Opinion
Civil Action 05-1385 Section I/2.
May 24, 2005
ORDER AND REASONS
Before the Court is a motion, filed on behalf of plaintiff, DPB Enterprises, L.L.C., to remand this action to the 25th Judicial District Court, Plaquemines Parish, Louisiana pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. For the following reasons, plaintiff's motion is GRANTED.
Background
This matter arises out of an alleged manufacturing defect in a fiberglass hull boat manufactured by defendant, American Marine Holdings, Inc. ("American Marine"). Plaintiff alleges that subsequent to purchasing the vessel, numerous problems with the vessel's engine and the hull developed. On March 11, 2005, plaintiff, alleging that the defects in the boat are redhibitory defects which entitle plaintiff to certain damages, filed this action in state court against American Marine. On April 11, 2005, American Marine removed this action pursuant to 28 U.S.C. § 1441, alleging diversity jurisdiction pursuant to 28 U.S.C. § 1332. On April 20, 2005, plaintiff, arguing that this Court lacks subject matter jurisdiction over this action because the amount in controversy does not exceed the requisite $75,000 jurisdictional amount, filed this motion to remand.Analysis
A party may remove an action from state court to federal court if the action is one over which the federal court possesses subject matter jurisdiction. Manguno v. Prudential Property and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citation omitted). The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper. Id. (citations omitted). In order to determine whether jurisdiction exists, a court will consider the claims in the state court pleadings as they existed at the time of removal. See id.; Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). Any ambiguities are construed against removal because removal statutes should be strictly construed in favor of remand. Acuna v. Brown Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000).Amount in Controversy
Federal courts have original jurisdiction over cases between citizens of different states "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332. The "value of the matter in controversy is not measured by the monetary judgment which the plaintiff may recover, but by the judgment's pecuniary consequence to those involved in the litigation." Duderwicz v. Sweetwater Savings Association, 595 F.2d 1008, 1014 (5th Cir. 1979).
Notwithstanding the presence of ABC Insurance Company, which plaintiff alleges to be a foreign entity, it is undisputed that complete diversity of citizenship exists in this case.
In determining whether the jurisdictional minimum is met, the plaintiff's claim for relief controls if the claim is made in good faith. See DeAguilar v. Boeing Co., 47 F.3d. 1404, 1408 (5th Cir. 1995) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S. Ct. 586, 590, 82 L. Ed. 845 (1938)) (" DeAguilar II"). Louisiana plaintiffs are generally prohibited from specifying a monetary amount of damages in their state court petitions. See Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999). However, article 893 of the Louisiana Code of Civil Procedure provides in part:
The prayer for relief shall be for such damages as are reasonable in the premises except that if a specific amount of damages is necessary to establish the jurisdiction of the court, the right to a jury trial, the lack of jurisdiction of federal courts due to insufficiency of damages, or for other purposes, a general allegation that the claim exceeds or is less than the requisite amount is required.
La. Code Civ. Proc. art. 893 (A) (1) (emphasis added).
When a plaintiff has not alleged a specific amount of damages, a removing defendant bears the burden of proving by a preponderance of the evidence that the amount in controversy exceeds $75,000. Luckett, 171 F.3d at 298; De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993) ( "DeAguilar I"). The preponderance of the evidence standard "forces the defendant to do more than point to state law that might allow the plaintiff to recover more than what is pled. The defendant must produce evidence that establishes that the amount in controversy actually exceeds [the jurisdictional amount, $75,000]." DeAguilar II, 47 F.3d at 1412. The defendant may make the requisite showing in either of two ways: (1) by demonstrating that it is facially apparent that plaintiff's claims are likely above $75,000, or (2) by setting forth the facts in controversy — preferably in the removal petition, but sometimes by affidavit — that support a finding of the requisite amount. Grant v. Chevron Phillips Chem. Co., 309 F.3d 864, 868 (5th Cir. 2002); Luckett, 171 F.3d at 298; Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).
Regardless of the method of proof used to establish the jurisdictional amount, the jurisdictional facts must be judged at the time of removal. Id. A subsequent reduction of the amount claimed cannot oust the district court's jurisdiction. Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); Marcel v. Pool Co., 5 F.3d 81, 84 (5th Cir. 1993). Although a court may consider post-removal evidence that clarifies the jurisdictional facts as they existed at the time of removal, a court may not consider post-removal events in determining whether the amount in controversy is met. See St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1254 n. 18 (5th Cir. 1998); Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia S.A., 988 F.2d 559, 565 (5th Cir. 1993) (" ANPAC"), abrogated on other grounds by Marathon Oil Co. v. Ruhrgas, 145 F.3d 211 (5th Cir. 1998).
Plaintiff's original state court petition alleges that the vessel manufactured by defendant had severe defects which should be "deemed to be redhibitory defects, vices and faulty construction of the boat." Based on the alleged defects, plaintiff seeks either rescission of the sale and return of the entire purchase price or a reduction in the sale price. Furthermore, in its petition, plaintiff alleges that its damages do not exceed $75,000. On April 15, 2005, plaintiff filed an amended complaint to "clarify" its claim, completely removing its claim for a return of the purchase price.
Rec. Doc. No. 1, exhibit 1, ¶ XIII.
Rec. Doc. No. 1, exhibit 1, ¶ XVIII.
Rec. Doc. No. 1, exhibit 1, ¶ XVII.
Rec. Doc. No. 7. Plaintiff's amended complaint is not relevant to this motion for remand because the time for examining the claim is the time of removal. See White v. FCI USA, Inc., 319 F.3d 672, 674 (5th Cir. 2003). Events occurring after removal, including an amendment, which reduce the amount recoverable do not defeat jurisdiction. See St. Paul Mercury Indem. Co., 303 U.S. at 289-90, 292, 58 S. Ct. at 590-91, 592.
Defendant argues that the plaintiff's request for rescission of the sale in its original petition ends the Court's remand inquiry because the sale price of the vessel was $282,000 and, therefore, the amount in controversy is met in this case. The Court disagrees.
Rec. Doc. No. 10. In its opposition to plaintiff's motion for remand, defendant also points to the fact that plaintiff seeks attorney's fees in its petition. If a statute allows payment of attorney's fees, they then constitute part of the matter in controversy. Manguno v. Prudential Property and Casualty Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (relying on defendant's affidavits that attorney's fees would likely exceed jurisdictional amount). The redhibition statute allows for recovery of attorney's fees if the seller knew or should have known of the defect in the thing that was the subject of the sale, La. Civ. Code art. 2545. A seller who is the manufacturer of the thing is deemed to know of the redhibitory defect. Id. However, defendant has offered no evidence of what plaintiff's attorney's fees might be. Accordingly, the Court is unable to aggregate to the amount in controversy whatever amount of attorney's fees plaintiff may be entitled.
Pursuant to Louisiana redhibition law, it is not facially apparent that plaintiff's claim exceeds the jurisdictional amount. While federal standards control the determination of the amount in controversy, the substantive questions which are incidental to the measure of damages are purely a matter of state law. Johns-Manville Sales Corp. v. Mitchell Enters., Inc., 417 F.2d 129, 131 (5th Cir. 1969); 15 James Wm. Moore, Moore's Federal Practice § 102.101 (3d ed. 2002). Therefore, "[s]tate law is relevant to [the amount in controversy] determination insofar as it defines the nature and extent of the right the plaintiff seeks to enforce." Johns-Manville Sales Corp., 417 F.2d at 131.
In Louisiana, a defect is redhibitory when it renders the product useless, or if its use is so inconvenient that it may be presumed that the buyer would not have purchased the product had he known of the defect. La. Civ. Code Ann. art. 2520. A defect may also be redhibitory when, without rendering the product totally useless, the usefulness is diminished so that it must be presumed that the buyer would still have purchased it, but for a lesser price. Id. The existence of a redhibitory defect gives the plaintiff the right to rescind the sale or to seek a reduction of the price even when the redhibitory defect is such that the sale could be rescinded. Id. "One of the principal elements in formulating the reduction of the sale price is the cost of the repairs." Agee v. Speers, 803 So. 2d 406, 412 (La.App. 2d Cir. 2001).
The value of plaintiff's redhibition claim is not facially apparent because plaintiff seeks either a reduction in its purchase price or a rescission of the sale. Because it is not facially apparent that plaintiff's claim exceeds the jurisdictional amount, the removing party must set forth facts in controversy that support the finding of a requisite amount. See Allen v. RH Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). However, removal cannot be based on merely conclusory allegations. Id. Rather, defendant must establish by a preponderance of the evidence that plaintiff's claim is likely to exceed $75,000 by setting forth facts in controversy that support a finding of the requisite amount. See Grant, 309 F.3d at 868.
Defendant offers evidence that plaintiff purchased the Donzi boat for $282,000. Notwithstanding the fact that the sale price of the vessel exceeds the jurisdictional amount, plaintiff requests either a reduction in the purchase price or a rescission of the sale. Defendant's evidence that the contract is greater than $75,000 is not sufficient to meet its preponderance of the evidence burden because the value of the vessel is not the only jurisdictional fact at issue in this case. The cost of remedying the alleged defects, which could be a small fraction of the purchase price of the vessel, is also relevant to plaintiff's claim. See Printworks, Inc. v. Dorn Co., 869 F.Supp. 436, 440-41 (E.D. La. 1994) (noting that with respect a redhibition claim the jurisdictional amount inquiry does not end with a finding of the value of the contract or the value of the defective item). Defendant has submitted no evidence with respect to the cost of repair that would support a finding that the requisite jurisdictional amount has been met.
Rec. Doc. No. 10, exhibit 5.
Accordingly, the Court cannot determine that it is more likely than not that plaintiff's redhibition claim exceeds $75,000. Defendant has not meet its burden of proving the jurisdictional facts by a preponderance of the evidence, and resolving any doubt in favor of remand, the Court finds that it does not have subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332. See Acuna v. Brown Root Inc., 200 F.3d 335, 339 (5th Cir. 2000) ("doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction").
For the above and foregoing reasons, IT IS ORDERED that plaintiff's motion to remand this action for lack of subject matter jurisdiction is GRANTED. IT IS FURTHER ORDERED that pursuant to 28 U.S.C. § 1447(c) this action is REMANDED to the 25th Judicial District Court, Plaquemines Parish, Louisiana.