E-Alert Case Updates
Amount in Controversy Sufficient to Confer Diversity Jurisdiction by Preponderance of Evidence Standard
Williams v. Bank of New York Mellon
On June 6, 2013, Judge Blake of the United States District Court for the District of Maryland denied Plaintiff’s motion to remand for lack of subject matter jurisdiction. Originally filed in the Circuit Court for Baltimore City, defendant removed on grounds of diversity jurisdiction under 28 U.S.C. §1332. The parties agreed that complete diversity existed, but Plaintiff argued that the amount in controversy did not meet the jurisdictional threshold, since his complaint sought “no more than $65,000.” Defendant proved by a preponderance of the evidence that the amount in controversy would exceed the jurisdictional minimum, so Plaintiff’s motion to remand was denied.
This suit arises from an alleged breach of a settlement agreement by Defendant, relating to Plaintiff’s residential mortgage. In his complaint, Plaintiff asserted claims for breach of contract and violation of the Maryland Consumer Protection Act, the Maryland Consumer Debt Protection Act, and the Maryland Mortgage Fraud Protection Act, seeking to recover actual damages and attorney’s fees, “in the sum of no more than $65,000.” The Maryland Consumer Protection Act and the Maryland Mortgage Fraud Protection Act both allow for an award of attorney’s fees.
Defendant removed the case to federal court on the grounds of diversity jurisdiction. Though the parties agreed that the requirement of complete diversity was satisfied, they disagreed that the amount in controversy satisfied the jurisdictional threshold of $75,000. Relying on Momin v. Maggiemoo’s Int’l, L.L.C., 205 F. Supp. 2d 506, 509-10 (D. Md. 2002), the court explained that two standards are used to determine whether the amount in controversy is sufficient to confer jurisdiction, depending on the plaintiff’s complaint. Where the plaintiff claims a specific amount in damages, removal is proper only if the defendant can prove to a legal certainty that the plaintiff would actually recover more if he prevailed. Where the plaintiff does not claim a specific amount in damages, the defendant need only prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional minimum.
In this case, because the plaintiff’s complaint sought “no more than $65,000” plus attorney’s fees, the court considered this a hybrid situation and concluded that the preponderance of evidence standard should determine whether the defendant met his burden of proving that damages would be $10,000 more than requested by the plaintiff. At the time of removal, Plaintiff had already incurred $5,250 in legal fees. An affidavit of a principal at counsel for defendants firm stated there was no possibility the litigation could be resolved for less than an additional $4,750 in legal fees, which would have brought the amount in controversy to the $75,000 jurisdictional requirement. Because the statutes under which Plaintiff sued allow for an award of attorney’s fees, it was proper for the court to consider a reasonable estimate of those costs in determining whether the amount in controversy exceeded the jurisdictional threshold.
Defendants successfully demonstrated that the amount in controversy would reach the jurisdictional threshold. Because Plaintiff sued under statutes that explicitly allow for an award of attorney’s fees, the court was correct in assessing the likely total amount of those fees for the purpose of determining the amount in controversy. Defendant’s affidavit stating that the litigation could not be resolved without Plaintiff’s attorney’s fees reaching the jurisdictional threshold was sufficient to overcome Defendants burden to establish the amount in controversy by a preponderance of the evidence, so Plaintiff’s motion to remand was denied.
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