The Plaintiffs’ Improper Request for Damages Put the Brakes on the Defendants’ Calculation of the Amount in Controversy

Donaldson v. GMAC Mortg. LLC, 2010 WL 381838, *2+ (M.D.Ga. Jan 26, 2010) (NO. 4:09-CV-117 (CDL)).

In this case, the United States District Court for the Middle District of Georgia, remanded the action back to the state court finding that nothing in the complaint suggested that the amount in controversy exceeded $5 million to impose CAFA jurisdiction.

The plaintiffs, seeking to represent a class of GMAC’s Georgia customers, brought an action against GMAC Mortgage, LLC and GMAC, Inc (collectively, “GMAC”) in the superior Court of Muscogee County, alleging that their home loans were serviced by GMAC, and that all the late fees that GMAC charged them were improper and excessive.

The plaintiffs also alleged claims under the Georgia Racketeer Influenced and Corrupt Organizations Act (“Georgia RICO”) for theft, mail fraud, wire fraud, deceptive commercial email violation, and residential mortgage fraud. The named plaintiff, Anthony Donaldson, was a Georgia resident; the other named plaintiff, Wanda Donaldson, was an Alabama resident; the defendant, GMAC Mortgage was a Delaware Corporation with its principal place of business in Minnesota; and the defendant, GMAC Inc, was a Delaware Corporation with its principal place of business in Michigan.

GMAC removed this case presenting evidence that there were more than 1,000 Georgia GMAC customers, who paid at least one late fee or property inspection fee, during the preceding year, GMAC collected interest totaling more than $5,000,000 from Georgia customers who had paid at least one late fee.

As there was no dispute that there were more than 100 putative class members in this action, and CAFA’s diversity of citizenship requirement was met, the only question that remained was whether the amount in damages was readily discernable or whether it would be pure speculation to find that the amount in controversy exceeded $5 million.

GMAC contended that the amount in controversy was easily discernable and exceeded $5 million based on the plaintiffs’ allegations in the complaint, specifically the plaintiffs sought to recover the late fees under the Georgia Fair Lending Act O.C.G.A. § 7-6A-3(3).

The Court found that the statutory damages were not available for a violation of O.C.G.A. § 7-6A-3(3), therefore, it would be inappropriate to rely only upon the plaintiffs’ prayer for statutory damages in determining whether jurisdiction existed under CAFA. Because the complaint or any documents accompanying the Notice of Removal failed to establish the actual amount in controversy, the Court concluded that GMAC had not met its burden of establishing the jurisdictional amount.

The Court also concluded that the plaintiffs’ claims under Georgia RICO did not raise a very substantial question because the mail and wire fraud allegations did not depend on an interpretation of some other provision of federal law; therefore, removal of this action to the federal court was not appropriate.