that its liability to Zacharia was limited to $1,000. It then dismissed the action sua sponte for want of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) since the amount in controversy is less than $10,000. 28 U.S.C. § 1332 (1980).

is in excess of $10,000. The Hotel, on the other hand, is prepared to present evidence that her original claim escalated sharply after a phone call to New York from the Hotel lobby.

We reverse.

DISCUSSION

Although diversity jurisdiction depends upon the amount in controversy exceeding $10,000, jurisdiction is not lost because a plaintiff's ultimate recovery is less than that amount. The jurisdictional determination is to be made on the basis of the plaintiff's allegations, not on a decision on the merits. Moreover, even where those allegations leave grave doubt about the likelihood of a recovery of the requisite amount, dismissal is not warranted. Deutsch v. Hewes Street Realty Corp., 359 F.2d 96 (2d Cir. 1966). Rather, it must appear to a legal certainty from the complaint that the plaintiff cannot recover sufficient damages to invoke federal jurisdiction. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938); Moore v. Betit, 511 F.2d 1004 (2d Cir. 1975). We have allowed, however, resort to materials developed in discovery to be used to amplify the meaning of the complaint allegations. Givens v. W. T. Grant Company, 457 F.2d 612 (2d Cir. 1972). In Givens, depositions of the plaintiffs disclosed that the claimed jurisdictional amount was an aggregate of individual claims, each of which was less than the requisite sum. Id. at 613, n.3. We have not, however, held that defenses asserted on the merits may be considered and adjudicated on jurisdictional motions.

Were the law otherwise, the orderly progress of litigation would be disrupted, and doubt and ambiguity would surround the jurisdictional base of most diversity litigation from complaint to final judgment. Issues going to a federal court's power to decide would be hopelessly confused with the merits themselves. Constitutional questions as to the right to have a jury determine factual issues would lurk in every jurisdictional motion. For these reasons, motions to dismiss for lack of a sufficient amount in controversy must be directed solely to the plaintiff's allegations. ²

The District Court did more in this case than assess the allegations of Zacharia's complaint. Upon a motion for summary judgment that defendant's liability be limited to $1,000, it held there was a valid defense to any claim exceeding $1,000 and dismissed the complaint sua sponte for lack of jurisdiction. Even if the Court's interpretation of Florida law were correct, dismissal contravenes the rule that the existence of a valid defense does not deprive a federal court of jurisdiction. Smithers v. Smith, 204 U.S. 632, 642, 27 S.Ct. 297, 299, 51 L.Ed. 656 (1907); Fireman's Fund Ins. Co. v. Railway Express Co., 253 F.2d 780 (6th Cir. 1958); Kissick Construction Co. v. First National Bank of Wahoo, 46 F.Supp. 869 (D.Neb.1942); 14 C. Wright and A. Miller, Federal Practice and Procedure, § 3702 at 382-83 (1976). We hold, therefore, that even if defendant's liability were limited to $1,000, plaintiff would nevertheless have a live claim for that amount cognizable in the District Court.

The expeditious progress of this litigation will not be furthered by our reversing on these grounds and declining to review the District Court's ruling as to the defendant's liability under Fla.Stat. § 509.111(1) (1979). A remand in these circumstances would merely set the stage for another appeal of the very issue argued here as to the Hotel's compliance with the Florida statute. Therefore, we decide that issue also.

Section 509.111(1) provides that a hotel's liability may be limited only if the hotel "gave a receipt for the property (stating the value)." Plaintiff was given no document of any kind in connection with use of the safe deposit box. All of the documentation was retained by the Hotel in accord with its established practices. Moreover, on Card (1), "Harbor Spa, Inc.-Statement of Value," the critical portion relating to limitation of liability was crossed out. Finally, the blanks within the text of Card (2) "Safe Deposit Box-Statement of Value," relating to plaintiff's name, the name of the Hotel, and date of deposit, were not filled in.

We can only speculate as to the result a Florida court would reach on these facts. Relevant Florida decisions, however, emphasize that the burden of compliance is on the hotel rather than on the guest, since the hotel has "superior position and knowledge ... with regard to the mandates of the statute," Garner v....