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SCHWARTZ v. VICTORY CONTAINER CORP.

January 13, 1969

Louis L. SCHWARTZ, Plaintiff,
v.
VICTORY CONTAINER CORP. and Edwin F. RADIN, Defendants


Levet, District Judge.


The opinion of the court was delivered by: LEVET

LEVET, District Judge.

In this diversity case and on my own motion, pursuant to the duty imposed upon federal courts to scrutinize jurisdictional requirements, I have raised the question of whether or not, as presented in the complaint itself, this "matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, * * *" as required by Title 28 U.S.C.A. § 1332(a).

 In attempting to resolve this question I held a hearing on December 13, 1968, at which counsel for the parties appeared, and I asked counsel for the plaintiff to state the specific claims of the matter in controversy. I subsequently received a memorandum from both plaintiff and defendants. Upon examination of the defendants' memorandum, it appears that they also move to dismiss the complaint for lack of jurisdiction.

 The action was started on April 11, 1966, when a complaint, based on diversity of citizenship, was filed in this court.

 THE COMPLAINT

 The second cause of action, which appears to be the basic claim of this suit, is a claim for breach of contract in which the total amount of $2,050 is allegedly involved.

 The first cause of action, which is based upon the same contract and breach thereof, seeks solely exemplary damages in the sum of $100,000.

 The third cause of action, likewise based upon the same contract, alleges anticipatory breach and seeks damages of $106,029 solely on account of such anticipatory breach rather than on any sum due at the time of the commencement of the action.

 For the reasons hereinafter stated, this action must be dismissed since the matter in controversy does not exceed the sum or value of $10,000 exclusive of interest and costs (Title 28 U.S.C.A. § 1332).

 I.

 THE FIRST CAUSE OF ACTION FOR EXEMPLARY DAMAGES IN A CONTRACT CASE

 The jurisdictional amount may not be founded upon a claim for exemplary damages which may not be legally awarded. Young v. Main, 72 F.2d 640 (8th Cir. 1934); Schroeder v. Nationwide Mutual Insurance Company, 242 F. Supp. 787 (S.D.N.Y.1965). The contract alleged and affixed to the complaint appears to have been signed by the plaintiff, Schwartz, then a resident of the City and State of New York, and the defendant, Victory Container Corp., likewise a resident of the City and State of New York. There is no indication that the contract was entered into elsewhere.

 In a diversity case the federal court must follow state law in ascertaining jurisdictional amount based on good faith claim for exemplary damages. Davenport v. Mutual Benefit Health and Accident Ass'n, 325 F.2d 785, 787 (9th Cir. 1963). See also Gray v. Occidental Life Insurance Company of California, 387 F.2d 935, 936 (3rd Cir. 1968), cert. denied 391 U.S. 926, 88 S. Ct. 1825, 20 L. Ed. 2d 665; Greene v. Keithley, 86 F.2d 238 (8th Cir. 1936).

 As a general rule, in the absence of statutory authority, exemplary damages are not recoverable in actions for breach of contract, irrespective of motive on the part of defendant which prompted the breach. 25 C.J.S. Damages § 120, pp. 1126, 1127. See Young v. Main, supra; Schroeder v. Nationwide ...


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