Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00640/USCOURTS-almd-2_07-cv-00640-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Fraud

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Nationpoint has since been dismissed as a party to this action because it is not a legal entity

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capable of being sued. (Doc. # 13.) 

IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

JEFFREY DANIEL, et al., )

)

Plaintiffs, )

v. ) CASE NO. 2:07-cv-640-WKW

) (WO)

NATIONPOINT, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This case is before the court on the plaintiffs’ Motion for Remand (Doc. # 14). For

the reasons set forth below, the Motion for Remand is due to be GRANTED.

I. FACTS AND PROCEDURAL HISTORY

Plaintiffs Jeffrey and Kimberly Daniel (collectively, the “Daniels”) filed a state court

action against Nationpoint, First Franklin Financial Corporation, Merrill Lynch Bank & 1

Trust Company, and Blake Barsamian, (collectively, the “defendants”) alleging that the

defendants wrongfully failed or refused to provide to the Daniels a home loan with 100%

financing. In June 2005, the Daniels sought a home loan from the defendants. (Compl. ¶ 7.)

On June 7, 2005, Blake Barsamian, an employee of First Franklin Financial Corporation,

notified the Daniels that they were approved for a loan that included 100% financing;

subsequently, the Daniels received both written and verbal confirmation that there would be

100% financing. (Id. ¶¶ 8, 11.) On June 29, 2005, Barsamian informed the Daniels that the

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property they were purchasing was deemed rural and they needed to provide a 10% down

payment. (Id. ¶ 11.) The Daniels could not provide a 10% down payment, and the closing

was delayed. (Id.. ¶ 13.) The Daniels eventually found financing but at a rate less favorable

than the one they had negotiated with the defendants. (Id. ¶ 14.) 

On January 12, 2006, the Daniels’ attorney sent the defendants a demand letter,

offering to settle the matter out of court for $100,000. (Notice of Removal Ex. C.) On June

5, 2007, the Daniels filed an action in Alabama state court with claims for fraudulent

suppression, fraud, breach of contract, and negligence, and in each count they requested

“compensatory and punitive damages as a jury deems reasonable and may award together

with interest and cost, not to exceed $74,999.00, exclusive of interest and costs.” (Compl.

at unnumbered pages 4-6.) The defendants removed the case to federal court on July 12,

2007, and on August 10, 2007, the Daniels filed a motion to remand, which is fully briefed

and ready for resolution.

II. STANDARD OF REVIEW

Federal courts have a strict duty to exercise the jurisdiction conferred on them by

Congress. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). However, federal

courts are courts of limited jurisdiction. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th

Cir. 1994). Thus, with respect to cases removed to this court pursuant to 28 U.S.C. § 1441,

the law of the Eleventh Circuit favors remand where federal jurisdiction is not absolutely

clear. “[R]emoval statutes are construed narrowly; where plaintiff and defendant clash about

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jurisdiction, uncertainties are resolved in favor of remand.” Id. 

III. DISCUSSION

The plaintiffs contend that there is no diversity jurisdiction because the amount-incontroversy requirement is not met. They argue that because they limited their demand to

$74,999.00 in the complaint, the defendants have a burden of proving to a legal certainty that

the amount in controversy requirement is met. 

Diversity jurisdiction exists where there is diversity of citizenship and the amount in

controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332. To

determine the amount in controversy, a court first looks to the amount alleged in the

complaint. Burns, 31 F.3d at 1095. Because the amount in the ad damnum clause here is

less than the jurisdictional amount, the defendants must prove to a legal certainty that if the

plaintiffs prevail on liability their award would be more than the jurisdictional amount, i.e.,

$75,000.00. Id. The law imposes a heavy burden on a defendant who asks the court to find

the plaintiff has understated the value of his claim in his complaint. Id. Because the

plaintiff’s attorney has a duty of candor to the tribunal, his signed pleading containing the

damages claim deserves “deference and a presumption of the truth.” Id. 

The defendants have put forth three arguments to support their claim that the amountin-controversy requirement is satisfied in this case: (1) the Daniels sought a settlement for

more than the jurisdictional amount; (2) the Daniels’ claims should be aggregated;, and (3)

the Daniels seek punitive damages. As explained below, these arguments do not establish

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 The defendants cite Fairchild v. State Farm Mut. Auto Ins. Co., 907 F. Supp. 969, 971 (M.D. 2

La. 1995), to support their claim that a settlement letter is relevant to establishing the value of the claim. 

However, in Fairchild the motion to remand was evaluated under a preponderance standard, not a legal

certainty standard, because the plaintiff had not alleged a specific amount of damages. Id. at 970.

 Although this case does not involve one plaintiff and one defendant, the same analysis applies. 3

The claims of several plaintiffs can be aggregated when they “unite to enforce a single title or right, in

which they have a common and undivided interest.” Smith v. GTE Corp., 236 F.3d 1292, 1300 n.6 (11th

Cir. 2001) (quoting Zahn v. Int’l Paper Co., 414 U.S. 291, 295 (1974)). Additionally, claims against

multiple defendants can be aggregated where it is alleged that the defendants are jointly liable. Jewell v.

Grain Dealers Mut. Ins. Co., 290 F.2d 11, 13 (5th Cir. 1961).

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to a legal certainty that if the Daniels prevail they will be awarded more than $75,000.00.

The defendants’ first argument is that the Daniels’ demand letter seeking settlement

of their claims for $100,000 establishes the jurisdictional amount. A settlement letter does

not establish to a legal certainty that if the plaintiffs prevailed at trial they would recover

more than the jurisdictional amount. Hogans v. Reynolds, No. 05-350, 2005 WL 1514070,

at *3 n.8 (M.D. Ala. June 24, 2005); see also Constant v. Int’l House of Pancakes, Inc., 487

F. Supp. 2d 1308, 1312 (N.D. Ala. 2007). That the Daniels offered to settle the case for 2

more than $75,000.00 does not establish to a legal certainty that the amount-in-controversy

requirement is met. 

The defendants’ second argument is that the Daniels’ claims should be aggregated to

determine the total amount in controversy. The Daniels respond that “[t]he counts alleged

in the Complaint are simply different legal theories concerning the same transaction.” (Mot.

Remand ¶ 6.) While the claims of one plaintiff against one defendant are generally

aggregated, under Alabama law a plaintiff cannot receive a “double recovery” for what is 3

essentially one viable cause of action. Deupree v. Butner, 522 So. 2d 242, 244-45 (Ala.

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1988); see Hardy v. Jim Walter Homes, Inc., No. 06-687, 2007 WL 1889896, at *4 (S.D. Ala.

June 28, 2007) (“claims seeking essentially the same recovery under a variety of theories are

not to be aggregated.”). While a plaintiff can sue for both a breach of contract and a tort

arising out of a single transaction, the claims are not aggregated because the plaintiff can

recover damages for either but not both. Combined Servs., Inc. v. Lynn Elecs. Corp., 888

F.2d 106, 107 n.4 (11th Cir. 1989); see Hill v. United Ins. Co. Of Am., 998 F. Supp. 1333,

1337 (M.D. Ala. 1998) (“whatever items of damage are compensated for as damage resulting

from the breach of contract may not also be compensated for as damages in a tort claim.”).

The defendants have not responded to the argument that aggregation is inappropriate because

the plaintiffs cannot receive a double recovery. Cf. Spidell v. Midland Credit Mgmt., Inc.,

No. 07-874, 2007 WL 3171380, at *1 (M.D. Ala. Oct. 26, 2007) (refusing to aggregate

claims when “[t]here is nothing in the notice to indicate why the damages sought in the two

counts are not the same and thus should not be aggregated”). Because the defendants have

failed to show that aggregation is proper, they have not carried their burden regarding the

amount in controversy.

The defendants’ final and weakest argument is that the amount-in-controversy

requirement is met because the Daniels seek punitive damages. In their complaint the

Daniels “demand judgment against the Defendants in such an amount of compensatory and

punitive damages as a jury deems reasonable . . . not to exceed $74,999.00.” (Compl. at

unnumbered pages 4-6.) A plain and obvious reading of the Daniels’ request for $74,999.00

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easily establishes that punitive damages are included in the demand. Moreover, an assertion

that the jurisdictional amount in controversy is met because the plaintiff seeks punitive

damages “begs the question of what those punitive damages are likely to be - a question that

[the defendant] bears the burden of answering.” Moore v. CNA Found., 472 F. Supp. 2d

1327, 1332 (M.D. Ala. 2007). 

The defendants fail to carry their burden of proving to a legal certainty that if the

Daniels prevail they will collect more than $75,000.00. 

IV. CONCLUSION

Accordingly, it is ORDERED that:

1. Plaintiffs’ Motion to Remand (Doc. # 14) is GRANTED.

2. This case is REMANDED to the Circuit Court of Covington County; and

3. The Clerk is DIRECTED to take appropriate steps to effect the remand.

DONE this 19th day of December, 2007.

 /s/ W. Keith Watkins 

UNITED STATES DISTRICT JUDGE

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