Opinion
CASE NO. 08-3244-SAC.
October 31, 2008
ORDER
This civil complaint was filed pursuant to 28 U.S.C. § 1331 by an inmate of the United States Penitentiary, Leavenworth, Kansas. Defendant is Tony Davis, owner of a private "legal representation firm" called ILS Service with an address in Austin, Texas. Plaintiff asserts that Mr. Davis, acting in his official capacity as an employee of the United States, violated his constitutional rights under the Eighth Amendment, intentionally inflicted mental distress, and was negligent. He seeks compensatory and punitive damages in the amount of nine million dollars.
As the factual basis for his complaint, Mr. Landry alleges he executed a contract with "ILS Services" on June 27, 2007, for provision of legal services including the filing of a request to reopen a motion under 28 U.S.C. § 2255, and that he paid defendant Davis over nine thousand dollars under the contract. He further alleges that defendant Davis made false statements regarding performance of the services, has not provided the services as promised, and has breached the contract.
Plaintiff attaches to his complaint exhibits of correspondence from ILS Services, Inc., in which ILS is described as "a legal research firm that specializes in challenging the jurisdiction of the federal court system."
APPLICATION TO PROCEED WITHOUT PREPAYMENT OF FEES
Plaintiff has filed an Application to Proceed Without Prepayment of Fees. 28 U.S.C. § 1915 requires that a prisoner seeking to bring a civil action without prepayment of fees submit an affidavit described in subsection (a)(1), and a "certified copy of the trust fund account statement (or institutional equivalent) for the prisoner for the 6-month period immediately preceding the filing" of the action "obtained from the appropriate official of each prison at which the prisoner is or was confined." 28 U.S.C. § 1915(a)(2). This action may not proceed until plaintiff has satisfied the filing fee by either submitting the documents required under Section 1915(a) to support his motion, or paying the full fee of $350.00. He will be given time to provide the copy of his trust fund account statement or pay the filing fee. If Mr. Landry fails to provide the documents required to support his motion, it will be denied; and if he fails to otherwise satisfy the fee requirement, this action may be dismissed without further notice.
Even if plaintiff's motion for leave to proceed in forma pauperis is granted, he will remain obligated to pay the full filing fee of $350.00 due herein. The granting of his motion will entitle him to pay the fee over time through payments from his inmate trust fund account as authorized by 28 U.S.C. § 1915(b)(2). Pursuant to § 1915(b)(2), the Finance Office of the facility where plaintiff is confined will collect twenty percent (20%) of the prior month's income each time the amount in plaintiff's account exceeds ten dollars ($10.00) until the filing fee has been paid in full.
SCREENING
Because Mr. Landry seeks leave to proceed in forma pauperis, the litigation process begins with the court screening his complaint. 28 U.S.C. § 1915(e)(2)(B)(ii) provides that "the court shall dismiss the case at any time if the court determines that . . . the action . . . fails to state a claim on which relief may be granted." Perkins v. Kansas Dept. of Corrections, 165 F.3d 803, 806 (10th Cir. 1999). Having screened all materials filed, the court finds the complaint is subject to being dismissed because it does not appear from the face of the complaint that this court has jurisdiction over plaintiff's claims.
FACTS DO NOT SHOW FEDERAL QUESTION JURISDICTION
Plaintiff cites 28 U.S.C. § 1331 as the basis for this court's jurisdiction. Section 1331 provides that federal district courts have original federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." Id. As a general rule, a case arises under federal law, for jurisdictional purposes, only if it is federal law that creates the cause of action. Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S.Cal., 463 U.S. 1, 8-10 (1983) (case arises under federal law when federal law creates cause of action or plaintiff's right to relief necessarily depends on resolution of substantial question of federal law); Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996), cert. denied, 520 U.S. 1162 (1997). "The presence or absence of federal-question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint."Stephenson v. Wheaton Van Lines, Inc., 240 F.Supp.2d 1161, 1163 (D.Kan. 2002), citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998) ("Without jurisdiction [a] court cannot proceed at all in any cause," and "the only function remaining to the court is that of announcing the fact and dismissing the cause.") (quotation omitted).
The allegations in the complaint do not establish that plaintiff's claims arise "under the Constitution, laws, or treaties of the United States" as required by 28 U.S.C. § 1331. No federal statute is invoked as the basis for this cause of action. Plaintiff's mere mention of the Eighth Amendment is not enough to confer federal question jurisdiction, and his claims are not shown to hinge upon the substance of the Eight Amendment. Plaintiff's allegations are essentially claims of breach of contract, fraud or misrepresentation, or even professional malpractice or negligence. Such claims arise under state, rather than federal, law. Nothing in plaintiff's allegations suggests that a substantial question of federal law is a "necessary element" of these state law claims. Franchise Tax Bd., 463 U.S. at 13.
A duty of good faith is implied in a contract, and conduct departing from that duty is a breach of a contractual obligation.Pizza Management Inc. v. Pizza Hut, Inc., 737 F.Supp. 1154, 1167 (D.Kan. 1990), citing Bonanza, Inc. v. McLean, 242 Kan. 209, 222, 747 P.2d 792 (1987).
Professional and legal malpractice are grounded in the tort concept of negligence or the failure of a professional to exercise the proper degree of care. Separating a claim for malpractice into claims of negligence, breach of contract, or fraud does not change the underlying fact that the claims are based on professional negligence. Breach of duty, negligent misrepresentation, and breach of contract have been held to merge into a malpractice claim. Malpractice claims are based strictly on the law of the State, such as of Kansas or Texas, and do not present any federal questions.
Moreover, despite plaintiff's bald statement that defendant Davis was acting in his official capacity as an employee of the United States, his factual allegations indicate otherwise. Defendant Davis is alleged to be the owner of a private firm in Texas, and an individual who contracted with plaintiff to provide post-conviction legal services for a fee. No facts indicate that defendant Davis was either employed by the federal government or acting as a federal official or agent. Thus, federal question jurisdiction does not exist under either the theory that plaintiff's claims arose under federal law or that defendant acted under color of federal law.
A private attorney or paralegal is not an employee of the United States simply because he or she contracts to provide legal assistance to a federal inmate.
INSUFFICIENT FACTS ALLEGED FOR DIVERSITY JURISDICTION
28 U.S.C. § 1332 provides, in pertinent part, that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." This court may exercise this "diversity jurisdiction" over state law claims of malpractice, negligence, fraud, and breach of contract under the circumstances prescribed in § 1332. However, there is a presumption against federal jurisdiction, and the party who seeks to invoke the jurisdiction of the federal courts bears the burden of establishing that such jurisdiction is proper. It follows that Mr. Landry must present facts to show diversity jurisdiction and support those facts with competent evidence.
Mr. Landry does not assert diversity jurisdiction anywhere in his complaint. Nor are there facts in the complaint showing diversity jurisdiction. The complaint shows that Mr. Landry currently resides in federal prison in Kansas, but no facts are provided to demonstrate that he is a citizen of the State of Kansas. Normally, a person's citizenship for diversity purposes is his domicile, which involves physical presence in a state with an intent to remain indefinitely. In the case of a prisoner, courts have presumed that he or she is "a citizen of the state of which he was a citizen before his incarceration." Smith v. Cummings, 445 F.3d 1254, 1260 (10th Cir. 2006); see Singletary v. Cont'l Ill. Nat'l Bank Trust Co., 9 F.3d 1236, 1238 (7th Cir. 1993) ("[Citizenship] should be the state of which [the prisoner] was a citizen before he was sent to prison unless he plans to live elsewhere when he gets out."). Plaintiff also fails to provide facts showing that defendant Davis is a citizen of a different state than Mr. Landry.
A corporation is "deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1).
Another prerequisite for a federal district court to exert diversity jurisdiction is that the amount in controversy must exceed $75,000.00. See, 28 U.S.C. § 1332. The party asserting jurisdiction has the burden of showing that the amount in controversy exceeds the jurisdictional amount. See Watson v. Blankinship, 20 F.3d 383, 386 (10th Cir. 1994). "The district court has subject matter jurisdiction in a diversity case when a fact finder could legally conclude, from the pleadings and proof adduced to the court before trial, that the damages that the plaintiff suffered are greater than $75,000." See Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002). Dismissal of a complaint based on diversity is justifiable if it "appears to a legal certainty that the claim is really less than for the jurisdictional amount." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938).
The facts alleged in the complaint plainly suggest that the amount in controversy in this case is much closer to nine thousand than nine million dollars. Plaintiff can satisfy the amount in controversy requirement by "alleg[ing] with sufficient particularity the facts creating jurisdiction, in view of the nature of the right asserted, and, . . . [by] support[ing] the allegation." Burrell v. Burrell, 229 F.3d 1162, ** 1 (10th Cir. 2000) (unpublished), citing St. Paul Mercury Indem. Co., 303 U.S. at 288. "Although allegations in the complaint need not be specific or technical in nature, sufficient facts must be alleged to convince the district court that recoverable damages will bear a reasonable relation to the minimum jurisdictional floor."Gibson v. Jeffers, 478 F.2d 216, 221 (10th Cir. 1973). The test to determine the sufficiency of plaintiff's allegations is based on pleading in good faith. The jurisdictional amount can "only be in controversy if asserted by [plaintiff] in good faith, as jurisdiction cannot be conferred or established by colorable or feigned allegations solely for such purpose." Emland Builders, Inc., 359 F.2d at 929.
The court points out this huge discrepancy and emphasizes to plaintiff that his statement of the amount in controversy must be made in good faith. The only way Mr. Landry could meet the jurisdictional requirement when he alleges he has paid defendant $9,000.00, is if punitive damages are included in the amount in controversy. Burrell, 229 F.3d at **2. If this action survives screening based on plaintiff's unsupported claim for millions in damages, jurisdiction may later be challenged herein by either a defendant or a judge, and the case dismissed unless plaintiff can then prove the amount in controversy exceeds $75,000. Because such damages appear unlikely from plaintiff's initial allegations of fact, the court is concerned that Mr. Landry may be wasting time attempting to proceed in federal court upon his state court claims — time that is limited by the applicable statute of limitations. Plaintiff should seek advice on how to best proceed on his state law claims from prisoner legal services or an attorney. This court cannot provide legal advice on how to proceed in state court.
A copy of this unpublished opinion is attached in accord with rules of the Tenth Circuit Court of Appeals.
The reference to the amount "in controversy" in § 1332 contemplates that plaintiff's assertions as to the value of the matter in issue be in good faith. If the amount becomes an issue, the trial court must make a determination of the facts. Emland Builders, Inc. v. Shea, 359 F.2d 927, 29 (10th Cir. 1966). The initial determination of the facts as they relate to good faith is made as of the time the jurisdictional allegations are made. Id. at 929. Plaintiff's allegations control if made in good faith.
The court concludes that plaintiff has not alleged facts establishing that this federal court has jurisdiction over his claims. Plaintiff will be given time to file a Supplement to his Complaint setting forth facts regarding his citizenship and that of the defendant as well his good faith statement of the amount in controversy and facts supporting that amount.
IT IS THEREFORE ORDERED that plaintiff is granted thirty (30) days from the date of this Order in which to submit a certified copy of his inmate account showing all transactions in the six-month period immediately preceding the filing of this complaint or to pay the full filing fee of $350.00.
IT IS FURTHER ORDERED that within the same thirty-day period plaintiff is required to file a Supplement to Complaint with additional facts showing this court has jurisdiction over his claims.
IT IS SO ORDERED.
Westlaw
229 F.3d 1162 (Table)
229 F.3d 1162 (Table), 2000 WL 1113702 (10th Cir. (N.M.)), 2000 CJ C.A.R. 4700
Unpublished Disposition
(Cite as: 229 F.3d 1162, 2000 WL 1113702 (10th Cir. (N.M.)))
NOTICE: THIS IS AN UNPUBLISHED OPINION.
(The Court's decision is referenced in a "Table of Decisions Without Reported Opinions" appearing in the Federal Reporter. See CTA 10 Rule 32.1 before citing.)
United States Court of Appeals, Tenth Circuit. John BURRELL, Plaintiff-Appellant, v. Richard BURRELL; Elvira J. Burrell, Defendants-Appellees. No. 00-2031. Aug. 7, 2000.Before SEYMOUR, Chief Judge, EBEL and BRISCOE, Circuit Judges.
ORDER AND JUDGMENT [FN*]
FN* After examining appellant's brief and the appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a)(2) and 10th Cir.R. 34.1(G). The case is therefore ordered submitted without oral argument. This Order and Judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir.R. 36.3.
EBEL
**1 Petitioner-Appellant John Haws Burrell ("Burrell"). a prisoner appearing pro se, brought suit pursuant to 28 U.S.C. § 1332 (diversity jurisdiction) in federal district court against Richard and Elvira Burrell ("appellees") for alleged conversion, fraud, and deceit in violation of New Mexico law. The district court dismissed Burrell's complaint without prejudice after finding it lacked subject matter jurisdiction because Burrell failed to meet the amount in controversy requirement. Burrell appealed this determination. For the following reasons, we REVERSE and REMAND.
In his complaint. Burrell indicated his total actual damages amounted to $67,559.03, and he also requested treble punitive damages. ( See ROA, Doc. 1.) After conducting informal discovery, appellees moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), 12(b)(6), and 28 U.S.C. 1915(E)(2) on November 18, 1999. In the alternative, appellees requested summary judgment pursuant to Federal Rule of Civil Procedure 56. Appellees asserted that Burrell failed to meet the $75,000 amount in controversy requirement set forth in 28 U.S.C. § 1332. Appellees attached a memorandum of law and an exhibit to the motion in support of this contention. ( See id., Doc. 22.) The district court sua sponte deferred entering an Order of Dismissal for Burrell's failure to file a timely response to appellees' motions for thirty days. The court eventually dismissed Burrell's complaint for lack of subject matter jurisdiction on December 20, 1999, determining not only that Burrell's claim of actual damages was grossly exaggerated and without support, but that appellees provided unrefuted evidence suggesting there was no valid basis for an award of punitive damages. ( See id., Doc. 33.)
The same day the court granted appellee's motion to dismiss, Burrell filed a motion for leave to file an amended complaint. Burrell sought to lower his request for actual damages to $55,729.57 and "costs and disbursements" but maintained his request for punitive damages. In support of the motion, he also included a list of unauthorized checks written by appellees on Burrell's account. ( See id., Doc. 28.) Although the complaint had already been dismissed, the court considered the motion, but determined that neither Burrell's original complaint nor his motion demonstrated the amount in controversy reasonably exceeded $75,000. The court concluded subject matter jurisdiction was lacking and confirmed the case was properly dismissed without prejudice pursuant to 12(b)(1). ( See id., Doc, 34.) We review de novo the district court's treatment of a 12(b)(1) motion to dismiss. Redmon v. United States, 934 F.2d 1151, 1155 (10th Cir. 1991).
We must first determine whether Burrell's complaint supports his claim of actual and punitive damages. "When federal subject matter jurisdiction is challenged based on the amount in controversy requirement, the plaintiff must show that it does not appear to a legal certainty that [he] cannot recover at least $[75],000." Watson v. Blankinship, 20 F.3d 383, 386 (10th Cir. 1994). Burrell can satisfy this test by "alleg[ing] with sufficient particularity the facts creating jurisdiction, in view of the nature of the right asserted, and, if appropriately challenged, or if inquiry be made by the court of its own motion, [by] support[ing] the allegation." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).
**2 A plaintiffs allegations in the complaint alone can be sufficient to support a claim for damages. "Although allegations in the complaint need not be specific or technical in nature, sufficient facts must be alleged to convince the district court that recoverable damages will bear a reasonable relation to the minimum jurisdictional floor." Gibson v. Jeffers. 478 F.2d 216, 221 (10th Cir. 1973). Our test to determine the sufficiency of a party's allegations is based on pleading in good faith. The jurisdictional amount can "only be in controversy if asserted by [plaintiff] in good faith, as jurisdiction cannot be conferred or established by colorable or feigned allegations solely for such purpose. If the amount becomes an issue . . . the trial court must make a determination of the facts." Emland Builders. Inc. v. Shea, 359 F.2d 927, 929 (10th Cir. 1966). The only way Burrell can meet the jurisdictional requirement is if punitive damages are included in the amount in controversy.
It is permissible for Burrell's claim of punitive damages to be included in the jurisdictional amount. See Bell v. Preferred Life Assurance Scc'y, 320 U.S. 238, 240, 64 S.Ct. 5, 6. 88 L.Ed. 15 ("[w]here both actual and punitive damages are recoverable under a complaint each must be considered to the extent claimed in determining jurisdictional amount"); see also Anthony v. Security Pac. Fin. Servs., Inc., 75 F.3d 311, 315 (7th Cir. 1996) (noting that a court may take a closer look where punitive damages make up the bulk of the amount in controversy); Geoffrey E. Macpherson, Ltd. v. Brinecell, Inc., 98 F.3d 1241, 1245 (10th Cir. 1996). Thus, the district court did not err in considering Burrell's request to apply punitive damages to the amount in controversy requirement.
To obtain punitive damages under New Mexico law, a plaintiff must show a culpable mental state on the part of the wrongdoer. Conduct must rise to a willful, wanton, malicious, reckless, oppressive, or fraudulent level. [FN1] See Gillingham v. Reliable Chevrolet, 126 N.M. 30, 33, 966 P.2d 197, 200 (N.M.Ct.App. 1998); see also Clay v. Ferrellgas, Inc., 118 N.M. 266, 269, 881 P.2d 11, 14 (N.M. 1994). New Mexico courts have also determined that punitive damages are appropriate sanctions for fraud. Naranjo v. Paull, 111 N.M. 165, 803 P.2d 254, 261-62 (N.M.Ct.App. 1990).
FN1. A federal court sitting in diversity applies the substantive law of the forum state. Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994).
For a claim of fraud and deceit, New Mexico law requires "a false representation, knowingly or recklessly made with the intent to deceive, for the purpose of inducing the other party to act and on which the other party relies to his or her detriment." Estate of Gardner v. Gholson, 114 N.M. 793, 802, 845 P.2d 1247, 1256 (N.M. 1993); see also Hockett v. Winks, 82 N.M. 597, 598, 485 P.2d 353, 354 (N.M. 1971) (noting that the tort of deceit is also called "fraud and deceit"), overruled on other grounds by Duke City Lumber Co, Inc. v. Terrel, 88 N.M. 299, 540 P.2d 229 (N.M. 1975). Conversion is "the unlawful exercise of dominion and control over property belonging to another in defiance of the owner's rights, or acts constituting an unauthorized and injurious use of another's property, or a wrongful detention after demand has been made." Security Pac. Fin. Serv. v. Signfilled Corp., 956 P.2d 837, 842 (Ct.App.N.M. 1998). Burrell has sufficiently alleged the elements of both claims in his pleadings.
**3 As noted above, Burrell sought "treble punitive damages" in his complaint. For his claim of fraud, punitive damages are the appropriate sanction. See Golden Cone Concepts, Inc., v. Villa Linda Mall, Ltd., 113 N.M. 9, 15, 820 P.2d 1323, 1329 (N.M. 1991), The same is true for the claim of deceit, which is one of the elements of fraud. See id. For conversion, the measure of damages is the property value at the time of the conversion plus interest. See Security Pac. Fin. Serv., 956 P.2d at 84.
There is no statutory limit to the amount of punitive damages a plaintiff may request. Nor are there specific guidelines this court can cite to conclude Burrell's request for three times the amount of his actual damages was proper or improper. In Vickrey v. Dunivan, 59 N.M. 90, 94, 279 P.2d 853, 856 (N.M. 1955), the Supreme Court of New Mexico stated that "[p]unitive damages are largely in the discretion of the jury, and they are presumed to be assessed as a measure of punishment for culpable conduct." The Court of Appeals of New Mexico, also noting that the damage assessment is left to the discretion of the fact finder, provides a more specific test to measure punitive damages. That court cited the analysis set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), which requires a court "to look at 1) the degree of reprehensibility of the conduct; 2) the ratio of the punitive award to the actual harm inflicted on plaintiff; and 3) a comparison between the punitive award and other sanctions that could be imposed for comparable misconduct." Weidler v. Big J Enterprises, Inc., 124 N.M. 591, 603, 953 P.2d 1089, 1101 (N.M.Ct.App. 1997). The New Mexico court further stated that "[i]n economic injury cases, if the damages are significant and the injury not hard to detect, the ratio of punitive damages to the harm generally should not exceed ten to one." Id. at 604, 953 P.2d at 1102.
We find no need to conduct a mini-trial to approximate the value of a punitive damage award. Burrell has not only pled the elements of fraud and deceit, but he has alleged that appellees' conduct was fraudulent to substantiate his claim of punitive damages. In his motion for leave to file an amended complaint, he requested $55,729.57 in actual damages. A punitive award of 40% of the actual award would satisfy the jurisdictional minimum. This is far less than what Burrell requested in his complaint, and below what is potentially recoverable under the law. Thus, without making a determination that Burrell is entitled either to a specific punitive damage award or to any damages at all, we conclude that he has satisfied the jurisdictional requirement of $75,000.
The district court purported to dismiss Burrell's claim under 12(b)(1) for lack of subject matter jurisdiction. The court considered documents appellees attached to their motion to dismiss to conclude that Burrell had exaggerated his claims and that appellees' conduct did not raise to a level to warrant punitive damages. ( See ROA, Doc. 23.) Although not all 12(b)(1) motions are converted into Rule 56 motions just because there is a reference to outside material, we have held that such a 12(b)(1) motion is converted into a Rule 56 motion when the jurisdictional question is "intertwined with the merits of the case." Wheeler v. Hurdman, 825 F.2d 257, 259 (10th Cir. 1987). That is the situation here. We therefore conclude that the district court in this case, instead of dismissing the action on a 12(b)(1) motion, in fact granted summary judgment for appellees pursuant to Rule 56. Under Rule 56, however, the court must give the opposing party notice that the motion to dismiss has been converted to summary judgment, and permit that party an opportunity to present opposing affidavits. This is because a grant of summary judgment resolves the issue on the merits, and a case is dismissed with prejudice. See Wheeler. 825 F.2d at 259 n. 5.
**4 We see no evidence here that the district court gave notice to Burrell that appellees' 12(b)(1) motion to dismiss was converted to a motion for summary judgment. Because there appears to be a genuine dispute of material fact as to the amount in controversy and because it does not appear that proper notification was given to Burrell under Rule 56, we conclude that the motion was granted improperly. Accordingly, we REVERSE the judgment by the district court on the motion to dismiss and REMAND the matter for further proceedings.
229 F.3d 1162 (Table), 2000 WL 1113702 (10th Cir. (N.M.)), 2000 CJ C.A.R. 4700 Unpublished Disposition