Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_13-cv-08218/USCOURTS-azd-3_13-cv-08218-0/pdf.json

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

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Bradshaw Home Medical Equipment,

L.L.C.,

Plaintiffs, 

vs.

Hospice Family Care, et al.,

Defendants. 

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No. 13-CV-8218-PCT-PGR

ORDER

Before the Court is Plaintiff’s motion to remand. (Doc. 12.) Defendant opposes the

motion. (Doc. 14.) For the reasons set forth herein, the motion is denied. 

BACKGROUND

Plaintiff Bradshaw Home Medical Equipment filed a complaint in Yavapai County

Superior Court on August 14, 2013, alleging breach of contract and breach of the implied

covenant of good faith and fair dealing. (Doc. 1, Ex. A.) Defendant removed the case on

September 4, 2013, and filed an answer on September 11, 2013. (Doc. 1, 6.) The case was

assigned to this court on September 19, 2013. 

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1 The complaint alleges that National HME “was the authorized agent and manager

authorized to enter into binding agreements for Defendant Curo Hospice.” (Doc. 1, Ex. A,

¶ 8.)

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Plaintiff’s claims arise out of a Health Care Services Agreement, effective February

1, 2013, between Plaintiff and National HME.1

 Defendant informed Plaintiff in May 2013

that it was terminating the Agreement.

Plaintiff alleges that Defendant breached the contract by failing to make timely

payments, failing to honor the exclusivity provision of the Agreement, and by wrongfully

terminating the Agreement. The complaint seeks judgment for the balance due on past

invoices, amounts accruing in lost revenue, and interest, late fees, and attorneys fees.

Defendant removed the action based on diversity jurisdiction pursuant to 28 U.S.C.

§§ 1332, 1441, and 1446. (Doc. 1.) Defendant alleges that this is an action involving a

controversy between citizens of different states and that the amount in controversy exceeds

$75,000. (Id.)

DISCUSSION

A defendant may remove a case from state court to federal court if the case could have

originally been filed in federal court. 28 U .S.C. § 1441(a). “The district courts shall have

original jurisdiction of all civil actions where the matter in controversy exceeds the sum or

value of $75,000 . . . and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1).

The removing party bears the burden of establishing diversity and the amount in controversy

by a preponderance of the evidence. Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010). The party

must support its jurisdictional allegations by “competent proof.” Id. at 96–97. Courts “strictly

construe the removal statute against removal jurisdiction” and must reject removal “if there

is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d

564, 566 (9th Cir. 1992). 

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In opposing removal and seeking remand to state court, Plaintiff contends that

Defendant fails to meet its burden of proof on both the amount in controversy and the

diversity of the parties. The Court disagrees. 

1. Amount in controversy

Courts decide whether the amount in controversy requirement has been met by first

considering whether the amount is “facially apparent” from the complaint. Abrego Abrego

v. The Dow Chemical Co., 443 F.3d 676, 690 (9th Cir. 2006) (quoting Singer v. State Farm

Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997)). “Where it is not facially evident from

the complaint that more than $75,000 is in controversy, the removing party must prove, by

a preponderance of the evidence, that the amount in controversy meets the jurisdictional

threshold.”Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003);

see Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007) (explaining that

when the complaint does not allege a specific amount of damages, the party seeking removal

bears the burden of persuasion that it is “more likely than not” that the amount in controversy

exceeds the jurisdictional amount). If the removing party’s “allegations of jurisdictional facts

are challenged . . . , he must support them by competent proof.” Gaus, 980 F.2d at 567. 

For purposes of calculating the amount in controversy, a court may consider, in

addition to potential compensatory damages, a plaintiff’s potential punitive damages and

attorneys’ fees. See Ansley v. Metropolitan Life Ins. Co., 215 F.R.D. 575, 577 (D.Ariz. 2003)

(citing Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n.3 (9th Cir. 2000),

and Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155–56 (9th Cir. 1998)). 

Plaintiff seeks compensatory damages, punitive damages, and attorneys’ fees. Because

the jurisdictional amount is not facially evident from the complaint, Defendant must prove

the amount by a preponderance of the evidence. 

The complaint alleges that Plaintiff is entitled to compensatory damages consisting

of “actual damages in a specific amount to be proved at trial, plus interest, expenses and

attorneys’ fees”; “the balance due on past invoices, amounts accruing in lost revenue, plus

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2 While the parties disagree as to whether attorneys’ fees incurred after removal may

be included in the amount in controversy, the Court agrees with Defendant the $3,000 figure

represents the minimum amount of fees sought in the complaint. 

3 As stated in the complaint, Plaintiffs sent a demand letter to Defendant prior to

filing this suit. The letter referred to Plaintiff’s $80,000 investment in new equipment. (Doc.

1, Ex. A, ¶ 26.)

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interest, late fees, and attorneys’ fees”; “damages in the sum certain of the ‘set ups’ Plaintiff

has been deprived of”; “pre-judgment interest at the maximum allowable rate on this sum

certain accruing from May 20, 2013 until the date of the Judgment”; and post-judgment

interest. (Doc. 1, Ex. A, ¶¶ 35, 40, A–C.) The complaint further alleges that Plaintiff is

entitled to “tort damages on Defendant for attempting to deprive the Plaintiff of the benefits

of such agreements, to deprive the Defendant of the benefits taken without compensation,

and to deter the Defendant from acting in bad faith and otherwise seeking to take advantage

of similar relationships in the future.” (Id., ¶ 33.) 

Defendant asserts that “a careful reading of the ambiguous Complaint makes clear that

Plaintiff seeks to recover at least $91,730.50.” (Doc. 14 at 7.) This assertion is based in part

on figures alleged by Plaintiff. The complaint specifically refers to $18,730.50 for amounts

due and owing on invoices and $3,000 in attorneys’ fees (Doc. 1, Ex. A, ¶¶ 21, C).2

 The

Court agrees that these figures, totaling $21,730.50, are properly included in calculating the

jurisdictional amount. 

In addition to these amounts, Defendant interprets the complaint as seeking “a

minimum of $70,000 in either reliance damages for expenses incurred in reliance on the

Agreement or in expectation damages for lost profits.” (Id. at 7–8.) The complaint states that

as a result of the Agreement “Plaintiff invested nearly $80,000 in equipment upgrades.”3

 (Id.,

¶ 18.) The complaint alleges that the Defendant has refused to allow it to perform new “set

ups” since May 2013. (Id., ¶ 22.) Therefore, Plaintiff was allowed to perform exclusively as

it expected to for only about one-eighth of the two-year term of the Agreement. (Id., ¶¶ 12,

17.) Therefore Defendant, in arriving at the $70,000 figure, interprets the complaint as

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4 Plaintiff’s invoices from February 2013 through April 2013 show that Plaintiff

billed National HME on average nearly $16,000 per month for services rendered under the

Agreement: $15,685.50 in February, $16,844 in March, and $15,428 in April. (See Doc. 14,

Ex. A.) Based on these figures, according to Defendant, Plaintiff’s lost profits can be

calculated as follows. For May 2013 through August 2013: $25,499 ($16,000 per month less

the amount invoiced during that time for continuing patients). For September 2013 to January

2015: $272,000 ($16,000 per month for the remaining 17-month term of the Agreement).

(Doc. 14 at 6.)

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alleging that Plaintiff has suffered damages of at least seven-eighths of the amount it invested

in reliance on the Agreement. (Doc. 14 at 5.) Defendant asserts that this figure is properly

included in the amount in controversy as “consequential damages or under a reliance theory,

and [] because that amount is indicative of the amount of lost profits Plaintiff will seek to

recover.” (Doc. 14 at 4.)

In addition, as Defendant notes, the complaint seeks expectation damages in the form

of lost profits. The complaint requests damages equal to “the ‘set ups’ Plaintiff has been

deprived of due of Defendant’s breach.” (Doc. 1, Ex. A, ¶ A.) The complaint does not specify

an amount for these lost set ups. However, according to Defendant, based on monthly

invoices billed by Plaintiff to National HME, “the minimum amount that Plaintiff could have

reasonably expected to receive under the two-year Agreement . . . is $297,499.00.”4

 (Id. at

5.) Defendant contends that these “lost profits” can be taken into account in calculating the

amount in controversy.

Next, Defendant notes that the complaint requests punitive damages in an unspecified

amount. Defendant argues that Arizona courts have awarded punitive damages in cases

involving breaches of good faith and fair dealing. (Id. at 6–7.) Defendant cites cases where

punitive damages in amounts greater the jurisdictional limit were awarded for breaches in the

context of insurance contracts. For example, in Hawkins v. Allstate Ins. Co., 733 P.2d 1073,

1077 (1987), the court upheld a $3.5 million award of punitive damages for a breach of the

duty of good faith. In Nardelli v. Metro. Group Prop. & Cas. Ins. Co., 277 P.3d 789, 806

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(App. 2012), the court upheld a 1:1 ratio of punitive damages to compensatory damages for

an insurer’s bad faith.

Plaintiff counters that the complaint includes neither a theory under which it would

recover for sums spent on the new equipment nor a figure for the amount of such a recovery.

(Doc. 17 at 2–3.) Plaintiff also contends that Defendant has not presented adequate proof

with respect to the amount of punitive damages. (Id. at 3–5.)

The Court agrees that Defendant has not provided competent proof concerning

punitive damages. While the complaint clearly requests an award of punitive damages, the

cases cited by Defendant are not sufficiently analogous to guide the Court in assigning a

figure to such damages.

However, the Court concludes that even without including an amount for punitive

damages, the damages sought in the complaint, taken cumulatively, likely would exceed

$75,000. Along with unspecified punitive damages, the complaint seeks pecuniary damages,

which include the balance due on Plaintiff’s invoices, $18,730.50; damages related to the

$80,000 equipment upgrade; lost revenue from the set ups Plaintiff was deprived of as a

result of the alleged breach; and attorneys’ fees of at least $3,000. While the complaint is

vague as to the amount of lost profits, Defendant has properly relied on Plaintiff’s allegations

to arrive at an estimate of potential damages in excess of the jurisdictional amount. See, e.g.,

McPhail v. Deere & Co., 529 F.3d 947, 955–56 (10th Cir. 2008) (citing Meridian Sec. Ins.

Co. v. Sadowski, 441 F.3d 536, 541 (7th Cir. 2006)). It is more likely than not that damages

related to the equipment upgrade and lost set ups exceeds the amount necessary, when added

to the balance due on the invoices and a minimum of $3000 in attorneys’ fees, to satisfy the

jurisdictional amount of $75,000.

In sum, based on the facts and theories set forth in the complaint, the Court finds, by

a preponderance of the evidence, that any calculation of potential damages exceeds $75,000.

2. Diversity

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For the Court to have diversity jurisdiction, each plaintiff must be a citizen of a

different state than each of the defendants. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).

For diversity jurisdiction purposes, a corporation is a citizen of the state of its incorporation

and the state of its principal place of business. Davis v. HSBC Bank Nevada, N.A., 557 F.3d

1026, 1028 (9th Cir. 2009). The Supreme Court has interpreted the phrase “principal place

of business” to mean the place where a corporation’s high level officers direct, control, and

coordinate the corporation’s activities. Hertz Corp. v. Friend, 559 U.S. at 82. A corporation’s

principal place of business typically will be the place where the corporation maintains its

headquarters, “provided the headquarters is the actual center of direction, control, and

coordination, i.e., the ‘nerve center,’ and not simply an office where the corporation holds

its board meetings (for example, attended by directors and officers who have traveled there

for the occasion).” Id. at 1192.

As alleged in the complaint, Plaintiff Bradshaw Home Medical Equipment, LLC, is

an Arizona limited liability company. (Doc. 1, Ex. A, ¶¶ 1, 6.) Defendant contends that

diversity exists because it is a Delaware corporation with its principal place of business in

North Carolina. Defendant’s Notice of Removal is accompanied by the declaration of Cindy

Phillips, Senior Vice President of Human Resources of Curo Health Services. (Id., Exhibit

C.) Ms. Phillips attests that Hospice Family Care, Inc., is a Delaware corporation that

maintains its principal place of business in North Carolina; that the sole stockholder of

Hospice Family Care is Curo Arizona Hospice, LLC, a Delaware limited liability company,

with Curo Health Services, LLC, as its sole member; that Curo Health Services is organized

as a Delaware limited liability company, with Curo Health Services Holdings, Inc., as its sole

member; and that Curo Health Services Holdings is a Delaware corporation with its principal

place of business in North Carolina. (Id.)

In responding to Plaintiff’s motion to remand, Defendant submitted a second affidavit

from Ms. Phillips. (Doc. 14, Ex. B.) Here she attests that Defendant’s officer and directors

“are all residents of North Carolina and perform their regular duties as officers at the

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Headquarters of Hospice Family Care, Inc., located at 491 Williamson Road, Suite 204, in

Mooresville, North Carolina.” (Id. at 1–2.) Phillips also states that “[t]hough Hospice Family

Care, Inc. conducts a significant amount of business activity in Arizona, that activity is

directed, controlled, and coordinated by its officers in Mooresville, North Carolina.” (Id. at

2.)

Plaintiff contends that Ms. Phillips’ declarations are not competent proof that

Defendant’s corporate headquarters in North Carolina are the true center of control and

coordination rather than merely an office used for board meetings. (Doc. 12 at 9; Doc. 17 at

5.) Plaintiff argues that Defendant’s principal place of business is in Arizona, where it has

offices in Prescott and Mesa and where the parties’ business dealings have occurred. (Doc.

12 at 9.) Plaintiff also asserts that Defendant’s website does not indicate that any of its

operations are directed or controlled from North Carolina. (Id.)

The Court disagrees with Plaintiff and finds that the Phillips declarations are sufficient

to establish that Defendant’s principal place of business, or nerve center, is in North

Carolina. Court have consistently found such sworn statements by corporate officers to be

competent proof of a corporation’s principal place of business. See, e.g., McCollum v. State

Farm Ins. Co., 376 Fed.Appx. 217, 219–20 (3d Cir. 2010); Simonson v. Allstate Ins. Co., No.

CV 12–4918 CAS (MANx), 2012 WL 3073918, at *2 (C.D.Cal. July 27, 2012); Thompson

v. Intel Corp., No. CIV 12-0620 JB/LFG, 2012 WL 3860748, at *17 (D.NM. Aug. 27, 2012);

37 Water, LLC v. DHI Water & Environment, Inc., No. 1:10-cv-347-CWD, 2010 WL

4853304, at *4 (D.Idaho Nov. 22, 2010); Greystone Bank v. Tavarez, No. 09-CV-5192

(SLT), 2010 WL 3311835, at *1–2 (E.D.N.Y. June 10, 2010). 

Because Plaintiff is an Arizona resident while Defendant is incorporated in Delaware

and has its principal place of business in North Carolina, diversity of citizenship is present

under 28 U.S.C. § 1332(a). 

/ / /

/ / /

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CONCLUSION

Based on the forgoing, Defendant has met its burden with respect to the jurisdictional

amount and diversity.

Accordingly,

IT IS HEREBY ORDERED denying Plaintiff’s motion to remand (Doc. 12).

DATED this 2nd day of December, 2013.

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