Opinion
1:02CV727
April 22, 2003
MEMORANDUM OPINION
This matter is now before the court on Plaintiffs Alan Burdick's, Dennis McEachern's, and Electrochem Corporation's ("ECC") motion to remand. Also before the court are Defendants James C. Teal's, Hubert L. Gill's, and Electrochem Laundry Sales, Incorporated's ("ELS") motion to dismiss and motion to transfer. For the reasons set forth below, Plaintiffs' motion to remand will be granted, and Defendants' motions to dismiss and transfer will be dismissed.
I. BACKGROUND
Plaintiffs Burdick and McEachern and Defendants Teal and Gill signed an "Agreement" seeking to establish a business relationship between Plaintiffs and Defendants. (Compl. Ex. A.) The relationship later soured, and Defendant ELS brought suit in the United States District Court for the Western District of Texas against Plaintiff ECC, seeking damages for breach of contract regarding the Agreement. ELS later amended the Texas complaint to add defendants (Burdick, McEachern, and Laundrox, Inc., an entity with which Burdick and McEachern later became associated) and causes of action, including tortious interference with contract. The Texas suit is ongoing.
Defendant ELS, a Texas corporation, brought suit in Texas federal district court asserting diversity jurisdiction over Plaintiffs, all of whom are North Carolina residents. The ad damnum clause of the Texas complaint asserts an amount in controversy greater than the federal jurisdictional minimum of $75,000.
Plaintiffs then brought this suit in the North Carolina General Court of Justice, Guilford County Superior Court Division, seeking an order under the North Carolina Declaratory Judgment Act regarding the contractual enforceability of the Agreement. In the alternative, in the event the Agreement is not an enforceable contract, Plaintiffs seek damages for breach of contract by Defendants. Plaintiffs also seek treble damages under the North Carolina Unfair and Deceptive Trade Practices Act for Defendants' conduct. Defendants timely removed the action to this court.
II. DISCUSSION
The court first addresses the motion to remand. Defendants removed from state court, asserting that this court has jurisdiction over the matter based on diversity of citizenship. 28 U.S.C. § 1332, 1441(b). Plaintiffs concede the fact that the parties are citizens of different states, but they assert that the amount in controversy fails to satisfy the jurisdictional minimum of $75,000 and seek remand on that basis. 28 U.S.C. § 1332, 1447(c). For the reasons set forth below, the court agrees with Plaintiffs and will therefore grant the motion to remand.
First, where the amount in controversy is clearly and unambiguously set forth in good faith on the face of the complaint, that amount should control. See. e.g., Gwyn v. Wal-Mart Stores, Inc., 955 F. Supp. 44, 45 (M.D.N.C. 1997) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590 (1938)). Here, the plain language of the complaint states that "[t]he amount in controversy between the parties is less than $75,000." (Compl. ¶ 6.) The court knows no reason that it should not let the complaint speak for itself, and accordingly finds that the ad damnum clause of the complaint fixes the amount in controversy at an amount below the jurisdictional minimum.
Second, assuming that uncertainty still remains about the amount in controversy after an examination of the complaint, it is appropriate for the court to consider post-removal stipulations of damages. See e.g., Gwyn, 955 F. Supp. at 46 (citing Asociacion Nacional de Pescadores a Pequena Escala O. Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia S.A., 988 F.2d 559, 565 (5th Cir. 1993); Griffin v. Holmes, 843 F. Supp. 81, 88 (E.D.N.C. 1993); Cole v. Great Atlantic Pacific Tea Co., 728 F. Supp. 1305, 1308-09 (E.D. Ky. 1990)). Plaintiffs, seeking to resolve any remaining ambiguity, filed a Stipulation of Damages (Pleading No. 9), a binding limitation of the amount they stand to gain under the suit to less than the jurisdictional minimum of $75,000. The court finds that this stipulation of damages resolves any remaining uncertainty about the amount in controversy and fixes that amount below the jurisdictional minimum.
Third, assuming that the amount in controversy is still at issue after an examination of the complaint and stipulation of damages, it is the removing party's burden to prove by at least a preponderance of the evidence that the amount in controversy satisfies the jurisdictional minimum. See, e.g., Doughton v. Ray. No. 1:02CV864, 2002 WL 31812918, at *2 (M.D.N.C. Dec. 13, 2002). Here, Defendants assert that ELS spent approximately $83,000 in reliance on the disputed agreement, $63,500 of which went directly to Plaintiffs. (Gill Aff. ¶ 8.) This assertion falls several steps short of establishing that Plaintiffs stand to gain more than $75,000 in this suit and the court finds it unpersuasive in the absence of further evidence linking the Plaintiffs' possible recovery to Defendants' expenditures.
Defendants also place great emphasis on several highly speculative forecasts of expected profits in the six- and seven-digit range. (Id. ¶¶ 5-7.) These forecasts are based on a "Memorandum of Understanding" which Plaintiffs proposed to Defendants and which contained pro forma financial projections applicable to the memorandum of understanding. (Id. Attach. A.) The court gives very little weight to these forecasts because, significantly, the proposed memorandum of understanding was apparently never signed or agreed to by the parties and therefore represents only a bald proposal which went no further. The court also notes the vast gulf which exists between the often wildly optimistic and speculative projections contained in pro formas, which sometimes are little more than marketing documents, and the proof necessary to recover at law.
Many dot-com investors were reminded of this point in recent years.
Defendants submit no other evidence which helps to satisfy their burden of proving satisfaction of the jurisdictional minimum amount in controversy by at least a preponderance of the evidence. This court is therefore constrained to find that burden unmet. Accordingly, this court lacks jurisdiction over the subject matter and must remand the action.
III. CONCLUSION
For the foregoing reasons, this court will grant Plaintiffs' motion to remand. Defendants' motions to dismiss and transfer will be dismissed for want of jurisdiction over the subject matter. A judgment in accordance with this memorandum opinion shall be entered this same day.
ORDER
For the reasons set forth in the memorandum opinion entered this same day,
IT IS ORDERED that Plaintiffs' Motion to Remand [7] is GRANTED;
IT IS FURTHER ORDERED that Defendants' Motion to Dismiss [5] is DISMISSED; and
IT IS FURTHER ORDERED that Defendants' Motion to Transfer [14] is DISMISSED.