Commercial Credit Corporation

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United States District Court, S.D. Mississippi, Eastern DivisionJul 11, 2002
No. 4:02CV47LN (S.D. Miss. Jul. 11, 2002)

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No. 4:02CV47LN

July 11, 2002


This cause is before the court on plaintiffs' motion to remand. Defendants have responded in opposition to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that plaintiffs' motion should be denied.

On February 20, 2002, the one hundred fourteen plaintiffs herein, one an Alabama resident and the rest Mississippi residents, filed suit in the Circuit Court of Noxubee County, Mississippi, against Commercial Credit Corporation, Citifiancial, Inc., American Health and Life Insurance Company, Triton Insurance Company and American Bankers Insurance Company of Florida, all nonresident corporations, alleging claims for breach of fiduciary duties, breach of implied covenants of good faith and fair dealing, fraudulent misrepresentation and/or omission, negligent misrepresentation and/or omission, civil conspiracy, negligence, unconscionability, unjust enrichment and fraudulent misrepresentation and suppression relating to defendants' sale of certain credit insurance products in connection with credit transactions between the respective plaintiffs and defendants. Defendants promptly removed the case to this court on the basis that there is diversity of citizenship jurisdiction in this court under 28 U.S.C. § 1332, pursuant to which "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between (1) citizens of different States. . ."

There is no dispute that there is complete diversity of citizenship between the parties. The issue is whether the amount in controversy exceeds the $75,000 jurisdictional minimum. To determine the amount in controversy, the court's first resort is to the state court complaint. Generally speaking, a plaintiff who does not "desire to try his case in federal court. . . may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294, 58 S.Ct. 586, 593, 82 L.Ed. 845 (1938); see also Allen v. RH Gas and Oil Co., 63 F.3d 1326, 1335 (5th Cir. 1995) ("[I]f a plaintiff pleads damages less than the jurisdictional amount, he generally can bar a defendant from removal."). In this case, paragraph 121 of plaintiffs' complaint recites that "[e]ach Plaintiff pleads that their individual claims are not more than $74,999.00." However, the amount in controversy inquiry "does not end merely because the plaintiff alleges damages below the threshold," De Aguilar v. Boeing Co. (De Aguillar II), 47 F.3d 1404, 1410 (5th Cir. 1995), for "[t]he face of the plaintiff's pleading will not control if made in bad faith," id.

Plaintiffs' motion to remand is accompanied by the affidavit of plaintiffs' attorney, Roman Shaul, who explains at length how it happened that he "forgot to add [a] stipulation concerning the amount of Plaintiffs' claims" which limited their claims to under $75,000, which had been his intent. Defendants responded to the motion to remand as though the complaint did not include such a stipulation, or allegation, and in fact went to great lengths to show that Mr. Shaul's failure to plead an amount of damages below the jurisdictional minimum had not been an inadvertent omission and that Mr. Shaul, in fact, had never intended to limit the plaintiffs' damages to below $75,000. Defendants thus approach the issue from this skewed perspective, arguing that since plaintiffs did not bother to limit their damages in the complaint, they cannot do so via Mr. Shaul's post-removal affidavit, in which he declares his belief and stipulates that no plaintiff's claim in this case was at the time of drafting the complaint and is now worth more than $75,000, and in which he further declares that he will not file an amended complaint to increase the requested damages.
In the court's view, the fact that plaintiffs' complaint does specify an amount of damages below the jurisdictional threshold alters the complexion of the amount in controversy analysis because the fact that they have pled such an amount, in the court's opinion, has the effect of establishing a "presumptively correct" amount in controversy or at least rendering the complaint ambiguous on the issue, leaving it open to plaintiffs to "clarify" this ambiguity via post — removal affidavit. See St. Paul Reinsurance Co. Ltd. v. Greenberg, 134 F.3d 1250, 1254 n. 18 (5th Cir. 1998) (stating, "We have considered a post-removal affidavit when the jurisdictional amount was ambiguous on the face of the state petition. In doing so. . . we explained that the affidavit helped clarify the jurisdictional facts `as of the time of removal.'") (citingAsociacion Nacional de Pescadores, 988 F.2d at 565) Nevertheless, it ultimately proves immaterial whether an amount was pled since the result is the same either way-the amount in controversy exceeds $75,000.

In the case at bar, defendants argue that because plaintiffs did not limit their claims for relief in the complaint to less than $75,000 and have requested damages for fraud which include punitive damages, it must be concluded that the complaint unambiguously seeks in excess of $75,000 per plaintiff. Defendants' argument is not well grounded, for plaintiffs have purported in their complaint to limit their claim for damages to less than $75,000. Thus, contrary to defendants' urging, plaintiffs' post-removal affidavit, which purports to clarify that the amount in controversy is, was and will forever be less than $75,000, may be considered.

That does not end the matter, though, because there are in this case one hundred fourteen plaintiffs, each of whom has alleged that defendants engaged in a common scheme to defraud them which warrants the imposition of punitive damages, and pursuant to applicable Fifth Circuit authority, the individual plaintiff's claims for punitive damages are aggregated for purposes of determining the amount in controversy. See Allen v. RH Oil and Gas Co., 63 F.3d 1326 (5th Cir. 1995). In Allen, the Fifth Circuit explained as follows:

Punitive damages in Mississippi. . . are fundamentally collective; their purpose is to protect society by punishing and deterring wrongdoing. [Miss. Code Ann. § 11-1-65 (Supp. 1994)]; see 1 SCHLUETER REDDEN, supra, §§ 2.0 to 2.2 (examining purposes and policies behind punitive damages). Their focus is not any one individual plaintiff; instead, the award is tailored to the defendant's wealth and wrongdoing. See Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1190 (Miss. 1990) (examining factors that juries may consider in determining quantum of punitive damages award); see also Miss. Code Ann. § 11-1-65(1)(e) (listing factors for jury to consider). The benefits of the award are meant to accrue to society.
Because punitive damages in Mississippi are not compensatory, they are individual awards in function only. While separate plaintiffs may seek an award in separate cases, the narrow right to seek such damages exists only because public policy as expressed through state statutes and the common law so dictate. See generally 22 AM.JUR.2D DAMAGES § 734, at 787 (1988) ("So viewed, punitive damages are allowed on grounds of public policy and in the interest of society and for the public benefit.") (footnotes omitted). An individual's damages or harm is relevant only to assessing the defendant's wrongdoing.

* * *

Finally, the general rule is that a plaintiff does not have a claim of right to punitive damages, and "it is always within the discretion of the jury or trial judge to withhold them." W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 2, at 14 (5th ed. 1984); see Wirtz v. Switzer, 586 So.2d 775, 783 (Miss. 1991) ("The award of punitive damages, along with the amount of such, are [sic] within the discretion of the trier of fact."). In other words, a claim for punitive damages is not by itself an independent tort. Hence, it is only because of the unique nature of these exemplary awards that they exhibit some of the characteristics of a separate claim of right.
Accordingly, while punitive damages do not fall neatly into either the "non-aggregation" caselaw or the "common and undivided interest" exception, the unique nature of these awards requires, at least in Mississippi, that the full amount of alleged damages be counted against each plaintiff in determining the jurisdictional amount. As punitive damages are collective awards, each plaintiff has an integrated right to the full amount of an award. An award's ultimate distribution does not change this result.
Punitive damages are, to use the language of the caselaw, undivided claims of right with a potentially separable award. Here, each of the 512 plaintiffs was empowered to bring a claim for punitive damages separately. The fact that they choose not to pursue their claims individually does not limit each plaintiff's alleged entitlement to the award; it only affects its distribution. The limiting factor here was the plaintiffs' decision to file jointly.
Allen, 63 F.3d at 1333-34 (emphasis added). See also Alice Smith et al. v. Associates Capital Bank, et al., Civ. Action No. 1:99CV301-P-A (Dec. 3, 1999) (aggregating punitive damages claims of sixteen fraud plaintiffs pursuant to Allen and denying motion to remand). There is no doubt that these one hundred fourteen plaintiffs' claims for punitive damages collectively exceed $75,000.

Other panels of the Fifth Circuit have expressed some skepticism of the Allen opinion, see Ard v. Transcontinental Gas Pipe Line Corp., 138 F.3d 596, 602 (5th Cir. 1998); HD Tire and Automotive-Hardware, Inc. v. Pitney Bowes Inc., 227 F.3d 326, 330 (5th Cir. 2000). However,Allen remains the law for cases in which punitive damages are sought under Mississippi law.

Therefore, it is ordered that plaintiffs' motion to remand is denied.