United States District Court, S.D. New York
SANTRISE N. WEBB, et uno, Plaintiffs,
LE'GREG O. HARRISON, et al., Defendants.
OPINION AND ORDER
RICHARD J. SULLIVAN, District Judge.
Plaintiffs Santrise N. Webb ("Webb") and The Board Administration, Inc. (collectively, "Plaintiffs") originally brought this action in New York State Supreme Court against Defendants Le'Greg O. Harrison ("Harrison"), Clayton Mitchell ("Mitchell"), Muhammad Hill ("Hill"), and Walker Johnson ("Johnson") (collectively, "Defendants"), alleging, in essence, that Defendants bilked Plaintiffs out of investments made in The Board Administration, LLC - a management company and record label. Defendants removed the action to this Court on the basis of diversity jurisdiction. Now before the Court is Plaintiffs' motion to remand for lack of subject matter jurisdiction. For the reasons set forth below, Plaintiffs' motion is denied.
Plaintiffs commenced this action by filing a summons with notice in New York State Supreme Court, New York County, on May 30, 2014. (Mem. at 2.) Thereafter, Plaintiffs filed an Amended Complaint on June 23, 2014, asserting myriad causes of action arising out of the disputed ownership and control of The Board Administration, LLC. (Mem. Ex. E.) On July 16, 2014, Defendants removed this action to this Court pursuant to 28 U.S.C. § 1446 on the basis of diversity jurisdiction. (Not. Rem.) Thereafter, on August 15, 2014,  Plaintiffs filed the instant motion to remand (Doc. Nos. 9, 13, 14), which was fully briefed on August 29, 2014 (Doc. Nos. 11, 12).
II. LEGAL STANDARD
A defendant in an action pending in state court may remove that action to federal court only if the pending action could have originally been brought in federal court on the basis of either federal question jurisdiction or diversity jurisdiction. See 28 U.S.C. § 1441(a). "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 v. Human Affairs Int'l, Inc., 28 F.3d 269, 274 (2d Cir. 1994) (citation omitted). If the removing party is invoking diversity jurisdiction, it is that party's burden to demonstrate, by a preponderance of the evidence, that complete diversity among the parties existed not only at the time of removal, but also when the state complaint was filed. See Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56-57 (2d Cir. 2006) ("We generally evaluate jurisdictional facts... on the basis of the pleadings, viewed at the time when defendant files the notice of removal."); United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994) ("[W]here [the] basis of removal is diversity[, ] then diversity of citizenship must exist at [the] time [the] action was filed in state court as well as at [the] time of removal." (citation omitted)); id. at 305 ("Where, as here, jurisdictional facts are challenged, the party asserting jurisdiction must support those facts with competent proof and justify [its] allegations by a preponderance of [the] evidence." (citation and internal quotation marks omitted)). A case must be remanded to state court "[i]f the record... does not reflect diversity." Vasura v. Acands, 84 F.Supp.2d 531, 535-36 (S.D.N.Y. 2000); see also 28 U.S.C. § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.").
In seeking remand to state court, Plaintiffs argue that: (1) the requirements of diversity jurisdiction have not been met, thereby depriving the Court of subject matter jurisdiction; (2) Defendants' Notice was untimely; and (3) Defendants waived their right to remove by litigating the state court action. ( See Mem. at 5-13.) The Court will address each contention in turn.
A. Diversity Jurisdiction
The parties agree that the only potential source of federal subject matter jurisdiction over this action is diversity jurisdiction pursuant to 28 U.S.C. § 1332. "In relevant part, that statute establishes that diversity jurisdiction exists over civil actions... between citizens of different States...." Herrick Co. v. SCS Commc'ns, Inc., 251 F.3d 315, 322 (2d Cir. 2001) (citing 28 U.S.C. § 1332(a)(1)-(2) (internal quotation marks omitted)); id. ("[D]iversity jurisdiction is available only when all adverse parties to a litigation are completely diverse in their citizenships."). Plaintiffs contend, however, that Defendants failed to adequately establish the citizenship of the parties since there was "no proof of citizenship provided for any Defendant, such as an address or any other information." (Mem. at 8.) Where, as here, removal is based on diversity jurisdiction, "[t]he district court's inquiry cannot be limited to the complaint, as it often can be when removal is based on federal question jurisdiction, because certain matters critical for determining diversity jurisdiction, such as the citizenship of the parties or the amount in controversy, may not appear in the state court complaint." 14B Wright & Miller, Federal Practice and Procedure § 3723 (4th ed. 2008); see also United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994) ("[The] usual rule is that removability is determined from the record as of the time the petition for removal is filed but where [the] basis of removal is diversity then diversity of citizenship must exist at [the] time [the] action was filed in state court as well as at [the] time of removal." (citing 14B Wright & Miller § 3723). Additionally, "the party asserting federal jurisdiction bears the burden of proving that the case is properly in federal court." MBIA Ins. Corp. v. Royal Bank of Canada, 706 F.Supp.2d 380, 386 (S.D.N.Y. 2009) (citation omitted). Thus, the Court "must determine from the record before [it] whether the defendants can establish a basis for... diversity... jurisdiction." United Food & Commercial Workers Union, Local 919, AFL-C10, 30 F.3d at 301.
Here, the Notice asserts that Webb is a citizen of either Michigan or Illinois and The Board Administration. Inc., is a citizen of New York. (Not. Rem. at 1-2.) With respect to Defendants, the Notice states that Harrison and Johnson are citizens of Maryland, and Mitchell and Hill are citizens of the District of Columbia. (Id. at 2.) Therefore, taking those assertions as true - and Plaintiffs offer no evidence to the contrary - it is clear that there is complete diversity of citizenship between Plaintiffs and Defendants. See Herrick Co., 251 F.3d at 322.
Plaintiffs next contend that the amount-in-controversy requirement has not been satisfied because they have not sought "any specific amount [of damages]... and contrary to the Defendants' assertion, there is no specific amount demanded in the Complaint." (Mem. at 7.) Where removal is premised on the existence of diversity jurisdiction, "the sum demanded in good faith in the initial pleading shall be deemed to be the amount in controversy...." 28 U.S.C. § 1446(c)(2). However, where the initial pleading either seeks nonmonetary relief or does not seek a specific sum of damages, removal of the action is nonetheless proper where "the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds [$75, 000]." and the other requirements of diversity jurisdiction under § 1332 are met. Id. § 1446(c)(2)(B); see also 28 U.S.C. § 1332(a). Under such a scenario, Defendants bear "the burden of proving that it appears to a reasonable probability that the claim is in excess of the statutory jurisdictional amount." Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 296 (2d Cir. 2000) (internal citation omitted). "To determine whether that burden has been met, [the Court must] look first to the plaintiffs' complaint and then to [the] petition for removal." Id. When damages are not explicitly requested, "the value of the suit's intended benefit or the value of the right being protected or the injury being averted constitutes the amount in controversy." Kheel v. Port of New York Auth., 457 F.2d 46, 49 (2d Cir. 1972) (citations and internal quotation marks omitted) (addressing 28 U.S.C. § 1331's former amount-in-controversy requirement).
Here, in the initial summons with notice filed on May 30, 2014, Plaintiffs requested damages of $1, 000, 000, which far exceeds the $75, 000 threshold set by § 1332(a). (Mem. Ex. A at 2.) Plaintiffs subsequently filed an amended summons with notice and complaint on June 23, 2014, omitting any specific amount of damages sought but asserting that Webb "had personally infused into the business close to $300, 000.00 of her personal capital." (Mem. Ex. E 38.) Plaintiffs argue that this capital contribution amount was "included only to establish [Webb's] claim of ownership in the company." (Mem. at 8). In addition to the $300, 000 capital investment, Plaintiff Webb also seeks "a salary that she did not receive." (Mem. Ex. E ¶ 42.) In light of the potential damages, which if awarded, could reasonably include the return of Plaintiff Webb's supposed $300, 000 capital investment, the Court has little difficulty finding that Defendants have met their burden of ...