Summary
holding that statement in petition in which plaintiffs waived and renounced their ability to be awarded any damages in excess of $74,999 constituted a binding judicial confession requiring remand
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Civil Action No. 04-2971 Section "N" (3).
December 23, 2004
ORDER AND REASONS
Before the Court is a Motion to Remand filed by plaintiffs Michele Lea Engstrom and Joseph Bowden Fairchild on November 8, 2004. (Rec. Doc. No. 5). For the reasons stated herein, plaintiff's motion is GRANTED.
I. BACKGROUND
This action arises primarily out of employment contract disputes between plaintiffs Michele Engstrom and Joseph Fairchild and defendant Government Services, Inc. (sued as L-3 Communications Government Services, Inc.). In March of 2004, Engstrom and Fairchild were contacted by Don Carfagna, a Program Manager for Government Services, regarding job opportunities in Afghanistan. See Petition at ¶¶ VI, VII, attached to Notice of Removal (Rec. Doc. No. 1). In their conversations, Carfagna allegedly assured plaintiffs that the operation in which they would be employed by Government Services would be professionally supervised, supplied and supported, and that job would be for a term of six months and compensation therefor in the amount of $86,000. Petition at ¶ VIII. Plaintiffs claim that, on March 31, 2004, Carfagna confirmed these assurances through an e-mail sent to each plaintiff. Id. Based on these oral and written representations, both plaintiffs allegedly quit their respective jobs and arranged for the storage of their belongings and for their relocation. Id. at ¶ IX.
On April 14, 2004, Carfagna allegedly mailed each plaintiff a written offer of employment which purported not to create a contract of employment for a term and which recited a starting annual rate of $86,000. Petition at ¶ X. Given the discrepancy between the written offer and the earlier communication of six months employment for $86,000, plaintiffs allegedly contacted Carfagna, who assured them that the terms communicated in March 2004 were the actual arrangement and that the April 14, 2004 letter was simply a formality. Id. at ¶ XI. Based on these alleged assurances, each plaintiff signed the written offer of employment. Id. Later, during initial briefings, plaintiffs claim Carfagna again assured plaintiffs that the job was for a fixed duration of six months. Id.
Once in Afghanistan, plaintiffs allegedly were fearful for their safety as they were subjected to "incompetent and directionless leadership, inadequate supplies, and general non-responsiveness to the expressed needs of Senior Intelligence Analysts/Interrogators in a volatile environment." Petition at ¶ XII. In a July 2004 briefing, an Army officer brought in by Government Services allegedly pointed a loaded assault weapon at the attendees, including plaintiffs. Id. at ¶ XIII. Later complaints about the latter incident allegedly were ignored. Id. at ¶ XIV. Given these and other alleged intolerable conditions, both plaintiffs felt compelled to leave their jobs with Government Services. Id. at ¶ XV.
On July 12, 2004, Fairchild made demand upon Carfagna for full payment of the prorated remainder of the $86,000 that Government Services had promised to pay both Fairchild and Engstrom for the six-month term of employment. Id. at ¶ XVI. Government Services allegedly has ignored these demands. Id.
On October 1, 2004, Engstom and Fairchild filed suit against Government Services in the 17th Judicial District Court, Parish of Lafourche, State of Louisiana. In their Petition, plaintiffs allege that Government Services is liable to each plaintiff for (1) breach of a contract of employment; (2) nonpayment of wages, penalties and reasonable attorney's fees under the Louisiana wage payment statute, La.Rev.Stat. 23:631, et seq.; (3) detrimental reliance; and (4) assault under La. Civ. Code art. 2315. See generally Petition. In the prayer for relief, each plaintiff also "pleads entitlement to aggregated monetary damages on all counts . . . in the amount of at least $50,000. . . ." Id. at ¶¶ XXI, XXII. Each plaintiff also "pleads that the aggregated monetary damages on all counts . . ., including penalties and statutory attorney's fees, but exclusive of interests and costs, do not exceed $74,999; and [each plaintiff] affirmatively and knowingly waives entitlement to any damages . . ., including penalties and statutory attorney's fees, but exclusive of interest and costs, in excess of $74,999." Id.
On October 29, 2004, Government Services removed the matter to this Court, stating in its Notice of Removal that this Court has original jurisdiction pursuant to 28 U.S.C. § 1332, as the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs, and is between citizens of different states. See generally Notice of Removal. Addressing diversity of citizenship, Government Services averred: (i) plaintiffs Michele Lea Angstrom and Joseph Bowden Fairchild are residents of the State of Louisiana; and (ii) Government Services is a Virginia corporation with its principal place of business in Virginia. See id. at ¶ 3. With respect to the $75,000 jurisdictional amount requirement, Government Services alleges that, despite their attempt to avoid federal jurisdiction, each plaintiff's claim does exceed $75,000, exclusive of interest and costs. Id. at ¶ 6. Petition at ¶¶ XVIII, XXI, XXII). Id.
On November 9, 2004, plaintiffs filed the instant motion to remand on the grounds that diversity jurisdiction as required by 28 U.S.C. ¶ 1332(c)(1) does not exist. Government Services opposes plaintiffs' motion, arguing that the amount in controversy requirement is clearly met as to each plaintiff and that this matter was properly removed under a straightforward application of Fifth Circuit caselaw.
II. LAW AND ANALYSIS
Generally, a defendant may remove a civil action filed in state court if a federal court would have had original jurisdiction. See 28 U.S.C. § 1441(a). The removing party bears the burden of establishing that federal jurisdiction exists at the time of removal. DeAguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995); see also Allen v. RH Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). The jurisdictional facts supporting removal are examined as of the time of removal. See Gebbia v. Walmart Stores, Inc., 223 F.3d 880, 883 (5th Cir. 2000). The Court must remand the matter, however, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c).
In this case, the complete diversity of the parties is undisputed. The parties dispute, however, whether the amount in controversy exceeds $75,000, as required by 28 U.S.C. § 1332. Louisiana law prohibits a plaintiff from pleading a specific amount of monetary damages. La. Code Civ. Proc. art. 893(A). Where, as here, the petition does not include a specific monetary demand, Government Services must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. Manguno v. Prudential Property and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing DeAguilar, 47 F.3d at 1412). "This requirement is met if (1) it is apparent from the face of the petition that the claims are likely to exceed $75,000, or, alternatively, (2) the defendant sets forth summary judgment type evidence of facts in controversy that support a finding of the requisite amount." Id. (quotations and citations omitted). If the defendant meets its burden in either of these ways, the plaintiffs must then show to a legal certainty that their claims are really less than $75,000. DeAguilar, 47 F.3d at 1412. Regarding how plaintiffs might go about showing that each is legally certain to recover damages in an amount less than the jurisdictional threshold, the Fifth Circuit has said:
While plaintiffs have alleged entitlement to damages in an amount not less than $50,000 but not exceeding $74,999, the Court finds that plaintiffs are seeking an indeterminate amount of damages, given the numerous theories of recovery alleged.
Plaintiffs criticize the defendant's reliance on the Fifth Circuit's decision in DeAguilar v. Boeing Company, supra, contending that this Court should not consider the DeAguilar decision as it is factually dissimilar and because the Court was applying Texas state law. Plaintiffs, however, fail to recognize that the DeAguilar decision sets forth a clear analytical framework which this Court is bound to follow. Further, as defendant correctly points out in its opposition, numerous Fifth Circuit and Eastern District of Louisiana cases have followed DeAguilar as controlling authority with respect to the removal of Louisiana state court cases. See, e.g., Manguno v. Prudential Property and Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); Gebbia v. Walmart Stores, Inc., supra; Crosby v. Lassen Canyon Nursery, Inc., 2003 WL 2253617 (E.D.La. Nov. 3, 2003) (Vance, J.).
Plaintiff's "legal certainty" obligation might be met in various ways; we can only speculate without intimating how we might rule in such case. Plaintiff's state court complaint might cite, for example, to a state law that prohibits recovery of damages that exceed those requested in the ad damnum clause and that prohibits the initial ad damnum to be increased by amendment. Absent such a statute, "[l]itigants who want to prevent removal must file a binding stipulation or affidavit with their complaints."Id. (citation omitted). By way of explanation, the Court continued, stating:
The general principle is that plaintiffs will have to show that they are bound irrevocably by their state pleadings in these situations. Certainly, plaintiffs who plead for specific damages and who are in states that have procedural rules binding them to their pleadings will satisfy their burdens more easily. Others will have the same opportunity to avoid federal court but will have to choose another method to show their commitment to recovery below the threshold amount.Id. at 1412, n. 10.
In this case, Government Services has met its burden. As set forth in its Notice of Removal and in its opposition memorandum, each plaintiff has made a claim (Count One) for the "prorated remainder of the $86,000 the Defendant promised to pay," which plaintiffs calculate at "roughly $57,000" per plaintiff. See Petition at ¶ XVI. Further, in Count Two of their Petition, each plaintiff claims entitlement to penalty wages pursuant to the Louisiana wage payment statute which provides that an employee can recover a penalty, in addition to actual damages, equal to ninety days wages, which is approximately $43,000, or half of the $86,000 each plaintiff claims for six months work. See id. at ¶ XVIII. Without even considering the plaintiffs' alleged entitlement to attorney's fees under the Louisiana wage payment statute and plaintiffs' alleged causes of action for assault and detrimental reliance, it is facially apparent that the amount in controversy exceeds the $75,000 jurisdictional amount. The Court finds that the defendants established by a preponderance of the evidence that the apparent amount in controversy exceeds $75,000.
As a result, the plaintiffs must show with legal certainty that their claims are really less than $75,000. Here, plaintiffs direct the Court's attention to the Petition, wherein each plaintiff "affirmatively and knowingly waive[d] entitlement to any damages . . ., including penalties and statutory attorney's fees, but exclusive of interest and costs, in excess of $74,999." Petition at ¶¶ XXI, XXII. Plaintiffs contend that the express waivers documented by their Petition are binding stipulations, as plaintiffs "waived and renounced their ability to be awarded any damages . . . in excess of $74,999 after having been advised that their waiver was binding and effective and that under no circumstances could a Louisiana state court award them more." Pls.' Mem., p. 3. To support their argument that these express waivers are binding stipulations, plaintiffs contend that the waiver language in their Petition constitutes a judicial confession under Louisiana Civil Code article 1853, or what courts have "commonly termed a judicial admission or stipulation." Harris v. Louisiana Paving Co., Inc., 427 So.2d 1352, 1355 (La.App. 2 Cir. 1983).
The Court notes that such representation before this Court is made in conformity with Fed.R.Civ.P. 11.
The Court agrees with plaintiffs that the express waiver contained in the Petition is a judicial confession, which is "indivisible" and which "may be revoked only on the ground of an error of fact." See La. Civ. Code art. 1853. While defendants are correct in stating that Louisiana courts, under La. Code Civ. Proc. art. 862, may grant a successful party relief which was not demanded in its pleadings, Louisiana courts are also bound to enforce a judicial confession made by an attorney on behalf of his client in a pleading, such as a Petition, absent an error of fact or absent a showing that the party in whose favor the confession was made suffered no detrimental reliance. See, e.g., C.T. Traina, Inc. v. Sunshine Plaza, Inc., 2003-1003 (La. 12/3/03), 861 So.2d 156 (holding that statement made by an attorney in an exception of no cause of action was a judicial confession and could not be revoked by an amended answer). See also La. Civ. Code art. 1853, cmt. (b) ("a declaration made by a party's attorney . . . has the same effect as one made by the party himself").
Defendants attempt to undermine plaintiffs' argument by contending that the matter at hand is factually similar to that before the Fifth Circuit in Manguno v. Prudential Property and Casualty Insurance Company, supra, and before Judge Duval in Turkish v. St. Paul Fire Marine Insurance Company, 2003 WL 22434222 (E.D.La. Oct. 24, 2003). Those cases, however, are dissimilar to the matter at bar. First, in both cases, the plaintiffs only alleged that the amount did not exceed $74,999. See Manguno, 47 F.3d at 722; Turkish, 2003 WL 22434222, at *2. The plaintiffs did not deny that they would accept more than $75,000, if the state court awarded that amount. In comparison, plaintiffs here have "affirmatively and knowingly waive[d]entitlement to any damages . . . in excess of $74,999," Petition at ¶¶ XXI, XXII (emphasis added), "after having been advised that their waiver was binding and effective and that under no circumstances could a Louisiana state court award them more." Pls.' Mem., p. 3. In addition, in Manguno, the plaintiff had filed a petition for a class action; in her petition, she stated that plaintiffs were not seeking statutory attorney's fees. Manguno, 276 F.3d at 721-22. In denying plaintiff's motion to remand, the Fifth Circuit stated: "it is improbable that [the plaintiff class representative] can ethically unilaterally waive the rights of the putative class members to attorney's fees without their authorization." Id. at 724. Finally, in reviewing the Manguno and Turkish decisions, it is apparent that neither Court addressed whether the purported waivers at issue were judicial confessions under La. Civ. Code art. 1853.
Defendant also contends that plaintiffs' motion to remand is without merit, as plaintiffs did not verify their Petition nor have they submitted a binding stipulation as required by the Fifth Circuit, citing DeAguilar, 47 F.3d at 1412. Defendant, however, fails to recognize that the express waiver contained in the Petition is regarded by Louisiana courts as a binding stipulation, as outlined above. Defendant contends that such is easily withdrawn, as evidenced by the Harris case cited by plaintiff. A review of that case, however, reveals that the appellate court ruled that the stipulation made by the parties at trial was not binding because it was based upon an error of fact. Harris v. Louisiana Paving Co., Inc., 427 So.2d 1352, 1356 (La.App. 2 Cir. 1983). In comparison, looking to the future and any possible attempts of plaintiffs to withdraw the express waivers contained in their Petition, this Court finds that it is highly unlikely that any court would accept an argument that the waivers were based upon an error of fact. In so finding, the Court is guided by La. Code Civ. Proc. art. 863, which states with respect to the state court pleadings: ". . . the signature of an attorney . . . shall constitute a certification by him that he has read the pleading; that to the best of his knowledge, information and belief formed after reasonable inquiry it is well grounded in fact; . . . and that it is not interposed for any improper purpose. . . ." (Emphasis added).
With respect to defendant's concerns that plaintiffs could withdraw the waivers asserted in their Petition, if either plaintiff did in fact later attempt to increase his or her damages demand, then removal would most likely be proper, even if such attempt came more than a year after commencement of plaintiff's suit, based on equitable estoppel principles. See Hux v. General Motors Acceptance Corp., 1998 WL 34202196, at*3, n. 3 (S.D.Miss. March 30, 1998) (citation omitted).
In the instant matter, plaintiffs, through counsel, have explicitly waived any claim for damages over $74,999, by the following language: "[Each plaintiff] "pleads that the aggregated monetary damages on all counts . . ., including penalties and statutory attorney's fees, but exclusive of interests and costs, do not exceed $74,999; and [each plaintiff] affirmatively and knowingly waives entitlement to any damages . . ., including penalties and statutory attorney's fees, but exclusive of interest and costs, in excess of $74,999." Petition at ¶¶ XXI, XXII. The Court is satisfied that this statement qualifies as the type of "binding stipulation" not subject to change in the future, to which the Fifth Circuit referred in DeAguilar. DeAguilar, 47 F.3d at 1412, n. 10 (explaining that the "general principle is that plaintiffs will have to show that they are bound irrevocably by their state pleadings in these situations"). Accord Hux v. General Motors Acceptance Corp., 1998 WL 34202196, at *3 (S.D.Miss. March 30, 1998) (granting remand where plaintiffs stated in their state court complaint: "Each plaintiff limits the amount in controversy for his claims to $74,999.00, exclusive of interests and costs, and specifically disclaims and [waives] any claim for damages, actual and punitive, which is over a total of $74,999"). Cf. Crosby v. Lassen Canyon Nursery, Inc., 2003 WL 2253617 (E.D.La. Nov. 3, 2003) (Vance, J.) (in denying remand where plaintiffs submitted a post-removal affidavit in which they agreed that their claims for damages did not exceed $75,000 and that they would not seek damages in excess of $75,000, the Court noted in its reasoning that plaintiffs did not stipulate that they would not accept more than $75,000, if a state court awarded it). Accordingly, the Court concludes that remand to state court is in order.
Plaintiffs have also moved the Court to order payment of the reasonable attorney's fees, expenses and costs associated with their filing of the Motion to Remand. The Court, however, declines to make such an award as it is not obvious that the defendant's removal of this matter was legally improper. Given the controlling Fifth Circuit case law, plaintiffs indeed could have verified their petition, or filed with their petition a separate binding stipulation, such that removal could have been avoided at the outset.
III. CONCLUSION
For the foregoing reasons, IT IS ORDERED that:1. The Motion to Remand filed by plaintiffs Michele Lea Engstrom and Joseph Bowden Fairchild is GRANTED;
2. Plaintiffs' request for costs, expenses, and attorney's fees is DENIED; and
3. Pursuant to 28 U.S.C. § 1447(c), this action is REMANDED to the 17th Judicial District Court, Parish of Lafourche, State of Louisiana, for lack of subject matter jurisdiction.