Welch v. Hercules Real Estate Services, Inc. ( 2009 )


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  •                        UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    )
    BEVERLY LYNN BARROW,                 )
    Personal Representative of           )
    the Estate of Olga Welch,1           )
    ) Civil Action No. 09-673 (EGS)
    v.                 )
    )
    HERCULES REAL ESTATE                 )
    SERVICES, INC.,                      )
    )
    Defendant.         )
    )
    MEMORANDUM OPINION
    Pending before the Court is plaintiff’s motion to remand
    this case to the Superior Court for the District of Columbia
    (“D.C. Superior Court”).       Upon consideration of plaintiff’s
    motion, the responses and reply thereto, the applicable law, the
    entire record herein, and for the reasons stated below, this
    Court GRANTS plaintiff’s motion for remand and DENIES plaintiff’s
    request for attorneys fees and costs incurred in bringing this
    motion.
    I.   BACKGROUND
    Plaintiff Olga Welch filed this action in D.C. Superior
    Court against defendant Hercules Real Estate Services, Inc.
    (“Hercules”) on March 18, 2009.       The action arises from a lengthy
    landlord-tenant dispute regarding the care and maintenance of her
    1
    Pursuant to the Court’s Minute Order dated June 8, 2009, Ms.
    Barrow, as the personal representative of the Estate of Olga
    Welch, was substituted as the plaintiff in this action.
    two-bedroom apartment in northwest Washington, D.C. by
    defendant.    Plaintiff’s claims include breach of the implied
    warranty of habitability, void lease, negligent infliction of
    emotional distress, negligence and violations of housing
    standards.    Plaintiff is seeking an unspecified amount of damages
    and other relief.
    On April 10, 2009, defendant filed a Notice of Removal in
    this Court.    Defendant removed the action to this Court on the
    basis of diversity jurisdiction pursuant to 
    28 U.S.C. § 1332
    .
    See Docket No. 1, Notice of Removal.    The pending motion to
    remand was filed on May 8, 2009.
    The day after the case was removed, Ms. Welch, who was
    eighty-eight years old at the time the suit was filed, died
    (hereinafter “Ms. Welch” or “decedent”).    On April 21, 2009,
    plaintiff’s counsel filed a statement with the Court noting the
    death of Ms. Welch.    See Docket No. 5.   On May 22, 2009,
    following D.C. Superior Court’s appointment of Beverly Lynn
    Barrow – Ms. Welch’s daughter and power of attorney – as the
    personal representative of the estate with powers that are not
    limited, plaintiff’s counsel filed a motion to substitute parties
    pursuant to Federal Rule of Civil Procedure 25(a)(1).    Docket No.
    11.   This Court granted the motion to substitute parties on June
    8, 2009.
    II. STANDARD OF REVIEW
    “[A]ny civil action brought in a State court of which the
    district courts of the United States have original jurisdiction,
    may be removed by the defendant or the defendants, to the
    district court of the United States for the district and division
    embracing the place where such action is pending.”   
    28 U.S.C. § 1441
    (a).   A district court has 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
    Citizens of different States.”   
    Id.
     § 1332(a).   “When a
    plaintiff seeks to remand to state court a case that was removed
    to federal court, ‘the party opposing a motion to remand bears
    the burden of establishing that subject matter jurisdiction
    exists in federal court.’”   RWN Dev. Group, LLC v. Travelers
    Indem. Co. of Conn., 
    540 F. Supp. 2d 83
    , 86 (D.D.C. 2008)
    (quoting Int’l Union of Bricklayers & Allied Craftworkers v. Ins.
    Co. of the West, 
    366 F. Supp. 2d 33
    , 36 (D.D.C. 2005)).
    “Because of the significant federalism concerns involved,
    this Court strictly construes the scope of its removal
    jurisdiction.”   Breakman v. AOL, LLC, 
    545 F. Supp. 2d 96
    , 100
    (D.D.C. 2008)(citing Shamrock Oil & Gas Corp. v. Sheets, 
    313 U.S. 100
    , 107-09 (1941)).   Therefore, “[a]ny doubts as to whether
    federal jurisdiction exist must be resolved in favor of remand.”
    RWN Dev. Group, 
    540 F. Supp. 2d at
    87 (citing cases); see also,
    3
    e.g., Breakman, 545 F. Supp. at 101 (“‘[I]f federal jurisdiction
    is doubtful, a remand to state court is necessary.’” (quoting
    Dixon v. Coburg Dairy, Inc., 
    369 F.3d 811
    , 815-16 (4th Cir. 2003)
    (en banc)); Johnson-Brown v. 2200 M St. LLC, 
    257 F. Supp. 2d 175
    ,
    177 (D.D.C. 2003) (“Where the need to remand is not self-evident,
    the court must resolve any ambiguities concerning the propriety
    of removal in favor of remand.”).    If the removing party cannot
    meet its burden, the court must remand the case.    See, e.g., Reed
    v. Alliedbarton Sec. Servs., LLC, 
    583 F. Supp. 2d 92
    , 93 (D.D.C.
    2008); Johnson-Brown, 
    257 F. Supp. 2d at 177
    .
    III. LEGAL ANALYSIS
    A.   Ms. Barrow Has Been Substituted for Ms. Welch as
    Plaintiff in this Action
    As a threshold issue, defendant argues that the motion to
    remand is not properly before the Court and should be stricken or
    otherwise dismissed.   Opp’n Br. at 4-6.   Hercules argues that the
    motion to remand was improperly filed because Ms. Welch was
    deceased at the time of the filing and Ms. Barrow had not yet
    been substituted as plaintiff.   
    Id.
       While defendant is correct
    in its assertion that at the time the motion to remand was filed
    no party had yet been substituted for decedent, this has since
    been remedied.   On June 8, 2009, the Court granted plaintiff’s
    motion to substitute parties.    See June 8, 2009 Minute Order
    (“Beverly Lynn Barrow, the power of attorney of Olga Welch, and
    4
    now, the personal representative of the Estate of Mrs. Olga Welch
    (‘Mrs. Welch’) is substituted for Mrs. Welch as the plaintiff in
    this action.”); see also Fed. R. Civ. P. 25(a)(1) (“If a party
    dies and the claim is not extinguished, the court may order
    substitution of the proper party.”).   Accordingly, pursuant to
    
    D.C. Code § 12-101
    , Ms. Barrow may pursue this action on Ms.
    Welch’s behalf.   See 
    D.C. Code § 12-101
     (“On the death of a
    person in whose favor or against whom a right of action has
    accrued for any cause prior to his death, the right of action,
    for all such cases, survives in favor of or against the legal
    representative of the deceased.”).   In view of the fact that Ms.
    Barrow has been substituted for the decedent as plaintiff in this
    action,2 it would be a waste of judicial resources for the Court
    to strike the motion to remand and order it to be refiled.
    Therefore, in the interest of judicial economy, the Court will
    address the underlying issue of subject matter jurisdiction,
    which has been fully briefed by the parties and is properly
    before the Court.3
    2
    Ms. Barrow has been an active participant in the litigation
    from the beginning. The complaint was signed by Ms. Barrow as
    “Power of Attorney of Olga Welch.” Compl. at 23.
    3
    The D.C. Circuit has instructed that “[w]hen it appears that a
    district court lacks subject matter jurisdiction over a case that
    has been removed from a state court, the district court must
    remand the case . . . .” Republic of Venezuela v. Philip Morris
    Inc., 
    287 F.3d 192
    , 196 (D.C. Cir. 2002)(emphasis added)(citing
    
    28 U.S.C. § 1447
    (c)). Having reviewed the record and determined
    that the Court lacks subject matter jurisdiction, this Court is
    obligated to remand the case to D.C. Superior Court. Cf. Reed,
    5
    B.   Hercules Has Not Carried its Burden of Establishing
    that the Amount in Controversy Exceeds the Statutory
    Minimum of $75,000
    Plaintiff argues that this case should be remanded to D.C.
    Superior Court because defendant has failed to establish that the
    amount in controversy in this action exceeds the statutory
    minimum required by 
    28 U.S.C. § 1332
    (a).4   As the removing party,
    defendant bears the burden of establishing that plaintiff’s
    unspecified “compensatory damages” exceed $75,000, exclusive of
    interests and costs.   See, e.g., RWN Dev. Group, 
    540 F. Supp. 2d at 86
     (explaining that after a case is removed to federal court,
    “the party opposing a motion to remand bears the burden of
    establishing that subject matter jurisdiction exists in federal
    court” (internal quotation marks omitted)).5
    
    583 F. Supp. 2d at 93
     (sua sponte remanding a case upon its
    determination that the defendant had failed to establish that the
    amount in controversy exceeded $75,000).
    4
    Plaintiff does not challenge that diversity of citizenship
    exists in this action. The Court will therefore assume without
    deciding that this statutory requirement has been satisfied.
    5
    The D.C. Circuit has not yet addressed what standard the Court
    should apply in assessing the adequacy of a defendant’s showing
    that the amount-in-controversy requirement is satisfied when, as
    here, the plaintiff does not plead a specific amount of damages
    in the complaint. While some courts have required a defendant to
    show to a “legal certainty” that the amount in controversy
    exceeds $75,000, the more recent trend is to require the
    defendant to prove by a preponderance of the evidence that the
    statutory jurisdictional threshold is met. See generally 14C
    Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal
    Practice & Procedure § 3725 (discussing the “numerous different
    standards” that courts have employed to assess the adequacy of a
    defendant’s showing of amount in controversy and providing an
    exhaustive overview of cases). The Court need not choose between
    6
    Defendant first argues that the amount-in-controversy
    requirement of 
    28 U.S.C. § 1332
    (a) is met because “if Ms. Welch
    prevails on her claims, the amount of her recovery and the costs
    of Hercules’ compliance with the judgment will, more likely than
    not, exceed $75,000.00.”   Opp’n Br. at 10.   In support of this
    argument, defendant relies on a settlement demand that plaintiff
    submitted to Hercules a month before filing this action.      See
    Docket No. 8, Ex. E.   In this demand (“Plaintiff’s Settlement
    Demand”), plaintiff agreed to settle her claims for $50,628.        See
    
    id.
       Plaintiff’s Settlement Demand was based on Ms. Welch’s
    alleged overpayment of rent for forty-nine months (totaling
    $20,628), as well as $30,000 in compensatory damages “for the
    costs of medical treatment for allergic rhinitis and vasomotor
    rhinitis, the destruction of her personal property, the loss of
    enjoyment of her apartment because of the conditions in her
    apartment, and the physical and emotional distress she suffered.”
    See 
    id.
       Defendant argues that even though Plaintiff’s Settlement
    Demand was $24,372 less than the statutory minimum, the actual
    amount in controversy is greater than $75,000 because plaintiff’s
    complaint contains additional allegations that were not included
    in Plaintiff’s Settlement Demand.    Specifically, defendant argues
    that: (i) “Ms. Welch’s lawsuit claims damages for alleged
    injuries that continued at least until the date of filing, and
    these different standards, however, because the Court finds that
    defendant has failed to satisfy its burden under either standard.
    7
    some of the alleged injuries were pled as continuing
    indefinitely”; (ii) “Ms. Welch’s lawsuit includes claims for
    items of damages that were not addressed in her settlement
    agreement, specifically ‘costs incurred for inspections of the
    property’ and ‘moving and storage costs’ and attorney’s fees”;
    and (iii) “Ms. Welch’s lawsuit asks the Court to ‘enjoin Hercules
    from further interference with Plaintiff’s use and enjoyment of
    the Apartment.”   Opp’n Br. at 11-12.   None of these arguments
    establishes that the amount in controversy is greater than
    $75,000.
    First, with respect to the continuing nature of plaintiff’s
    claims, defendant has not provided the Court with a means by
    which to estimate the cost of any “continuing injuries” suffered
    by plaintiff.   The fact that plaintiff requests compensatory
    damages for “the personal injury and emotional distress Plaintiff
    has and continues to suffer,” Compl. at 21, is insufficient to
    establish that the amount in controversy is met.    See Blue v.
    Fremont Inv. & Loan, 
    584 F. Supp. 2d 10
    , 12 (D.D.C. 2008)
    (rejecting defendant’s argument that plaintiff’s request for
    “unspecified damages for ‘mental anguish,’ ‘embarrassment,
    humiliation and emotional distress,’ ‘statutory damages,’ among
    fees, interest and treble damages” was sufficient to establish
    that the amount-in-controversy requirement was met, stating that
    8
    “[t]he allegations provide the Court with no basis from which to
    find an amount in controversy exceeds $75,000").
    Second, with regard to plaintiff’s claims for damages that
    were not addressed in Plaintiff’s Settlement Agreement, defendant
    relies on an expert report which estimates these costs at $7,800.
    See Opp’n Br. at 11-12.   Assuming arguendo that this value is
    accurate, defendant has still failed to establish that the amount
    in controversy is greater than $75,000.
    Third, with respect to injunctive relief, defendant has put
    forth no evidence regarding what it would cost to repair
    plaintiff’s apartment.    See Wexler v. United Air Lines, 
    496 F. Supp. 2d 150
    , 153 (D.D.C. 2007) (“The value of injunctive relief
    for determining the amount in controversy can be calculated as
    the cost to the defendant.”).   Defendant’s self-serving,
    conclusory statement that “the cost for effecting Ms. Welch’s
    requested repairs . . . would more than exceed the amount in
    controversy requirement for federal jurisdiction,” Opp’n Br. at
    12, is simply insufficient to satisfy the statutory requirements
    of 
    28 U.S.C. § 1332
    (a).   See Wexler, 
    496 F. Supp. 2d at 154
    (characterizing the defendant’s statement that its compliance
    with an injunction would cost more than $75,000 as a “non-
    existent evidentiary showing” that was “insufficient to meet
    [its] burden to establish the existence of federal subject matter
    jurisdiction,” and explaining that the defendant should have
    9
    submitted supporting declarations or affidavits from its
    employees estimating the cost of complying with plaintiff’s
    requested relief); cf. Reed, 
    583 F. Supp. 2d at 94
     (defendant
    failed to establish that the amount in controversy exceeded
    $75,000, where the only evidence was an “unsubstantiated
    allegation” that the plaintiff had made a settlement demand “well
    in excess of $75,000”); RWN Dev. Group, 
    540 F. Supp. 2d at 90
    (“Although the defendant relies on the projection of the
    plaintiffs’ in the Underlying Suits that their damages exceed
    $75,000, absent any supporting evidence to substantiate the
    asserted value of those claims reduces them to nothing more than
    pure speculation.”).
    Finally, defendant argues that the amount in controversy is
    greater than $75,000 because plaintiff’s counsel was unwilling to
    stipulate that the amount of damages sought by plaintiff was less
    than $75,000.   Opp’n Br. at 13-15.   Hercules contends that
    because plaintiff was unwilling to stipulate to the amount in
    controversy, “it is clear that the amount in controversy exceeds
    $75,000, exclusive of costs and interests.”    Notice of Removal
    Ex. 1, Decl. of C. Thomas Brown ¶ 7.    The Court rejects this
    circular logic.   There are many reasons that a plaintiff would be
    unwilling to stipulate that its damages were less than $75,000 –
    particularly where, as here, discovery had not yet commenced.
    Accordingly, plaintiff’s unwillingess to stipulate to the amount
    10
    in controversy does not satisfy a removing defendant’s burden to
    establish that the amount in controversy exceeds $75,000.     See,
    e.g., Williams v. Best Buy Co., 
    269 F.3d 1316
    , 1320 (11th Cir.
    2001) (“[A] refusal to stipulate standing alone does not satisfy
    [defendant]’s burden of proof on the jurisdictional issue.”);
    Leys v. Lowe's Home Ctrs., Inc., 
    601 F. Supp. 2d 908
    , 917 (W.D.
    Mich. 2009) (“‘Since a defect in subject matter jurisdiction
    cannot be stipulated to or waived, attempting to force the
    plaintiff to enter a stipulation regarding the potential amount
    of damages would serve no effect in determining the actual amount
    in controversy at the time of removal.   The burden is on
    defendants, not the plaintiff, to prove the amount in
    controversy.   If the Court were to conclude that a plaintiff’s
    refusal to stipulate is sufficient to satisfy that burden,
    defendants in every removal dispute would force the plaintiffs to
    choose between stipulating against their future remedies and
    remaining in federal court.’” (quoting Dobson v. United Airlines,
    Inc., No. 02-cv-04771, 
    2002 U.S. Dist. LEXIS 27714
     (N.D. Cal.
    Nov. 25, 2002))).
    In sum, because the Court must resolve any ambiguities
    concerning the propriety of removal in favor of remand, defendant
    has failed to provide this Court with sufficient evidence to
    determine that the amount in controversy exceeds the statutory
    minimum required by 
    28 U.S.C. § 1332
    (a).   Consequently, this
    11
    Court lacks subject matter jurisdiction.    Plaintiff’s motion to
    remand is therefore GRANTED.
    C.   Plaintiff’s Request for Attorneys Fees and Costs is
    Denied
    Under 
    28 U.S.C. § 1447
    (c), a court “may require payment of
    just costs and any actual expenses, including attorney fees,”
    when an action is remanded.    Plaintiff argues that such costs
    should be awarded because Hercules’ failure to prove to a “legal
    certainty” that the amount in controversy exceeds $75,000, “is
    contrary to well-settled authority and lacks any legal basis.”
    Mot. for Remand at 7-8; see Johnson-Brown, 
    257 F. Supp. 2d at 181
    (explaining that costs and expenses may be awarded if “the
    removing party contradicts well-settled law in attempting to
    remove the case to federal court”).    In her reply brief, however,
    plaintiff concedes that “the D.C. Circuit has not specifically
    addressed the standard of proof the defendant must satisfy” and
    admits that there is a Circuit split on the issue.    Reply Br. at
    3; see also supra n.4.   Hercules’ removal was therefore not in
    contradiction to “well-settled authority.”    The Supreme Court has
    also counseled that “absent unusual circumstances, attorney’s
    fees should not be awarded when the removing party has an
    objectively reasonable basis for removal.”     Martin v. Franklin
    Capital Corp., 
    546 U.S. 132
    , 141 (2005)(affirming decision not to
    award attorneys fees pursuant to § 1447(c)).    Although defendant
    failed to put forth sufficient evidence to support its removal,
    12
    the Court concludes that an award of attorneys fees and costs is
    not warranted under the circumstances of this case.   Accordingly,
    Plaintiff’s request for attorneys fees and costs is DENIED.
    IV.   CONCLUSION
    For the reasons set forth above, the Court GRANTS
    plaintiff’s motion to remand this action to D.C. Superior Court,
    where the case commenced.   The Court DENIES plaintiff’s request
    for attorneys fees and costs.   An appropriate Order accompanies
    this Memorandum Opinion.
    SIGNED:    Emmet G. Sullivan
    United States District Court Judge
    July 24, 2009
    13