Opinion
1:01CV00864
December 13, 2002
MEMORANDUM OPINION
This matter, filed initially in state court, involves an alleged breach of contract for the sale of a private residence in Winston-Salem, North Carolina by Plaintiffs Thomas J. Doughton and Ashley Doughton ("Plaintiff Sellers") against Defendants Robert Ray and Martha Sterling Ray ("Defendant Buyers"), acting pro se, for specific performance of the contract and money damages. After removal pursuant to 28 U.S.C. § 1332, 1441(a), Plaintiff Sellers timely moved to remand the case because the amount in controversy allegedly did not meet the federal jurisdictional minimum. Because Defendant Buyers have failed to show by a preponderance of the evidence that the amount in controversy exceeds $75,000, this court will remand the case to the General Court of Justice, Superior Court Division, Forsyth County, North Carolina.
I. BACKGROUND
Plaintiff Sellers and Defendant Buyers entered into a written contract to purchase Plaintiffs' home on or about July 24, 2001. Before the closing date of September 7, 2001, Defendant Buyers decided not to purchase Plaintiffs' home. On August 22, 2001, Plaintiff Sellers filed their complaint in the General Court of Justice, Superior Court Division, Forsyth County, North Carolina seeking money damages "in excess of $10,000.00" and specific performance of the contract. Defendant Buyers filed a notice of removal on September 12, 2001, stating in a conclusory manner that the amount in controversy exceeded $75,000, and that the parties satisfied the diversity of citizenship requirements pursuant to section 1332. On October 1, 2002, Plaintiff Sellers closed on the sale of their home with a subsequent buyer for $1,500 less than the contract price at issue in this case. (Pl. Thomas J. Doughton Aff. ¶ 2.) Plaintiff Thomas J. Doughton tendered a post-removal affidavit to the court stipulating that the damages sought in the case were now fixed at "less than $15,000.00." (Id. ¶¶ 2, 3.) Four days later, on October 5, 2002, Plaintiff Sellers filed a motion to remand the case alleging that the claim did not exceed $75,000, and therefore, the court did not have subject matter jurisdiction over the matter pursuant to section 1332.
The parties do not dispute the diverse citizenship of the parties. At the time this action was instituted, Plaintiff Sellers were citizens of North Carolina and Defendant Buyers were citizens of Nebraska. Defendant Buyers' current residence in Texas does not alter the diverse citizenship of the parties. The only issue in this case is whether the amount in controversy has been satisfied for jurisdictional purposes.
Prior to Plaintiff Sellers' closing on the home with a subsequent buyer and clarifying the amount of money damages, Defendant Buyers filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)").
II. ANALYSIS
The party seeking to remove the case to federal court has the burden of establishing federal jurisdiction. McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189, 56 S.Ct. 780, 785 (1936); Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). Normally, the defendant is bound by the amount claimed by the plaintiff unless "it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590 (1938). The court is not divested of subject matter jurisdiction if events arising subsequent to the institution of the suit reduce the amount in controversy to below the jurisdictional minimum. Id., 303 U.S. at 289, 58 S.Ct. at 590-91. But see id., 303 U.S. at 291, 58 S.Ct. at 591 ("A different situation is presented in the case of [removal]. . . . There is a strong presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on a federal court . . . .").
When the amount in controversy for jurisdictional purposes is not apparent from the face of the complaint, the "legal certainty" standard ofSt. Paul Mercury is not applied necessarily. Although the Fourth Circuit has not ruled on which specific standard to apply, the Middle District of North Carolina has held that a defendant must show by a preponderance of the evidence that the amount in controversy exceeds the federal jurisdictional minimum. Gwyn v. Wal-Mart Stores, Inc., 955 F. Supp. 44, 46 (M.D.N.C. 1996) (noting that $50,000 was the minimum federal jurisdictional amount in 1996). This court is in line with a trend of courts following the preponderance of the evidence standard in this type of situation.
Most courts require that the defendant show by a preponderance of the evidence that the amount in controversy exceeds the federal jurisdictional minimum when it is not apparent from the face of the complaint. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996); Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1357 (11th Cir. 1996), abrogated on other grounds by, Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000); De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993); Gould v. Artisoft, Inc. 1 F.3d 544, 547 (7th Cir. 1993); Gafford v. General Elec. Co., 997 F.2d 150, 158 (6th Cir. 1993);Royal Ins. Co. v. Jones, 76 F. Supp.2d 202, 204 (D. Conn. 1999); Peterson v. BASF Corp., 12 F. Supp.2d 964, 968 (D. Minn. 1998); Amundson Associates Art Studio, Ltd. v. National Council on Compensation Ins. Inc., 977 F. Supp. 1116, 1122 (D. Kan. 1997).
Next, this court must determine what evidence to consider in deciding whether the defendant has met the preponderance of the evidence standard for establishing the federal jurisdictional amount. Ordinarily, the court looks only to the plaintiff's complaint at the time the case was removed. St. Paul Mercury, 303 U.S. at 291, 58 S.Ct. at 591; Hicks v. Universal Hous, Inc., 792 F. Supp. 482, 484 (S.D. W. Va. 1992). After removal, a court cannot consider a plaintiff's stipulation to an amount in controversy below the federal jurisdictional minimum if the amount of money damages was clear from the face of the complaint and alleged in good faith. De Aguilar v. Boeing Co., 11 F.3d 55, 57 (5th Cir. 1993);Gwyn, 955 F. Supp. at 46. When faced with an unspecified claim of damages, several courts, including this one, have held that a post-removal stipulation by the plaintiff that the claim does not exceed the minimum federal jurisdictional amount is appropriate for the court's consideration. Asociacion Nacional de Pescadores a Pequena Escala O Artesanales de Colombia ("ANPAC") v. Dow Quimica de Colombia S.A., 988 F.2d 559, 565 (5th Cir. 1993); Gwyn, 955 F. Supp. at 46; Griffin v. Holmes, 843 F. Supp. 81, 88 (E.D.N.C. 1993). The rationale for considering evidence besides the complaint of the amount in controversy is that jurisdiction is not determinate until the amount is made clear.Gwyn, 955 F. Supp. at 46. When the complaint does not specify the amount of money damages sought, the court must look to other evidence to determine if the defendant can satisfy the preponderance of the evidence standard for federal jurisdiction. See id.
Plaintiffs' complaint demands specific performance of the contract and alleges that damages are "in excess of $10,000.00." After removal, Plaintiff Thomas J. Doughton stipulated in an affidavit that "the damages that may be recovered in this action have been fixed" (Pl.'s Aff. ¶ 2) to a sum of "less than $15,000.00" (id. ¶ 3) because of the subsequent sale of their residence to another buyer for $1500 less than the contract price with Defendant Buyers. (Id. ¶ 2.) Because the court cannot determine the amount in controversy from the face of the complaint, the court will consider Plaintiffs' stipulation that the value of the claim does not exceed $75,000, and is, in fact, "less than $15,000.00." See Angus v. Shiley Inc., 989 F.2d 142, 145 n. 3 (3d Cir. 1993) ("where a complaint is ambiguous as to the damages asserted and the controversy seems small, it is conceivable that a court justifiably might consider a subsequent stipulation as clarifying rather than amending the original pleading."); Gwyn, 955 F. Supp. at 47. Defendant Buyers have neither rebutted Plaintiff Thomas J. Doughton's affidavit nor produced any evidence to show that Plaintiff Sellers' claim exceeds $75,000. ANPAC, 988 F.2d at 565-66 (stating that the defendants' bare allegations in the notice of removal that the damages exceeded the minimum jurisdictional amount was insufficient evidence to counter the plaintiff's affidavit to the contrary). Because Defendant Buyers have failed to prove by a preponderance of the evidence that the amount in controversy exceeds $75,000, this court lacks subject matter jurisdiction over this matter pursuant to section 1332. Therefore, the court will remand the case to the General Court of Justice, Superior Court Division, Forsyth County, North Carolina. Because this matter is one for the state court to decide, this court will dismiss Defendants' motion to dismiss pursuant to Rule 12(b)(6).
There is no evidence that Plaintiffs' stipulation was made in bad faith by attempting to circumvent federal jurisdiction of this matter.
III. CONCLUSION
For the reasons set forth above, the court will grant Plaintiffs' Motion to Remand and will dismiss Defendants' Motion to Dismiss.
A judgment in accordance with this memorandum opinion shall be filed contemporaneously herewith.