Posted: March 6, 2020

Judge Kuntz Remands Personal Injury Action After Adopting Magistrate Judge Mann’s R&R Finding That Defendants Failed to Establish Amount in Controversy Threshold

Posted by Solomon N. Klein, Litigation Partner

Judge William F. Kuntz, II, recently overruled defendants’ objections to the Report and Recommendation issued by Magistrate Judge Roanne L. Mann, and remanded a personal injury action for lacking the amount in controversy threshold in diversity actions. Daversa v. Cowan Equipment Leasing, LLC, 20-CV-163 (E.D.N.Y. Feb. 28, 2020) (WFK)(RLM).

This case once again highlights the difficulty many practitioners face in removing cases to federal court when the amount of controversy is not stated in the complaint or notice with summons. As explained in a previous post, personal injury plaintiffs in New York State courts are barred by C.P.L.R. §3017(c) from asserting a monetary amount in the complaint.  In other words, a defendant will not easily find the factual support that the plaintiff is seeking an amount exceeding $75,000 (the jurisdictional threshold to remove to federal court).

At the same time, once it becomes clear that plaintiff is seeking in excess of $75,000, a defendant must act quickly to remove the case to federal court or lose the right to remove. This has created a wealth of cases where defendants have removed the case either 1) too early — before it is clear that plaintiff is seeking more than $75,000, or 2) too late — defendant failed to act within 30 days of a document showing that the claim exceeded $75,000. As suggested in the previous post on this issue, when faced with a personal injury action that is potentially removable to federal court, counsel should serve “a supplementary demand” which requires the plaintiff to specify in writing the amount in controversy.

In this case, defendants removed too early. Magistrate Judge Mann, sua sponte, recommended that the case be remanded for failure to establish diversity jurisdiction. Defendants objected to the R&R, arguing that defendants’ counsel was informed by plaintiff’s counsel in a phone call that plaintiff would not cap damages at $75,000 – thus exceeding the jurisdictional threshold.

Judge Kuntz, however, adopted the R&R over defendants’ objections and found that the basis for the amount in controversy was not sufficiently established.

As stated by Magistrate Judge Mann, “In this Circuit, a case filed in state court does not become removable ‘until the plaintiff serves the defendant with a paper that explicitly specifies the amount of monetary damages sought. ‘“ Id. at 2 (quoting Mollner v. Starbucks Coffee Co., 624 F.3d 34,38 (2d Cir. 2010) (per curiam)). This is a “bright line rule requiring service of a document explicitly stating the amount in controversy” to trigger the removal period. Cutrone v. Mortg. Elec. Registration Sys., Inc., 749 F.3d 137, 143 (2d Cir. 2014). No such paper has been served in this case, as the Complaint only states Plaintiff seeks damages in an amount “which exceeds the jurisdictional limits of all Courts lower than the [New York] Supreme Court.” Compl. ¶ 32.

Defendants fail to satisfy their burden of proving satisfaction of the federal jurisdictional limits to a “reasonable probability.” First, the jurisdictional limitation of the lower civil courts of New York is only $25,000.00. Further, Plaintiffs counsel’s statement “that he would not cap his damages at $75,000” does not provide any clarity as to the amount in controversy in this action. While Defendants conclude this statement should be read as Plaintiff “seeking in excess of $75,000 in damages,” the statement only operates as a refusal to stipulate to a maximum amount of damages. It provides no basis for the Court to conclude to a reasonable probability the amount in controversy exceeds $75,000.00.

Accordingly, the Court finds the amount in controversy requirement under 28 U.S.C. § 1332(a) is not satisfied.

Daversa v. Cowan Equipment Leasing, LLC, 20-CV-163 (E.D.N.Y. Feb. 28, 2020) (WFK)(RLM).

Posted by Solomon N. Klein, Litigation Partner

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