Opinion
02-CV-0525E(Sc)
September 17, 2002
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
Yorkshire Pioneer Central School District ("Yorkshire") filed suit against defendant Travelers June 20, 2002 in the New York Supreme Court, Cattaraugus County, for the alleged breach of an insurance contract that purportedly required Travelers to provide Yorkshire with defense coverage against certain claims. Travelers removed the action to this Court July 22, 2002. Travelers filed its Answer July 26, 2002. Yorkshire moved to remand August 15, 2002. Travelers filed papers in opposition to Yorkshire's motion to remand September 6, 2002.
Travelers subsequently filed an Answer To First Amended Complaint — although there is no record of an Amended Complaint having been filed.
In support of its motion, Yorkshire contends, inter alia, that Travelers' removal notice is facially defective because it asserted only that there is more than $50,000 in controversy — as opposed to the amount in controversy of $75,000 that is required under 28 U.S.C. § 1332. Travelers responds with two arguments. First, Travelers contends that its use of a superceded jurisdictional amount is "harmless error" within the meaning of Rule 61 of the Federal Rules of Civil Procedure ("FRCvP"). Travelers cites no case law in support of this argument. Indeed, controlling case law appears to suggest the contrary — albeit outside the context of FRCvP 61.
See Advani Enters., Inc. v. Underwriters at Lloyds, 140 F.3d 157, 160 n. 3 (2d Cir. 1998) ("In 1997, Congress increased the amount-in-controversy requirement to $75,000. Federal Courts Improvement Act of 1996, Pub.L. No. 104-317, Title II, § 205(a), 110 Stat. 3850.").
In any event, FRCvP 61 does not appear applicable here and Travelers fails to provide any analysis applying FRCvP 61 to the facts of this case.
In Lupo v. Human Affairs Intern., Inc., 28 F.3d 269 (2d Cir. 1994), the Second Circuit Court of Appeals refused to remand the case to the district court in order to conduct a hearing to determine the amount in controversy because
"allowing a hearing to determine the amount in controversy when the removal petition fails even to allege the proper amount in controversy contradicts [the Supreme Court's] admonition that `[i]f [the defendant] fails to make the necessary allegations he has no standing.'" Lupo, at 274 (emphasis added) (quoting McNutt v. General Motors Corp., 298 U.S. 178, 189 (1935)).
The Second Circuit Court of Appeals' subsequent decision in Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 298 (2d Cir. 2000), is distinguishable inasmuch as the defendant in Mehlenbacher "asserted diversity jurisdiction from the start," whereas Travelers has never technically asserted diversity jurisdiction in that it never alleged that the amount in controversy exceeds $75,000.
Indeed, inasmuch as Travelers failed to allege that the amount in controversy exceeded $75,000 as required under 28 U.S.C. § 1332, it has failed to allege the facts essential to show jurisdiction. McNutt, at 189; Lupo, at 274. Moreover, as the Second Circuit Court of Appeals noted in Lupo,
"[t]he right to remove a state court action to federal court on diversity grounds is statutory, and must therefore be invoked in strict conformity with statutory requirements. In light of the congressional intent to restrict federal court jurisdiction, as well as the importance of preserving the independence of state governments, federal courts construe the removal statute narrowly, resolving any doubts against removability." Lupo, at 274 (citations omitted).
Accordingly, Yorkshire's motion to remand will be granted.
Travelers further contends that this Court may grant it leave to amend its Notice of Removal under 28 U.S.C. § 1441. Under 28 U.S.C. § 1446(b), however, Travelers had thirty days from the date this action became removable to amend its Notice of Removal. Travelers did not amend its Notice of Removal by August 22, 2002 — nor has it done so. Accordingly, Travelers "may not amend its notice of removal after this thirty-day period to remedy a substantive defect in the petition." Briarpatch Ltd., L.P. v. Pate, 81 F. Supp.2d 509, 517 (S.D.N.Y. 2000) (citing 28 U.S.C. § 1446(b) and holding that "[f]ailure to assert federal question jurisdiction as a basis for removal is a substantive defect"). Likewise, the failure to adequately allege diversity jurisdiction as a basis for removal is a substantive defect. This Court declines Traveler's invitation to treat its failure to allege the requisite jurisdictional amount as a "harmless error" or a "technical defect" that may be overlooked.
Accordingly, it is hereby ORDERED that plaintiff's motion to remand is granted and that this action is remanded to the New York State Supreme Court, County of Cattaraugus.