Opinion
Civil Action No. 02-CV-1715
August 12, 2002
MEMORANDUM AND ORDER
Presently before the Court is Plaintiffs Motion to remand the above action to the Bucks County Court of Common Pleas (Doc. 2). For the reasons set forth below, upon consideration of Plaintiffs motion and Defendant's response (Doc. 4), Plaintiffs Motion to remand is granted.
BACKGROUND
On or about February 26, 2002, Plaintiff Environmental Tectonics Corporation ("ETC") commenced a civil action against Defendant Summer Lake International Enterprises Corporation, ("Summer Lake") in the Court of Common Pleas of the Seventh Judicial District of the Commonwealth of Pennsylvania (Bucks County). The complaint averred that Summer Lake issued a $400,000 purchase order contract to ETC for design, development, testing, and delivery of certain equipment. ETC alleges it performed its obligation under the purchase order contract, but Summer Lake refused to pay the $67,415 balance due under the purchase order contract. By reason of the alleged breach of the purchase order contract, ETC seeks judgment in an amount not less than $67,415, together with pre-judgment interest, Plaintiffs costs, and attorneys' fees, in the Defendant's answer, Defendant asserts a counterclaim against Plaintiff for breach of contract in the amount of $2,600. On March 28, 2002, Summer Lake filed a notice of removal to this Court pursuant to 28 U.S.C § 1332(a)(1) and § 1441(a) alleging complete diversity of citizenship and jurisdictional amount in excess of $75,000.
Plaintiff is a corporation organized and existing under the laws of Pennsylvania, with its principal place of business located in Southampton, Pennsylvania. Defendant is a corporation organized under the laws of California with a principal place of business in California.
On April 18, 2002, ETC filed a motion to remand the case to the Bucks County Court of Common Pleas. ETC argues that the amount in controversy is $67,415, which is below the requisite amount in controversy for removal, and that the notice of removal was untimely. ETC also seeks an order awarding costs including reasonable attorneys' fees pursuant to 28 U.S.C. § 1447(c) for having to respond to Defendant's notice of removal, which it deemed frivolous. On May 3, 2002, Defendant filed a response to ETC's motion to remand arguing that the amount in controversy is the full value of the contract ($400,000), in view of Plaintiff's failure to deliver equipment conforming to the contract standard. Defendant also argues that Defendant's notice inadvertently omitted a federal question basis of jurisdiction because it plans to join to the proceedings, Weihai Aiwei Medicine Company, Ltd. ("Weihai") a Chinese corporation with commercial contacts to the U.S., who through Defendant attempted to purchase the equipment in question. Defendant contends that Weihai refused to pay for the equipment.
Plaintiff argues that Defendant's notice of removal was untimely pursuant to 28 U.S.C. § 1446 (b). Defendant counters that the notice was untimely by two days because of the absence of Defendant's California counsel. The Court finds that Defendant's notice was untimely, but the plaintiff was not prejudiced.
The Court will deny Plaintiffs request for attorneys' fees, and the Court finds that Defendant's notice of removal was not frivolous.
LEGAL STANDARD
Generally, a defendant may remove a civil action filed in state court so long as the federal court would have had original jurisdiction over the matter had it been filed in federal court. See 28 U.S.C.A. § 1441. Upon a motion to remand, the defendant has the burden of establishing the propriety of the removal. Viola v. Provident Life and Accident Ins., No. Civ.A.00-1656, 2000 WL 1022894, at *1 (E.D. Pa. July 17, 2000) (quoting Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990)). When considering remand and removal, the removal statute is construed strictly as to resolve all doubts in favor of remand. Id. (quoting Pedrick v. Allstate Ins. Co., No. Civ.A.00-948, 2000 WL 565211, at *1 (E.D. Pa. May 2, 2000)). Furthermore, in deciding a motion to remand, the court is not limited to the plaintiffs complaint, but may instead look to the entire record. Id. (quoting Speight v. Personal Pool of America, Inc., No. Civ.A.93-2055, 1993 WL 276859, *2(E.D. Pa. July 20, 1993)).
DISCUSSION
A. Amount in Controversy
District Courts have original jurisdiction where the amount in controversy exceeds the sum of $75,000 and the citizenship of the parties is diverse. See 28 U.S.C.A. § 1332(a). At issue in the present matter is whether the amount in controversy satisfies the $75,000 jurisdictional amount to support removal to this Court. When determining whether a claim exceeds $75,000, exclusive of interests and costs, "the court must assess the value of the fights being litigated," Angus v. Shiley, Inc., 989 F.2d 142, 146 (3d Cir. 1993), or "the value of the object of the litigation." Hunt v. Wash. State Apple Advers. Comm'n, 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). The defendant has the burden of persuasion to establish the requisite amount in controversy by a preponderance of the evidence. Earley v. Innovex (North America) Inc., No. Civ.A.02-2130, 2002 WL 1286639, at *2 (E.D. Pa. June 10, 2002) (quoting Mercante v. Preston Trucking Co., No. 96-5904, 1197 WL 230826, at *2 (E.D. Pa. May 1, 1997)). To determine if the defendant's burden has been met, the court must rely on the plaintiffs complaint at the time the removal was filed. Id. (quoting Werwinski v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002)). Furthermore, the action should not be remanded, unless it's apparent to a legal certainty that the plaintiffs claim cannot meet the amount in controversy requirement. Id. (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938)).
When considering the citizenship of a corporation, a corporation shall be deemed a citizen of any state by which it is incorporated and of the State where it has its principal place of business. 28 U.S.C.A. § 1332(c). The parties' diversity of citizenship is not disputed in this matter. Therefore, the Court finds that diversity of citizenship exists in this case.
In the present case, Defendant argues that the jurisdictional amount is satisfied because the amount in controversy should equal the full value of the contract in question, $400,000, in view of Plaintiffs alleged failure to deliver equipment conforming to the contract standard. Plaintiff counters that its claim seeks judgment in the amount not less than $67,415, exclusive of interest and costs, an amount below the $75,000 jurisdictional minimum. ETC's complaint seeks judgment for the unpaid portion of the contract, an amount not less than $67,415, together with pre-judgment interest plus attorneys' fees. The Court must consider the value and object of the claim when determining the amount in controversy. See Angus, 989 F.2d at 146; See also Hunt, 432 U.S. at 347. In this case, the object of Plaintiffs claim is not the full contract value of $400,000, but instead, only the unpaid balance.
The Court is not persuaded by Defendant's argument that Plaintiffs failure to perform the contract entitles Defendant to consideration of the full contract value. The Court has considered the Plaintiffs alleged failure to perform the contract for which Defendant seeks a judgment in the amount of $2,600. Defendant has failed to recognize that when a court is assessing the jurisdictional amount, the amount in controversy is controlled by Plaintiffs complaint. Furthermore, even if the Court considered the defendant's demand of $2,600, the amount in controversy is still below $75,000. Plaintiffs complaint clearly sets forth the amount sought, $67,415. The Court finds that it's apparent to a legal certainty that Plaintiffs claim does not meet the amount in controversy. The Court concludes Summer Lake has not met its burden of proving the jurisdictional amount has been satisfied in this case. Therefore, the Court will remand the case to the Bucks County Court of Common Pleas.
The Court's analysis excludes the calculation of interest and costs when considering the amount in controversy.
B. Federal Question Jurisdiction
Defendant argues that even if federal diversity jurisdiction is not satisfied the case should be removed to this court pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605(a)2. Defendant also argues that if Plaintiff wins a judgment, that a foreign corporation, Weihai, will be sued for indemnification. Defendant is asserting the Foreign Sovereign Immunities Act as a defense to Plaintiffs complaint.
Federal question jurisdiction is appropriate when "it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims." Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). A defense that raises a federal question is inadequate to confer federal jurisdiction. Louisville Nashville R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Plaintiff did not plead a federal question in its complaint.
Next, Defendant argues that remand would unfairly prejudice its ability to seek indemnification of Weihai. Defendant's argument misinterprets the Foreign Sovereign Immunities Act. The Defendant referenced a portion of the Foreign Sovereign Immunities Act which states, in part, "A foreign state shall not be immune from the jurisdiction of the courts of the United States or of the States in any case . . ." 28 U.S.C. § 1605(a)2. The Foreign Sovereign Immunities Act does not require that foreign corporations appear in federal court, in fact, the Act simply states that these entities are not immune from suit in any courts of the United States or States. The inclusion of "the States" simply means foreign entities are not immune from Federal or State courts in the United States. The Court concludes that Defendant would not be prejudiced if this case were remanded to State Court. Therefore, the Court finds that the Foreign Sovereign Immunities Act does not confer federal jurisdiction on this Court.
CONCLUSION
For the reasons stated above, the Plaintiff's motion to remand is granted. The Defendant has not demonstrated that the jurisdictional amount in the present claim satisfies the $75,000 threshold. Therefore, the Court remands this action to the Bucks County Court of Common Pleas. An appropriate order follows.
ORDER
AND NOW, this 12th day of August 2002, upon consideration of Plaintiffs Motion to Remand (Docs. 2) and Defendants' Response thereto (Doc. 4), IT IS HEREBY ORDERED that Plaintiffs Motion is GRANTED.
IT IS FURTHER ORDERED that the above action shall be remanded to the Court of Common Pleas for the Seventh Judicial District of the Commonwealth of Pennsylvania, Bucks County.