Opinion
06 C 6856.
May 29, 2007
MEMORANDUM OPINION
This matter comes before this Court on Plaintiff Leonard Chavin's motion to reconsider our dismissal of his complaint for lack of subject matter jurisdiction and to permit him to file an amended complaint. Chavin supplemented the instant motion with a series of filings, some made at the request of this Court and others made on Chavin's own initiative. In the interest of efficiency and clarity, we address all of his submissions in this opinion. For the following reasons, all of Chavin's motions are denied with prejudice.
BACKGROUND
A. Dismissal of Chavin's ComplaintIn his original complaint, Chavin alleged that while he was in prison, his daughter Shari Chavin Ross and granddaughters Valorie Chavin and Stacie Chavin stole 22 of his Social Security checks, forged his signature on those checks, deposited them in his account at Cole Taylor Bank, and then withdrew the money from his account for their own use. Chavin sought relief from this court from what he contended were violations of a number of federal criminal statutes, the Racketeering Influenced and Corrupt Organizations Act ("RICO"), and the Securities and Exchange Commission Act of 1934 ("the 1934 Act"), as well as under several state law causes of action. He claimed actual damages of $23,000, compensatory damages of $69,000, and $138,000 in punitive damages.
We raised the issue of the propriety of the exercise of our jurisdiction sua sponte and dismissed Chavin's complaint for lack of subject matter jurisdiction. Chavin v. Cole Taylor Bank, 2007 WL 528374 (N.D. Ill. Feb. 14, 2007). In our opinion, we held that he lacked standing to assert claims under federal criminal statutes and the 1934 Act, that his RICO claim was frivolous, and that the parties lacked complete diversity of citizenship. Id.
B. First Motion to Reconsider, Proposed First Amended Complaint, and Other Intervening Filings
Although Chavin styled the instant motion as a "motion to reconsider," his representations to this Court made clear that he sought instead to amend his complaint to omit all non-diverse defendants and thereby invoke federal diversity jurisdiction over his claims. As the alleged theft amounted to only $23,000, well below the amount in controversy requirement of 28 U.S.C. § 1332, we ordered him to submit a proposed amended complaint and a statement in support of subject matter jurisdiction. His amended complaint asserted the same state and federal claims as were alleged in his original complaint; this time, however, he asserted these claims against the only diverse defendant, Valorie Chavin ("Valorie"), a citizen of Florida. Chavin argued that we now had diversity jurisdiction over his proposed amended complaint because he is an Illinois citizen and the punitive damages requested were in excess of the jurisdictional minimum. Further, he maintained that we had federal question jurisdiction over his repled federal claims as well as pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. Valorie filed a response to his motion, arguing that this Court had neither subject matter nor personal jurisdiction over her.
While his initial motion to reconsider was pending, Chavin also filed two more motions, entitled "motion to reconsider" and "motion for clarification," in which he set out the basis for an additional claim he wished to pursue against Valorie. Chavin also filed a sur-reply in support of his initial motion to reconsider and a motion to strike Valorie's response to that motion. We declined to consider his additional claims in piecemeal fashion and ordered him to submit a proposed second amended complaint.
D. Proposed Second Amended Complaint
As Chavin's proposed second amended complaint encompasses the claims raised in his proposed first amended complaint and subsequent motions, we discuss only the proposed second amended complaint in detail. In this document, Chavin repeats his allegations concerning the theft of 22 Social Security checks. Although he still maintains that the parties previously named as defendants also participated in the theft, he seeks relief only against Valorie. Chavin also raises a new claim against Valorie alone; he alleges that, without his consent, she named him as guarantor for a $36,500 student loan and then defaulted on the loan. Finally, Chavin makes a host of other allegations against Valorie: that she owed him a fiduciary duty, a duty that Chavin seems to believe arises because Valorie is an attorney licensed to practice law in Florida; that she conspired with the parties formerly named as defendants to steal Chavin's money; that she threatened Chavin's children in connection with a custody dispute over one Jonathan Chavin; that she coerced several banks, the Social Security Administration ("SSA"), and the Department of Education to commit unlawful acts against Chavin; and that she publicly disparaged him. Based upon these alleged acts, Chavin asserts nine separate causes of action: fraud, negligence, RICO violation and mail fraud, conspiracy, forgery and embezzlement, unjust enrichment, intentional infliction of emotional distress, and violations of Section 17a, Section 10(b), and Rule 10(b)(5) of the 1934 Act. For each of these counts, Chavin claims damages of $60,000, compensatory damages of $180,000, and punitive damages of $360,000.
DISCUSSION
Despite the variety of issues Chavin has included in his numerous filings, the sole question before this Court at this time is the propriety of our exercise of federal jurisdiction. We will address only those portions of the parties' motions and responses that deal with the legal issue at hand.
I. Federal Question Jurisdiction Pursuant to 28 U.S.C. § 1331
Although Chavin now asserts an additional claim of fraud against Valorie with respect to the alleged loan, his federal law claims are essentially the same as those he asserted against all defendants in his original complaint. We have already dismissed those claims with prejudice in our prior opinion and we see no reason to reconsider that dismissal here.
Although Chavin has waived this claim by not raising it in his second amended complaint, any assertion that this Court has federal question jurisdiction by virtue of the Declaratory Judgment Act, 28 U.S.C. § 2201, is without merit as § 2201 is not an independent ground of federal jurisdiction. See, e.g., Nationwide Ins. Co. v. Zavalis, 52 F.3d 689, 692 (7th Cir. 1995).
II. Diversity Jurisdiction Pursuant to 28 U.S.C. § 1332
Plaintiffs seeking to invoke the diversity jurisdiction of the federal courts must not only establish diversity of citizenship but also that the matter in controversy "exceeds the sum or value of $75,000, exclusive of interests and costs." 28 U.S.C. § 1332; Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977 (7th Cir. 2000). Having re-pled his original complaint to omit all non-diverse defendants, Chavin contends that we have diversity jurisdiction over his complaint because he resides in Illinois, Valorie resides in Florida, and his damage claims exceed $75,000.
Ordinarily, a plaintiff's good faith assertion of the amount in controversy will suffice. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938). Courts must accept this assertion on the face of the pleadings unless "it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed." Id. at 289. However, when the court or the opposing party questions the facts supporting the existence of jurisdiction, the "proponent of federal jurisdiction must . . . prove those jurisdictional facts by a preponderance of the evidence" and "only if it is `legally certain' that the recovery . . . will be less than the jurisdictional floor may the case be dismissed." Meridian Security Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006).
In this case, Chavin claims actual damages of $60,000 and punitive damages of $360,000. It is only by including punitive damages, then, that Chavin can state a claim for damages in excess of the required amount in controversy. Punitive damages, if recoverable as a matter of state law, may be taken into account in determining whether or not the jurisdictional amount is met unless it is clear "beyond a legal certainty that the plaintiff would under no circumstances be entitled to recover the jurisdictional amount." Del Vecchio, 230 F.3d at 978. We assess claims for punitive damages well in excess of the amount at stake "critically" and require plaintiffs to support their claim with "competent proof, lest fanciful claims for punitive damages end up defeating the statute's requirement of a particular amount in controversy." Id.
Chavin also claims $180,000 in "compensatory" damages. It is unclear what Chavin believes to be the difference between "actual" and "compensatory" damages. He has provided no support for what might constitute his compensatory damages; instead, the damage claimed is simply three times his actual damages. Accordingly, we assume Chavin believes that compensatory damages are a form of punitive damages and we disregard his "compensatory" damages figure and consider only the higher "punitive" damages number.
First, Illinois law technically may permit Chavin to recover punitive damages for his claims of fraud and negligence if he proves malice and willfulness. Although Illinois courts disfavor awards of punitive damages in cases of deceit alone, such awards are permitted in "extraordinary or exceptional circumstances clearly showing malice and willfulness." See, e.g., Home Sav. and Loan Ass'n of Joliet v. Schneider, 483 N.E.2d 1225, 1228 (Ill. 1985). However, Illinois law does not permit recovery of punitive damages for claims of intentional infliction of emotional distress. Knierim v. Izzo, 174 N.E.2d 157, 165 (Ill. 1961).
The fact that punitive damages may be recoverable on some of Chavin's asserted causes of action does not end our analysis. We must also ascertain whether it is a "legal certainty" that Chavin could not recover the amount of punitive damages he claims. To do so, we must examine the basis for his claims of actual damage. In this case, it is clear from Chavin's submissions to this court that the amount of actual damages he could potentially recover is so low that if punitive damages were awarded such that total damages exceeded $75,000, the punitive damage award would be excessive as a matter of law. See Del Vecchio, 230 F.3d at 978.
As an initial matter, as discussed above in footnote 2, Chavin has wholly failed to support his claim for "compensatory" damages, and we disregard that claim. While he claims medical and legal expenses in addition to his actual losses, he has provided no evidence of those expenses. Accordingly, we examine only Chavin's assertion of $60,000 in damages, which appears to be the sum of the $23,000 in Social Security funds he contends Valorie stole from him while he was in prison and the $36,500 loan for which he alleges he owes because Valorie fraudulently named him as guarantor. We address the evidence underlying his claims for each of these amounts separately.
A. Alleged Theft of Social Security Checks
Documents appended to Chavin's proposed second amended complaint make clear that it is a legal certainty that he could not recover the $23,000 in damages he claims as a result of the allegedly stolen Social Security checks. According to attachments to his complaint, the SSA has demanded repayment of the $22,731.80 in Social Security payments made to him from May 2001 to August 2003 — the time during which he was in prison — because he was not entitled to those funds while incarcerated and he admitted he did not notify the SSA of his imprisonment as required by law. While the SSA may be demanding repayment of approximately $23,000, Chavin has not provided any evidence that he was actually damaged in that amount as a result of Valorie's actions. Although he claims that Valorie forged his signature, deposited checks in his account, and withdrew those checks for her own use, he has failed to substantiate his claim that $23,000 was taken from him or that Valorie was responsible for the entire loss. Instead, the documents attached to the proposed second amended complaint establish that the majority of the checks were deposited into Chavin's own bank account — an action that would not damage him. The only evidence Chavin can muster in support of his claim that Valorie misappropriated these funds are three checks bearing the endorsement "Pay to the Order of Valorie Chavin," totaling under $4,000. Furthermore, he has not proffered any evidence that $23,000 was unlawfully withdrawn from his account. As the holder of the account, Chavin is entitled to copies of his bank statement and checks drawn upon his account. The copies of cashed checks attached as exhibits to his proposed complaint make clear that he does have access to his account information. In this situation, the absence of any evidence that might show that anything more than $4,000 was paid out to any party is telling. Had Valorie, or others, actually written checks out of Chavin's account while he was in prison, a bank record of those withdrawals would exist.
At several points in his proposed second amended complaint, Chavin claims for the first time that the amount of money represented by the 22 stolen Social Security checks totals $60,000, not $23,000, as he has previously claimed. The SSA documents attached to his complaint show that less than $23,000 in checks were issued to him while in prison. Accordingly, we will assume that the claim of $60,000 in stolen checks is a typographical error.
Chavin has attached copies of seventeen different checks issued to him by the Social Security Administration ("SSA") between August 2001 and April 2003, together totaling $21,791. Of those checks, three bear the endorsement "Pay to the Order of Valorie Chavin." The remaining checks contain the endorsement "For Deposit Only — Howard Style Shop," the name of Chavin's account at Cole Taylor Bank.
B. Alleged Fraud in Obtaining Student Loan
Chavin has attached demand notices from the Department of Education to his complaint in order to establish the amount of the debt he owes as a result of having been allegedly named as guarantor on a loan without his consent. However, there is no evidence to support his claim that the debt he owes the Department of Education is in any way related to Valorie. Chavin has simply attached to his proposed amended complaint a copy of a bill from the Department of Education, seeking payment of a debt of $36,523.07. This notice makes no mention of his status as guarantor nor of the purpose of the loan. Although Chavin has had multiple opportunities to submit documentation, he has not proffered any evidence to support his contention that he is being held liable as the guarantor or that the loan involved Valorie.
Chavin's proposed second amended complaint seeks over half a million dollars in damages against Valorie. After considering his allegations and examining the proffered proof, we conclude that the only damage claims supported by any evidence are the less than $4,000 in Social Security checks that bear the notation "pay to the order of Valorie Chavin." As we have determined that Chavin has only shown a reasonable possibility of recovering $4,000 in damages, it is certain that any punitive damage award totaling over $75,000 would be excessive as a matter of law. See Del Vecchio, 230 F.3d at 980 (amount in controversy not met when plaintiff alleged $400 in actual damages and $75,000 in punitive damages because the ratio of actual damages to punitive damages was so great as to be excessive).
In determining that Chavin has supported his claim of actual damages with respect to these checks, we are not determining that he has proven that the checks were stolen or that Valorie committed any wrongful acts. We are only determining that Chavin has supported his allegation of jurisdictional facts in this instance, in that he has proffered some evidence that damages in that amount might have been incurred. The ultimate question of whether damages were suffered or wrongful acts were committed must still be determined by a finder of fact.
It is clear from Chavin's conduct that he is searching for any means to keep this case in federal court. We do not believe his actions evince a good faith claim for damages above the jurisdictional minimum. His claims of actual damages lack any basis in logic or proof, his calculation of compensatory damages is without support, and his punitive damages reveal a mechanical application of a multiplier rather than any consideration of the alleged facts or Illinois law. Furthermore, his conduct of this litigation, including his artful pleading and the threats made to Valorie in letters and court filings, lead us to believe that Chavin seeks to employ the authority of this court not to seek justice but to intimidate and threaten. We will not permit Chavin to continuously amend his pleadings in an attempt to create federal jurisdiction in aid of this goal.
CONCLUSION
For the foregoing reasons, Chavin's two motions to reconsider (Doc. 44, 51), his motion to clarify (Doc. 54), his motion to strike (Doc. 57), and his motion to file a second amended complaint (Doc. 62) are all denied, with prejudice. Our order of February 14, 2007, dismissing his federal claims with prejudice and his state claims without prejudice, stands.