Opinion
CIVIL ACTION NO. 03-0239.
June 6, 2003.
MEMORANDUM AND ORDER
In this case, Plaintiffs Angelo and Donna DiTullio are suing Defendants Universal Underwriters Insurance Company ("Universal Underwriters") and Lowe's Companies, Inc., alleging negligence and breach of contract claims resulting from a forklift accident. The instant case was removed from the Court of Common Pleas for Philadelphia County to this Court on January 10, 2003. Presently before the Court are Plaintiffs' Motion to Remand (Docket No. 2) and Defendant Universal Underwriters' Petition to Consolidate (Docket No. 12). For the reasons discussed below, Plaintiffs' Motion is granted and Defendant's Petition is denied as moot. The case is remanded to the Court of Common Pleas for Philadelphia County.
As discussed below, the instant case is related toUniversal Underwriters Ins. Co. v. E.R. Collision Company, docketed at Civil Action Number 02-08875. Universal Underwriters' Petition to Consolidate is cross-filed as Docket Number 20 in that action.
I. BACKGROUND
This case arises out of forklift accident that occurred at E.R. Collision Company on May 16, 2002. E.R. Collision Company is located in a building, which is owned by Plaintiffs Angelo and Donna DiTullio, at 1021-25 Snyder Avenue in Philadelphia, Pennsylvania. While making a delivery to E.R. Collision, an employee of Defendant Lowe's Companies, Inc. ("Lowe's Companies"), allegedly struck the corner of the building with a forklift.
At the time of the accident, Defendant Universal Underwriters Insurance Company ("Universal") was the insurer of the property. Upon inspecting the premises, Defendants Lowe's Companies and Universal Underwriters determined that the amount of damage caused by the forklift accident was $1500 and that the remaining damage to the building was pre-existing. The insurance policy does not cover pre-existing damage.
Two lawsuits arose out of the dispute over the various parties' liability for the accident. First, on December 4, 2002, Universal Underwriters, which is a Defendant in the instant case, filed an action in this Court against the DiTullios and E.R. Collision Company, seeking a declaratory judgment limiting its liability under the insurance policy. That case is docketed at Civil Action Number 02-08875.
Second, on December 23, 2002, the DiTullios filed the instant case in the Court of Common Pleas for Philadelphia County. In this case, they assert two claims. In Count I of the complaint, the DiTullios assert a negligence claim against Lowe's Companies, alleging, inter alia, that Lowe's Companies failed to properly hire and train the employee who struck their building. See Compl. at 2-3. Although not entirely clear, Count II appears to assert a breach of contract claim against Universal Underwriters for its failure to pay the compensation allegedly due under the insurance contract. Id. at 4. In their complaint, the DiTullios assert damages "in an amount in excess of" $50,000. Id. at 3, 4.
The claims against the two Defendants arise out of the same incident and are intended to compensate for the same injury. Accordingly, Plaintiffs are not seeking damages in excess of $50,000 from each Defendant, but rather total damages in that amount.
On January 10, 2003, Defendant Universal Underwriters removed this case from the Court of Common Pleas to this Court. In the removal petition, Universal Underwriters cites two grounds for removal. First, Universal Underwriters asserts, pursuant to 28 U.S.C. § 1332, that this Court has jurisdiction over the case based on diversity of citizenship jurisdiction. Alternatively, Universal Underwriters asserts that the Court has supplemental jurisdiction over the case, pursuant to 28 U.S.C. § 1367(a), because the case arises from the same nucleus of facts as the declaratory judgment case currently before the Court, Universal Underwriters Insurance Company v. E.R. Collision Company, docketed at Civil Action Number 02-08875.
II. LEGAL STANDARD
A defendant may remove from state court any civil action "of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). In federal district court, there are two forms of original jurisdiction: (1) diversity and (2) federal question. Diversity jurisdiction occurs when the amount in controversy exceeds $75,000 and there is complete diversity among the parties, i.e., no plaintiff is a citizen of the same state as any defendant. 28 U.S.C. § 1332. Federal question jurisdiction occurs when the plaintiff's well-pleaded complaint states a claim arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. As noted above, Defendants in this case base their removal petition on diversity jurisdiction and supplemental jurisdiction.
This motion to remand is governed by 28 U.S.C. § 1447(c), which provides that a case may be remanded back to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). When considering a motion to remand, the Court must review the plaintiff's complaint as it appeared when the defendant removed the case from state court. Steel Valley Auth. v. Union Switch Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987).
Importantly, the defendant bears the burden of establishing removal jurisdiction. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990). Thus, the defendant must demonstrate that this Court would have had original jurisdiction to hear the matter, i.e., either diversity or federal question jurisdiction. See, e.g., Winnick v. Pratt, No. Civ.A. 03-1612, 2003 WL 21204467, at *1 (E.D. Pa. May 20, 2003);Miller v. Riddle Mem'l Hosp., No. Civ.A. 98-392, 1998 WL 272167, at *2 (E.D. Pa. May 28, 1998). In this circuit, removal statutes are strictly construed against removal, and any doubts are resolved in favor of remand. Boyer, 913 F.2d at 108 (citing Steel Valley Auth. v. Union Switch Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)).
III. DISCUSSION
Defendant asserts two bases of jurisdiction for removal of this case. First, Defendant argues that the Court has diversity jurisdiction over the case because there is complete diversity and the amount in controversy exceeds $75,000. See Def.'s Mem. at 2-3. Second, Defendant argues that 28 U.S.C. § 1367, the supplemental jurisdiction statute, provides federal jurisdiction over the case. See Def.'s Mem. at 3-4. These arguments are discussed in turn below.
A. Diversity Jurisdiction
This Court has subject matter jurisdiction over state law claims if there is complete diversity of citizenship among the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. In the Motion to Remand, Plaintiffs argue that the amount in controversy is less than $75,000. To support this contention, Plaintiffs point to their complaint in this action, which merely seeks damages "in excess of $50,000." Moreover, Plaintiffs also offer a stipulation, signed by their counsel, indicating that they will not plead or seek to prove damages in excess of $75,000. Pls.' Mem. at Ex. B.
In response, Defendant, which bears the burden of establishing the amount in controversy, essentially argues that the damages are unclear. Rather than providing evidence of an estimated amount in controversy, Defendant points to inconsistencies in the Plaintiffs' pleadings. Specifically, Defendant compares the attachments to Plaintiffs' complaint, which contain invoices estimating damages at approximately $35,000, with the specific Counts of the complaint, which seek damages in excess of $50,000. From these inconsistencies, Defendant states that "allegations that damages are only approximately $34,000 makes one question the allegation of why [sic] damages are alleged to be in excess of $50,000." Def.'s Mem. at 3.
In evaluating the amount in controversy requirement, this Court does not look to the low end of an open-ended claim, but rather conducts "a reasonable reading of the value of the rights being litigated." Werwinksi v. Ford Motor Co., 286 F.3d 661, 666 (3d Cir. 2002) (citing Angus v. Shiley, Inc., 989 F.2d 142, 146 (3d Cir. 1993)). To conduct this review, the Court looks first to the complaint and then to any materials which may help clarify the damages. See Angus, 989 F.2d at 145, n. 3 (stating additional materials must clarify rather than amend claim). If the complaint does not limit itself to a precise damages amount, then the Court may conduct an independent appraisal of the claim. Id. at 146.
Because the United States Court of Appeals for the Third Circuit has not delineated the standard applied when the complaint seeks unliquidated damages, courts in this circuit have applied several different tests. See Chaparro v. State Farm Ins. Co., No. Civ.A. 99-2063, 1999 WL 961035, at *2-4 (E.D. Pa. Oct. 12, 1999) (collecting cases); Charles A. Wrightet al., Federal Practice Procedure § 3725, at 89-93 (3d ed. 1998 Supp. 2003) (describing four distinct tests). First, the most stringent standard applied is the "legal certainty" test, which requires a defendant to prove the amount in controversy requirement "to a legal certainty." See, e.g., Samuel-Basset v. Kia Motors Am., Inc., 143 F. Supp.2d 503, 506 (E.D. Pa. 2002). Second, some courts have applied a preponderance of the evidence standard. See, e.g., Wilbur v. H R Block, Inc., 170 F. Supp.2d 480, 483 (E.D. Pa. 2000). Third, other courts require a defendant to demonstrate "some reasonable probability" that the damages exceed $75,000. See, e.g., Hayfield v. Home Depot U.S.A., Inc., 168 F. Supp.2d 436, 454 (E.D. Pa. 2001). Finally, the most lenient standard applied is the "inverted legal certainty test," which requires the defendant merely to show that it does not appear to a legal certainty that the damages are less than the amount in controversy. See, e.g., Michael F. Ronca Sons, Inc. v. Monarch Water Sys., Inc., No. Civ.A. 90-5029, 1990 WL 140154, at *3 (E.D. Pa. Sept. 24, 1990). In this case, the outcome is the same regardless of which test is applied.
Because Defendant cannot meet the burden under the inverted legal certainty test, which is the most lenient of the tests used in this circuit, the Court finds that the amount in controversy requirement is not satisfied. Under this test, the Court must be convinced to a legal certainty that the Plaintiff cannot recover the jurisdictional amount. St. Paul Mercury Indem. Co. v. Red. Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). Put another way, the burden is on Defendant to prove that there is a legal uncertainty as to whether Plaintiffs' claim will exceed the amount in controversy requirement. See Wright, et al., supra, § 3725, at 91-92. In this case, the attachments to Plaintiffs' complaint indicate total damages of approximately $35,000. Additionally, Plaintiffs filed a stipulation, signed by Plaintiffs' counsel, clarifying that they will not plead or seek to prove damages in excess of $75,000. Finally, the complaint itself states only that the damages exceed $50,000. Because nothing in these documents, nor any evidence presented by Defendant, indicates that the damages in this case even approach the $75,000 jurisdictional amount, Defendant has not met its burden of establishing that there is a legal uncertainty as to whether the jurisdictional amount will be met in this case.
Moreover, in Meritcare, Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 222-23 (3d Cir. 1999), the United States Court of Appeals for the Third Circuit affirmed the remand of a case with facts similar to the instant case. In Meritcare, three corporate plaintiffs sued their property insurer in state court, seeking damages resulting from the collapse of the roof at their place of business. 166 F.3d at 216. In their complaint, the plaintiffs sought damages "exceed[ing] $25,000." Id. In a Pre-Trial Memorandum, one plaintiff conceded that its claim was worth less than $5,000. Id. at 222. The Third Circuit, examining the plaintiff's concession and the record, severed the plaintiff's claims and remanded its case to state court. Id. at 223. Similarly, in this case, Plaintiffs' complaint, which seeks damages "in excess of $50,000," coupled with Plaintiffs' stipulation that it will not seek to prove more than $75,000 in damages, requires that this case be remanded to Pennsylvania state court.
At the time that the Meritcare case was removed to federal court, the amount in controversy requirement was $50,000. 166 F.3d at 216, n. 2.
B. Supplemental Jurisdiction
In the alternative, Defendant purports to base its removal petition on the supplemental jurisdiction statute, 28 U.S.C. § 1367(a). Def.'s Mem. at 3-4. As noted above, another suit between these parties is currently pending before this Court. According to Defendant, because these two actions are so closely related, the supplemental jurisdiction statute serves as an independent basis for removal of the instant case. Because removal is only appropriate where the district court could have exercised original jurisdiction over the state law claims, rather than supplemental jurisdiction, Defendant's argument fails.
Section 1367 provides federal district courts with the discretionary authority to hear state law claims which would ordinarily not be within the federal court's jurisdiction. 28 U.S.C. § 1367 (a). The state law claims must share a common nucleus of operative fact with a claim that falls under the federal court's original jurisdiction. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966).
It is well-settled, however, that supplemental jurisdiction is not an independent source of removal jurisdiction. See, e.g., Henson v. Ciba-Geigy Corp., 261 F.3d 1065, 1068, n. 3 (11th Cir. 2001); Ahearn v. Charter Township of Bloomfield, 100 F.3d 451, 456 (6th Cir. 1996); In re Estate of Tabas, 879 F. Supp. 464, 467 (E.D. Pa. 1995); see also Wright et al., supra, § 3722, at 384-85, n. 7. State law claims may not be removed to federal court solely because there is a pending federal case that arises out of a common nucleus of operative fact with the state action. Tabas, 879 F. Supp. at 467; Wright, et al., supra, § 3722 at 385. Rather, to remove a case from state court to federal court, a federal claim must exist within the removal petition itself. Tabas, 879 F. Supp.2d at 467. No such federal claim is present in the instant removal petition. Accordingly, this case must be remanded to Pennsylvania state court.
IV. CONCLUSION
Defendant bases its removal petition on diversity jurisdiction or, in the alternative, supplemental jurisdiction. First, because the amount in controversy requirement is not satisfied, this Court does not have diversity jurisdiction over this case. Second, it is axiomatic that supplemental jurisdiction cannot serve as an independent basis for removal of state law claims to federal court. Accordingly, Defendant has not carried its burden of establishing that the case is removable. Thus, the case is remanded to the Court of Common Pleas for Philadelphia County.
An appropriate Order follows.
ORDER
AND NOW, this 6th day of June, 2003, upon consideration of Plaintiffs' Motion to Remand (Docket No. 2) and Defendant Universal Underwriters Insurance Company's Petition to Consolidate (Docket No. 12), IT IS HEREBY ORDERED that:
(1) Plaintiffs' Motion to Remand (Docket No. 2) is GRANTED;
(2) Defendant Universal Underwriters Insurance Company's Petition to Consolidate (Docket No. 12) is DENIED AS MOOT; AND
Because the instant case is remanded to state court, Defendant's Petition to Consolidate the instant case withUniversal Underwriters Insurance Company v. E.R. Collision Company, No. Civ.A. 02-8875, is moot.
(3) This case is REMANDED to the Court of Common Pleas for Philadelphia County.