Opinion
No. 1:0 0CV91-D-D
July 20, 2000
OPINION
Presently before the court is the Defendant's motion to dismiss the Plaintiffs' amended complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Upon due consideration, the court finds that the motion should be denied.
A. Factual Background
In 1997, James and Linda Davis (the Davises) purchased real property located at 2399 Oktoc Road, Oktibbeha County, Mississippi. As part of this transaction, the Davises executed a note secured by a deed of trust that was later assigned by its owner to the Defendant, Fleet Mortgage Group (Fleet).
On December 20, 1999, the Davises sold the property and satisfied their indebtedness to Fleet. The Davises claim that, as part of the payoff transaction, they were required by Fleet to pay interest for the entire month of December, including $183.85 of unearned interest for December 20 through December 31, despite the fact that no agreement between the Davises and Fleet allowed Fleet to retain interest charges incurred beyond the payoff date. Additionally, the Davises allege that Fleet, in the absence of an agreement permitting them to do so, charged the Davises a $20.00 "fax statement fee" to fax a two page document, and a $60.00 "statement fee" for the computer generation of the Davis' two page payoff statement. The Davises assert that they should not have been required, as a condition of loan payoff, to pay Fleet an amount in excess of the cost actually incurred by Fleet to generate and fax the two page payoff statement.
The Davises filed the current complaint in this putative diversity class action lawsuit on April 28, 2000, seeking punitive damages and asserting state law causes of action for tortious breach of contract, unjust enrichment, conversion and breach of the implied covenant of good faith and fair dealing. On May 19, 2000, Fleet filed the current motion to dismiss.
B. Standards for Dismissal Pursuant to Rules 12(b)(1) and 12(b)(6)
Invoking Rule 12(b)(1) of the Federal Rules of Civil Procedure, Fleet argues that this court lacks jurisdiction over the subject matter of this action. District courts have subject matter jurisdiction over civil actions where the matter in controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of different states. 28 U.S.C. § 1332. As the party invoking jurisdiction, the Davises bear the burden of establishing, by a preponderance of the evidence, that their claim exceeds the statutory amount. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994).
Fleet does not dispute that this action is between citizens of different states.
In ruling on a motion to dismiss under Rule 12(b)(6), the court must take as true the well-pled allegations in the complaint and construe them in the light most favorable to the plaintiff. C.C. Port, Ltd. v. Davis Penn Mtg. Co., 61 F.3d 288, 289 (5th Cir. 1995). Taking the plaintiff's allegations as true, the court should dismiss the complaint only when it appears certain that the plaintiff cannot prove any set of facts that would entitle them to the relief requested. Id. Dismissal is never warranted solely because the court believes the plaintiff is unlikely to prevail on the merits. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).
C. Discussion 1. Subject Matter Jurisdiction
In their complaint, the Davises assert that they suffered actual damages in the amount of $263.85 and that they are seeking punitive damages "in excess of $75,000.00 per Plaintiff." When a complaint does not allege a specific amount of damages, the party invoking federal jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional amount. As part of that proof, the district court first examines the complaint to determine whether it is "facially apparent" that the claims exceed the jurisdictional amount. Myers v. Guardian Life Ins. Co. of Am., Inc., 5 F. Supp.2d 423, 428 (N.D.Miss. 1998). Here, the court concludes that the Davises have met their burden, considering their claim for punitive damages. See St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (stating punitive damages are included in calculation of amount in controversy).
Fleet argues that the Davises cannot, as a matter of law, be awarded sufficient punitive damages in order to meet the jurisdictional minimum, given the relatively small sum of actual damages they allegedly incurred. See BMW of North Am., Inc. v. Gore, 517 U.S. 559, 574-75, 116 S.Ct. 1589, 1598-99, 134 L.Ed.2d 809 (1996) (rejecting as unconstitutional a punitive damages award five hundred times the amount of actual damages and setting forth three factors courts must consider in determining the constitutionality of punitive damage awards). Fleet asserts that a punitive damage award of $74,736.16, two hundred eighty-three times the Davises' actual damages and the amount necessary to satisfy the federal jurisdictional minimum, would necessarily be grossly excessive and unconstitutional. The ratio of punitive damages to actual damages, however, is only one of three factors the Supreme Court outlined in Gore. The first and, in the Supreme Court's words, "[p]erhaps the most important," factor is the degree of reprehensibility of the defendant's conduct. While Fleet asserts that its behavior was far from reprehensible, the Davises contend otherwise. And, at this stage of the proceedings, the court must take as true the well-pled allegations contained in the Davises complaint. As such, at this juncture, the court cannot state that a punitive damage award of $74,736.16 in this case would, as a matter of law, be unconstitutional.
The parties also argue at length over whether the punitive damage claims of the unnamed putative class members can be aggregated to assist the Davises in meeting the amount in controversy requirement. See Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995) (under Mississippi law, claims for punitive damages are collective and, at least in actions with multiple named plaintiffs, the total amount of punitive damages claimed for multiple plaintiffs is counted against each plaintiff's required jurisdictional amount). Here, however, the court need not address this argument, and whether Allen applies to putative class actions, because the Davises' individual claim alone may potentially support an award of sufficient punitive damages so as to warrant federal jurisdiction. As such, the court can exercise supplemental jurisdiction over the unnamed putative class members regardless of the amount of their individual claims. In re Abbott Labs., 51 F.3d 524, 529 (5th Cir. 1995).
In sum, the court finds that the Davises have proven by a preponderance of the evidence that the amount in controversy exceeds $75,000.00. As such, this court possesses subject matter jurisdiction to adjudicate this matter.
2. Fleet's Rule 12(b)(6) Motion
Considering only the pleadings in this action, and taking the facts alleged in the complaint as true, the court finds that Fleet has failed to show that "it appears certain that the plaintiff cannot prove any set of facts that would entitle it to the relief it seeks." See C.C. Port, Ltd., 61 F.3d at 289. Fleet's motion to dismiss pursuant to Rule 12(b)(6), therefore, shall be denied.
A separate order in accordance with this opinion shall issue this day.