Virgil v. Reorganized M.W. Co., Inc., Civ.A. 3:00CV977BN.

156 F.Supp.2d 624

Eddie VIRGIL, Plaintiff, v. REORGANIZED M.W. CO., INC., Montgomery Ward Credit Corp., Monogram Credit Card Bank of Ga., Northland Credit Group, Inc., and Equifax, Defendants.

No. Civ.A. 3:00CV977BN.

United States District Court, S.D. Mississippi, Jackson Division.

June 22, 2001.

COPYRIGHT MATERIAL OMITTED

Kathryn N. Nester, Kathryn N. Nester, Attorney, Jackson, MS, for Eddie Virgil, plaintiff.

Ross F. Bass, Jr., Amanda K. Jones, Phelps Dunbar, Jackson, MS, for Reorganized M.W. & Co., Inc., Montgomery Ward Credit Corporation, Monogram Credit Card Bank of Georgia, defendants.

OPINION AND ORDER

BARBOUR, District Judge.

This cause comes before the Court on Plaintiff's Motion to Remand. After considering the motion, the Joint Response of the defendants, and the plaintiff's Rebuttal, the Court finds that the motion to remand is well taken and should therefore be granted.

I. Facts and Proceedings

Plaintiff Eddie Virgil ("Virgil") sought to sue the Reorganized M.W. Co., Inc., the Montgomery Ward Credit Corporation, the Monogram Credit Card Bank of Georgia, the Northland Group, Inc., and Equifax ("the Defendants") in the circuit court of Copiah County, Mississippi. Virgil alleged that he was wrongly reported as having a delinquent credit account by defendant Montgomery Ward, which resulted in collection efforts and a bad credit report, and that repeated efforts to notify the Defendants of their error were in vain. In the complaint that Virgil filed with the circuit court, he asserted that the Defendants' "continuous and ongoing false reports of a debt and attempts to collect the debt ... constitute a wanton and reckless disregard" of his rights, and that their "negligent and/or grossly negligent acts include but are not limited to ... [n]egligent infliction of emotional distress," among other acts. Virgil sought judgment "in the amount of $74,000.00 in compensatory and punitive damages, and for costs, pre-judgment interest and attorney fees."

After Virgil filed the complaint on November 10, 2000, the Defendants jointly moved for removal to this Court on December 26, 2000. The Defendants claimed that removal on diversity grounds was proper under 28 U.S.C. §§ 1332(a), 1441(a) and (b), and 1367, since (1) Virgil's allegation of punitive damages meant that attorney fees greater than $1,001.00 were likely to be awarded if he prevailed in court and (2) Virgil is a Mississippi resident while the Defendants are all nonresident corporations. The Defendants also claimed that federal question jurisdiction was satisfied by the preemptive effect of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seg. ("FDCPA").

On January 25, Virgil filed the Motion to Remand which is now before this Court, denying that either the amount in controversy or the FDCPA create federal subject-matter jurisdiction in this case and asking this Court to remand to the Copiah County circuit court.

II. Analysis

Virgil's Motion to Remand is opposed by the Defendants on two grounds, diversity jurisdiction and federal question jurisdiction. Because Defendants invoked federal jurisdiction in seeking removal to federal court, theirs is the burden of demonstrating subject matter jurisdiction. Kidd v. Southwest Airlines, 891 F.2d 540, 543 (5th Cir.1990); Roberson v. Jim Walter Homes, No. CIV.A.100CV108-D-D, 2000 WL 798826, at *1 (N.D.Miss. June 2, 2000) (citing Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995)).

A. Diversity Jurisdiction

Virgil argues that because he asked in his complaint for a judgment "in the amount of $74,000.00 in compensatory and punitive damages, and for costs, pre-judgment interest and attorney fees," the amount in controversy clearly fails to meet the statutory amount set by 28 U.S.C. § 1332(a).

Against this, the Defendants assert that Virgil's inclusion of punitive damages in his prayer for relief renders possible an award for attorney fees, which Virgil did in fact request, and that the amount of those fees can be included when calculating the actual amount in controversy. See Foret v. Southern Farm Bureau Life Ins. Co., 918 F.2d 534, 537 (5th Cir.1990) (attorney fees clearly part of jurisdictional amount when provided for by contract or state statute); Aetna Cas. & Sur. Co. v. Steele, 373 So.2d 797, 801 (Miss.1979) (punitive damages merit award of attorney fees).

Generally, the plaintiff is free to sue for less than the amount that 28 U.S.C. § 1332 sets as the minimum for a federal diversity claim and thus remain "master of his complaint." Allen, 63 F.3d at 1335.

The United States Court of Appeals for the Fifth Circuit has held that the defendant seeking removal must

show by a preponderance of the evidence that the amount in controversy is greater than the jurisdictional amount. The preponderance burden forces the defendant to do more than point to a state law that might allow the plaintiff to recover more than what is pled. The defendant must produce evidence that the actual amount in controversy exceeds [the jurisdictional amount].

De Aguilar v. Boeing Co. (De Aguilar II), 47 F.3d 1404, 1412 (5th Cir.1995) (footnote omitted). If the defendant meets this burden, then the burden shifts to the plaintiff, who must show to a "legal certainty" that he will not be able to recover more than his complaint states. De Aguilar II, 47 F.3d at 1411.

In a slip-and-fall case, the United States District Court for the Northern District of Mississippi considered a plaintiff's motion to remand where the plaintiff sought "$74,000.00[,] prejudgment interest, attorneys' fees and all costs accruing in the action." Scott v. Kroger Co., 982 F.Supp. 419, 421 (N.D.Miss.1997). As in the present case, the defendant argued that the attorney fees would surely total more than $1,001.00, so that diversity jurisdiction was proper; the plaintiff then declared in her motion to remand that $74,000.00 was the maximum she would seek. One reason for the court's rejecting the defendant's argument was that punitive damages are not available for simple negligence, Scott, 982 F.Supp. at 422 & n. 4, and that reason does not apply to the present case. The court also observed that, while the plaintiffs original complaint is the basis on which removal jurisdiction must be determined and cannot be amended to defeat removal, the later motions of the plaintiff may be used to clarify, not amend, an ambiguous or uncertain jurisdictional amount. Id. at 421-22 (citing De Aguilar II, 47 F.3d at 1406).

Ambiguity in the pleadings should be resolved in favor of state jurisdiction. Greer v. MAJR Fin. Corp., 105 F.Supp.2d 583, 591 n. 6 (S.D.Miss.2000) (Lee, J.).

Mississippi courts are not permitted to enter final judgment for monetary amounts exceeding those demanded in the pleadings or amended pleadings. Miss. R.Civ.P. 54(c). However, as this Court has noted previously, the amount sought may be amended at any time before the jury is presented with the case. Draper v. United States Fid. & Guar. Co., No. 3:00CV70BN, 2000 WL 268565, at *3 n. 1 (S.D.Miss. Mar.8, 2000) (Barbour, J.).

Virgil asserts in support of his Motion to Remand that the requested $74,000.00 in damages "is inclusive of attorney fees." While the original complaint could have been read to construe Virgil as seeking (1) $74,000.00 in compensatory and punitive damages plus (2) costs, interest, and attorney fees, this reading depends on how one construes the apparently simple yet potentially ambiguous conjunction "and."¹ An alternative reading would be to construe the list beginning with "compensatory and punitive damages" as enumerating the elements comprised in the $74,000.00 total, and this reading is the one argued by Virgil in his briefs. The court in Scott read a similar pleading to include attorney fees in the total damages sought. Given the admitted though slight ambiguity of the complaint, this Court finds it appropriate to accept Virgil's clarification of the amount in controversy. The bare prospect that a court might award attorney fees in addition to, rather than as part of, punitive damages, does not rise to a preponderance of the evidence. Nor does the mere possibility that Virgil might later amend his pleading satisfy the evidentiary standard set by the Fifth Circuit. Any concerns the Defendants might have on this score would best be addressed by the procedure recommended by this Court, namely, a request for admission by the Defendants. Draper, 2000 WL 268565, at *3 (citing McLain v. American Int'l Recovery, Inc., 1 F.Supp.2d 628, 631 (S.D.Miss.1998)).

Therefore, this Court finds that diversity jurisdiction does not lie in this case, and that it does not have subject matter jurisdiction on that basis. The Court turns now to the Defendants' second asserted basis for subject matter jurisdiction.

B. Preemption and Federal Removal Jurisdiction

In his complaint, Virgil sues for gross negligence, a state common-law action. However, the Defendants assert that because Virgil referred to collection attempts made by defendant Northland Credit Group, Inc., his state-law claim is preempted by the FDCPA. The Defendants further cite a previous opinion by this Court, Thrasher v. Cardholder Services, 74 F.Supp.2d 691 (S.D.Miss.1999) (Barbour, J.), which held that removal was proper where the FDCPA apparently conflicted with state common-law causes of action. They claim that therefore, "under the doctrine of conflict preemption, plaintiff's claims are preempted by the FDCPA," which then would lead to supplemental jurisdiction over Virgil's other claims pursuant to 28 U.S.C. § 1367.

Where a district court has original jurisdiction over a civil action brought in state court, the defendant may remove to the appropriate district court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (citing 28 U.S.C. § 1441(a). One source of...