Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00663/USCOURTS-azd-2_10-cv-00663-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

John F. Sullivan and Susan B. Sullivan,

husband and wife, 

Plaintiffs, 

vs.

Pulte Home Corporation, 

Defendant. 

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No. CV-10-663-PHX-DGC

ORDER

Plaintiffs John and Susan Sullivan own a home in Phoenix, Arizona. The home

is located in a hillside community surrounded by a long retaining wall. Defendant Pulte

Home Corporation developed and built the community about a decade ago.

Plaintiffs filed suit against Defendant in state court on February 25, 2010. Dkt. #1-1

at 3-26. Plaintiffs allege that the retaining wall is failing due to improper grading and

drainage in the community. The complaint asserts state law claims for fraud, negligence, and

breach of implied warranty. Defendant removed the case to this Court on the basis of

diversity jurisdiction. Dkt. #1.

Plaintiffs have filed a motion to remand. Dkt. #6. The motion is fully briefed.

Dkt. ##9, 10. Oral argument has not been requested. For reasons stated below, the Court

will grant the motion.

I. The Motion to Remand.

“Federal courts are courts of limited jurisdiction. They possess only that power

authorized by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of Am.,

Case 2:10-cv-00663-DGC Document 13 Filed 06/22/10 Page 1 of 4
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511 U.S. 375, 377 (1994). Defendant asserts that the Court has subject matter jurisdiction

pursuant to 28 U.S.C. § 1332(a)(1), which confers jurisdiction to adjudicate cases where the

parties are citizens of different states and the amount in controversy exceeds $75,000.

Dkt. #1 at 2.

The complaint in this case does not demand a dollar amount. Instead, Plaintiffs seek

the costs of investigation and repair “in an amount to be determined at trial.” Dkt. #1-1 at 26.

Defendant therefore “bears the burden of establishing, by a preponderance of the evidence,

that the amount in controversy exceeds [$75,000].” Sanchez v. Monumental Life Ins. Co.,

102 F.3d 398, 404 (9th Cir. 1996); see Matheson v. Progressive Specialty Ins. Co., 319 F.3d

1089, 1090 (9th Cir. 2003).

The scope of the repairs in this case is currently unknown. Defendant asserts that

repairs could range from some “minor repairs” to replacing the retaining wall and modifying

the home’s foundation. Dkt. #9 at 4. Defendant notes that other homeowners have submitted

claims seeking between $14,000 and $100,000 for grading and drainage problems, and cite

to an arbitration award where the cost of installing a new retaining wall exceeded $80,000.

Id. Defendants further assert that damages for the alleged diminished value of Plaintiffs’

home could be as high as $41,000, and an award of attorney fees could range anywhere from

$15,000 to $30,000. Id. at 5-6. Based on these figures, Defendant believes that the amount

in controversy “could easily exceed $75,000.” Id. at 4.

Such possibilities neither overcome the “strong presumption” against removal

jurisdiction, nor satisfy Defendant’s burden of setting forth the “underlying facts supporting

its assertion that the amount in controversy exceeds [$75,000].” Gaus v. Miles, Inc.,

980 F.2d 564, 567 (9th Cir. 1992) (emphasis in original); see Valdez v. Allstate Ins. Co., 372

F.3d 1115, 1116-17 (9th Cir. 2004) (removal cannot be based upon mere information and

belief that the amount in controversy exceeds $75,000); Haisch v. Allstate Ins. Co., 942 F.

Supp. 1245, 1249 (D. Ariz. 1996) (it would be “inherently speculative” to find the amountin-controversy requirement satisfied based on awards in other cases where the defendant

“failed to articulate why the particular facts that are alleged in the instant action might

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warrant extraordinary . . . damages”). 

The removal statute, 28 U.S.C. § 1441(a), is to be strictly construed against removal.

Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 32 (2002); Shamrock Oil & Gas

Corp. v. Sheets, 313 U.S. 100, 108 (1941). This strong presumption against removal “means

that the defendant always has the burden of establishing that removal is proper.” Gaus, 980

F.2d at 566. Defendant has failed to meet its burden. The Court, therefore, will remand the

case for lack of subject matter jurisdiction. 28 U.S.C. § 1447(c) (“If at any time before final

judgment it appears that the district court lacks subject matter jurisdiction, the case shall be

remanded.”); see also Valdez, 372 F.3d at 1118 (“If the district court determines that it is

sufficiently doubtful that the amount-in-controversy requirement has been met and thus that

federal subject matter jurisdiction is lacking, the district court should . . . remand to state

court.”); Matheson, 319 F.3d at 1090 (“Where doubt regarding the right to removal exists,

a case should be remanded to state court.”).

II. The Requests for Attorney Fees and Sanctions.

Plaintiffs seek an award of attorney’s fees and costs under 28 U.S.C. § 1447(c)

(Dkt. #6 at 7-8), and the imposition of sanctions under Rule 11 of the Federal Rules of Civil

Procedure (id. at 9). The Court will award reasonable attorney fees and costs under

§ 1447(c) and deny the request for Rule 11 sanctions.

Section 1447(c) provides that a remand order “may require payment of just costs and

any actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C.

§ 1447(c). Defendant removed based on its speculative belief that the amount in controversy

could exceed $75,000. Dkt. #1 at 2. Defendant presented few facts specific to this case to

support the Court’s exercise of jurisdiction. Dkt. #9 at 4-6. This Circuit has made clear that

removal cannot be based simply upon mere belief that the amount in controversy exceeds

$75,000. Valdez, 372 F.3d at 1116-17; Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d

373, 375 (9th Cir. 1997). The Court finds that Defendant “had no objectively reasonable

basis for removal.” Patel v. Del Taco, Inc., 446 F.3d 996, 999 (9th Cir. 2006). The Court,

pursuant to 28 U.S.C. § 1447(c), will award Plaintiffs reasonable attorney fees and costs

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incurred as a result of the improper removal. Given this ruling, the Court will deny the

request for Rule 11 sanctions.

III. The Request for Summary Ruling.

Pursuant to Local Rule of Civil Procedure 7.2(i), Plaintiffs seek a summary ruling on

their motion to remand on the ground that Defendant failed to file a timely response.

Dkt. #8. Defendant had three additional days, beyond the 14 days provided by Local Rule

7.2(c), to file its response. See Fed. R. Civ. P. 6(d). The request for summary ruling will be

denied.

IT IS ORDERED:

1. Plaintiffs’ request for summary ruling (Dkt. #8) is denied.

2. Plaintiffs’ motion to remand (Dkt. #6) is granted.

3. Plaintiffs’ request for an award of attorney fees and costs pursuant to 28

U.S.C. § 1447(c) is granted. The request for Rule 11 sanctions is denied.

4. The parties shall attempt in good faith to determine the reasonable amount of

attorneys’ fees and cost incurred as a result of removal. If the parties agree on

that amount, they shall file a stipulation with the Court. If they are unable to

agree despite good faith efforts, Plaintiffs shall, by July 9, 2010, file a motion

for attorney fees pursuant to Local Rule 54.2. A response will be due by

July 23, 2010, and the reply by July 30, 2010.

5. The Clerk is directed to remand this action to state court.

DATED this 22nd day of June, 2010.

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