Pretka v. Kolter City Plaza II, Inc.

608 F.3d 744

Andrew PRETKA, Paul Litvak, Michelle Litvak, Peter O'Connell, Harriet Dinari,on behalf of themselves and others similarly situated, Plaintiffs-Appellees, v. KOLTER CITY PLAZA II, INC., Defendant-Appellant.

No. 10-11471.

United States Court of Appeals, Eleventh Circuit

June 8, 2010

Scott N. Gelfand, Scott N. Gelfand, P.A., Coral Springs, FL, for Plaintiffs-Appellees.

Jaime A. Bianchi, David P. Draigh, Stephen M. Corse, Christopher Nicholas Dawson, White & Case, LLP, Miami, FL, for Defendant-Appellant.

Before EDMONDSON, CARNES and PRYOR, Circuit Judges.

CARNES, Circuit Judge:

The underlying dispute in this case involves luxury condominiums in West Palm Beach, Florida. The plaintiffs entered into contracts to purchase units in Two City Plaza, a new high-rise building that offers ocean views and "cruise-like amenities" such as a Zen Garden, Moonlight Theatre, and a rooftop resort pool and steam room.¹ The plaintiffs were eager to enjoy those amenities, but there was trouble in paradise, or in getting paradise constructed. Extensive construction delays (and maybe a downturn in the real estate market) turned the plaintiffs' eagerness for the promised condos into eagerness to get out of their contracts. After the developer, Kolter City Plaza II, Inc., refused to let the plaintiffs out of the contracts, they filed a class action lawsuit against Kolter in Florida state court, alleging violations of the Florida Condominium Act as well as breach of contract.

This appeal is not about the merits of the lawsuit but about whether it will be decided in state or federal court. It brings us important issues of federal removal jurisdiction and the Class Action Fairness Act, the decision of which requires that we take a close look back at Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. 2007). The district court relied on Lowery in granting the plaintiffs' motion to remand this lawsuit to state court. We think it misapplied or overextended that decision. As we will explain, Lowery was a case that involved the removal procedures in the second paragraph of 28 U.S.C. § 1446(b), and the decision must be read in that context. While some of the language of the opinion sweeps more broadly, it is dicta insofar as a § 1446(b) first paragraph case, like this one, is concerned. While we may consider dicta for its persuasive value, we are not persuaded to follow Lowery's dicta about the type of evidence a defendant that removes a case under the first paragraph of § 1446(b) may use in establishing the requisite amount in controversy.

I. FACTS AND PROCEDURAL HISTORY

On April 9, 2009, Andrew Pretka, Paul Litvak, and Michele Litvak filed a class action complaint against Kolter in Florida state court. Kolter was served with a copy of the initial complaint on the same day. On April 27, 2009, those three plaintiffs, joined by Peter O'Connell, Harriet Dinari, Bruce Fisher, and Daniel D'Loughy, filed an amended complaint and had it served two days later. The two complaints are materially identical except that the amended complaint was brought by all seven, instead of just three, named plaintiffs. (For simplicity, we will refer to the amended, operative complaint as "the complaint" unless otherwise noted.)

Based on alleged violations of the Florida Condominium Act, as well as breach of contract, the plaintiffs sought in the complaint "to rescind the purchase and sale contracts and obtain the return of their deposits and the return of the deposits for all similarly situated depositors." Complaint ¶ 3. As for the amount in controversy, the question at the heart of this appeal, the complaint is indeterminate. It states that the case "is an action for monetary damages in excess of $15,000.00, exclusive of interest, costs and attorney's fees." Id. ¶ 4.

The complaint, however, does contain some additional information on the amount in controversy. Copies of the named plaintiffs' contracts are attached to the complaint. Those exhibits share "identical contract language" not only with each other, but also with the contracts executed by unnamed putative class members.² Id. ¶ 22. One part of that identical contract language is a line where the parties to each agreement entered the "Initial Deposit" paid to the escrow agent, the amount of which was "equal to 10% of [the] Purchase Price." Another part of the contract language shared by the agreements is an entry for the "Construction Payment" paid to the seller, the amount of which also was "equal to 10% of the Purchase Price." It is undisputed that the sum of each plaintiff's "initial deposit" and "construction payment" counts toward the amount in controversy; the plaintiffs want both of those deposits returned.³ The six exhibits attached to the complaint, on which the required deposit amounts have been written, show that the named plaintiffs agreed to make initial deposits and construction payments totaling $628,240; the total deposit per condominium ranging from $73,780 to $121,600, with the average being $104,707.⁴

The complaint also states that "[t]he class is believed to consist of over 300 members." Id. ¶ 48. The complaint and its attachments do not identify all the class members, but the complaint alleges that their identity is "a matter capable of ministerial determination" from Kolter's records. Id. ¶ 55 ("The only individual, as opposed to common, issue is the identification of the class members who provided deposits for construction of a condominium unit to the Defendant, a matter capable of ministerial determination from Defendant's records."). The complaint also alleges that the named plaintiffs' claims are typical of those of the class. Id. ¶ 49 ("Plaintiffs' claims are typical of those of the class members. All claims are based on the same factual and legal theories involving the same Condominium building, the same form contract (required by law to be identical for all purchasers), the same delinquent developer, the same basis for rescission and/or breach, and the same ultimate relief—the return of the purchasers' deposits.").

On May 8, 2009, which was the twenty-ninth day after the initial complaint was filed, Kolter removed the case to the Southern District of Florida, pursuant to the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). Kolter's notice of removal stated that the proposed class consists of more than 100 members, that the parties are minimally diverse, and that the aggregate amount in controversy exceeds $5 million, exclusive of interest and costs.

Kolter's notice of removal also stated that CAFA's amount-in-controversy requirement was met because the company had "collected purchase deposits for units at the Two City Plaza condominium totaling in excess of $5 million." Kolter supported that factual assertion by attaching to the notice of removal a sworn declaration by Michael Clarke, Chief Financial Officer of Kolter's parent company.⁵ In his declaration, Clarke states that Kolter's corporate records are maintained under his "supervision, direction, and control" and that he had personal knowledge of the facts that he was setting forth. Clarke stated that Two City Plaza contains 468 luxury units, and that "more than 100 prospective purchasers of condominium units at Two City Plaza have executed the same purchase and sale form contracts as those attached as exhibits to the Amended Complaint, save for certain buyer-specific addenda to those contracts."⁶ He also attested that Kolter had "collected more than $5 million in condominium unit purchase deposits from prospective purchasers of units at Two City Plaza." On that basis, Kolter's notice of removal argued that "it is clear from the allegations of the Amended Complaint as well as the facts set forth in this Notice of Eemoval that the amount in controversy in this case exceeds the $5,000,000 minimum required under 28 U.S.C. § 1332(d)(2)."

The plaintiffs filed a motion to remand on May 26, 2009, arguing that Lowery required the district court to ignore Clarke's declaration because it was not a document received from the plaintiffs. 483 F.3d at 1213-15 ("[U]nder [28 U.S.C.] § 1446(b), in assessing the propriety of removal, the court considers the document received by the defendant from the plaintiff—be it the initial complaint or a later received paper—and determines whether that document and the notice of removal unambiguously establish federal jurisdiction.").

On June 12, 2009, Kolter filed an opposition to remand making several contentions. First, it contended that the jurisdictional amount is "readily deducible" from the plaintiffs' complaint, even if Clarke's declaration were ignored. See id. at 1211 ("If the jurisdictional amount is either stated clearly on the face of the documents before the court, or readily deducible from them, then the court has jurisdiction."). Kolter based that assertion on an extrapolation from the named plaintiffs' deposit amounts to at least 301 named and unnamed class members.⁷ Second, Kolter contended that Lowery, a torts case, does not apply to a contract-related dispute, such as this case, where the defendant has unique knowledge of the value of the plaintiffs' claims. See Id. at 1214 n. 66 ("A defendant would be free to introduce evidence regarding damages arising from a source such as a contract provision whether or not the defendant received the contract from the plaintiff."). Accordingly, Kolter argued that it could rely on Clarke's declaration as evidence of the amount in controversy. Third, Kolter contended that the district court could and should consider the evidence that it had submitted with its opposition to remand. The bulk of that post-removal evidence was the first three pages of every unnamed plaintiff's contract—i.e., every agreement executed by a purchaser whose deposits Kolter had not returned. Another exhibit attached to Kolter's opposition to remand was a sworn declaration from Francine...