Opinion
No. 02 Civ. 2347 (HB)
April 30, 2002
OPINION AND ORDER
Plaintiff law firm sued its former client in New York State Supreme Court to recover legal fees in the amount of $15,887.53 and punitive damages. The defendants answered and filed a Notice of Removal on March 25, 2002. The plaintiff moves pursuant to 28 U.S.C. § 1447(c) to remand to state court and seeks attorney fees and costs. For the following reasons, the plaintiff's motion is GRANTED, in part, and DENIED, in part.
I. DISCUSSION
This dispute between the plaintiff law firm, Kleinberg, Kaplan, Wolff Cohen, P.C. ("Kleinberg") and its former client, defendants BrandAid Communications, BrandAid Marketing Corporation and Jay Elliot (collectively "BrandAid"), was first brought in New York State Supreme Court by service of the summons and the complaint on January 28, 2002. Kleinberg asserts various causes of action for account stated, breach of contract, quantum meruit, fraudulent conveyance and tortious interference with contract seeking $15,887.53 in legal fees for services rendered to BrandAid. Additionally, Kleinberg seeks "an amount not less than $45,000" for the defendant's alleged willful conduct in relation to the claim for tortious interference with contract. (Compl. ¶ 77). On March 25, 2002, the defendants filed their Notice of Removal based on diversity of citizenship, 28 U.S.C. § 1332.
On a motion to remand, the party seeking to sustain removal from state to federal court, in this instance BrandAid. shoulders the burden of demonstrating that removal was proper. Heredia v. NYC Dep't of Corrections, 2002 WL 441127, at *1 (S.D.N.Y. March 21, 2002) (Baer, J.,). If that party fails to sustain this burden, then the case must be remanded back to state court. Id. Here, BrandAid has failed to sustain its burden of demonstrating that removal of this action to federal court was proper.
Pursuant to 28 U.S.C. § 1332, this Court may exercise diversity jurisdiction only where the parties are of diverse citizenship and the amount in controversy exceeds the sum or value of $75,000, exclusive of costs and interest. 28 U.S.C. § 1332 (a).
The parties dispute whether there exists either diversity of citizenship or an amount exceeding $75,000. As it is clear that the plaintiff seeks an amount below $75,000, subject matter jurisdiction fails on this ground alone and I need not reach the issue of diversity of citizenship.
The defendants' argument that their counterclaims are for an amount that exceeds $75,000 is unavailing. Kaplan v. Computer Sciences Corp., 148 F. Supp.2d 318, 320-21 (S.D.N.Y. 2001) (Brieant, J.,) (noting that counterclaims are not considered for purposes of determining diversity jurisdiction); Bernard v. Gerber Food Products Co., 938 F. Supp. 218, 220 (S.D.N.Y. 1996) (Baer, J.,) (noting that the amount in controversy for purposes of diversity jurisdiction is determined at the time the complaint was filed). Additionally, the defendants assert that diversity jurisdiction is sustained by plaintiffs Fourth and Fifth causes of action that seek to set aside certain transfers of approximately $75,000 as fraudulent conveyances. This argument must also fail. As the plaintiff points out, the amount of the transfers are only incidental to the relief being sought, which is well below $75,000. Put another way, the plaintiff is entitled to have the transfers set aside only to the extent necessary to satisfy its claim for $15,887.53. N.Y. Debtor Creditor Law 278 (1)(a); Century 21 Constr. Corp. v. Rabolt, 143 A.D.2d 873, 873 (2d Dep't 1988) ("The relief to which a defrauded creditor is entitled is limited to that which could have been obtained had there been no conveyance."). The defendants cite no authority to the contrary.
Lastly, the defendants contend that the plaintiff's claim for punitive damages prevents the court from determining with legal certainty the total damages and therefore provides "little doubt that the amount in controversy for Federal jurisdiction has been met." (Def. letter dated April 18, 2002, at p. 2). In other words, the defendants suggest that any complaint containing a claim for punitive damages, where diversity of citizenship exists, necessarily opens the door to federal court. I disagree. Bearing in mind that the plaintiff here seeks $15,887.53, it is unconvincing that the punitive damages, if any. would far exceed the $45,000 prayed for by the plaintiff. See BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 1601 (1996) (noting that punitive damages must bear a reasonable relationship to compensatory damages). It is clear that the total amount in controversy is below $75,000.
While I find that this case is remanded for failure to meet the requirements of diversity jurisdiction, it is interesting to note that the defendants also failed to timely file their Notice of Removal.
Pursuant to 28 U.S.C. § 1446 (a), a Notice of Removal must be filed in the district court within thirty days of service of the summons and complaint. As the defendants were served with the summons and complaint on January 28, 2002. they had thirty days thereafter to file their Notice of Removal, which was instead filed on March 25, 2002, almost a month late.
With respect to plaintiffs request for attorney fees and costs under 28 U.S.C. § 1447(c), I decline to find any here. See Morgan Guar. Trust Co. of New York v. Republic of Palau, 971 F.2d 917, 923-24 (2d Cir. 1992) (noting that 28 U.S.C. § 1447(c) "affords a great deal of discretion and flexibility to the district courts in fashioning awards of costs and fees").
II. CONCLUSION
For the foregoing reasons, the plaintiff's motion to remand this case to state court is GRANTED, and the plaintiff's motion for attorney fees and costs is DENIED. The Clerk of the Court is instructed to remove this case from my docket.