evaluation of the stakes involved in this litigation, as stated both in plaintiffs’ first
amended complaint and in plaintiffs’ response to defendants’ interrogatory number
five.

The amount in controversy can be calculated as whatever is required to satisfy
the plaintiffs’ demands in full. Hart v. Schering-Plough Corp., 253 F.3d 272, 273 (7th
Cir. 2001); Gardynski- Leschuck v. Ford Motor Co., 142 F.3d 955, 958-59 (7th Cir.1998).
Three of plaintiffs’ six claims (breach of written contract, breach of oral contract, and
tortious interference with business relationships) survived the defendants’ 12(b)(6)
motion. In determining whether a plaintiff has satisfied the jurisdictional amount,
the plaintiffs may aggregate their claims against a single defendant. Fed. R. Civ. Pro.
18(a). But in this case, the amount that the plaintiffs’ allege is at issue fails to reach
the jurisdictional threshold. Count I, for breach of written contract, alleges that the
defendants have not paid a balance of $8,725 on the contracts in dispute. Count II, for
breach of two oral contracts alleges that the defendants agreed to modify the written
contract and pay an additional $6,020, which remains unpaid. Count TI further alleges
that the defendants breached an oral agreement to allow the plaintiffs to use their
home as a “referral,” and seeks the recovery of $33,000, an amount the plaintiffs claim
they reduced the cost of their services in exchange for the “referral.” Finally, Count IV,
for tortious interference with contracts, alleges that the defendants intentionally

frustrated the plaintiffs, preventing them from completing their work and costing the


threshold matter 'spring[s] from the nature and limits of the judicial power of the
United States’ and is ‘inflexible and without exception.’ " Steel Co. v. Citizens for a
Better Environment, 523U.S. 83, 94-95, 118 S.Ct. 1003, 1012, 140 L.Ed.2d 210 (1998)
(quoting Mansfield C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 511, 28
L.Ed. 462 (1884)). Once the Court has reason to believe that there is a serious
jurisdictional issue, it is obliged to resolve it before proceeding to the merits. Cook v.
Winfrey, 141 F.3d 322, 325 (7th Cir. 1998); Crawford v. United States, 796 F.2d 924,
929 (7th Cir.1986).

In their complaint, the plaintiffs assert that jurisdiction is proper under 28
U.S.C. § 1332. In order to support jurisdiction under § 1332, two requirements must
be satisfied: complete diversity of citizenship between the plaintiffs and the
defendants, and the existence of an amount in controversy in excess of $75,000
exclusive of interests and costs. For the moment, the Court will put aside the issue of
the diversity of citizenship and turn directly to the jurisdictional amount. As the party
seeking to invoke federal diversity jurisdiction, the Johnsons bear the burden of
demonstrating the existence of the amount in controversy. Chase v. Shop "N Save
Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997). Nevertheless, the Seventh
Circuit has indicated a preference for honoring the plaintiffs’ determination of the
amount in controversy. See Barbers, Hairstyling for Men & Women v. Bishop, 132
F.3d 1208, 1205 (7th Cir. 1997). Accordingly, for the purposes of determining whether

laintiffs’ claims satisfy the jurisdictional amount, the Court accepts plaintiffs’
P.


plaintiffs $24,250 in lost profits on other contracts.? Thus, the sum required to satisfy
plaintiffs’ claims in full thus amounts to only $71,955—a sum that is insufficient to
invoke the Court’s diversity jurisdiction.? In their response to the defendants motion
for summary judgment, the plaintiffs attempt to repackage their claim for lost wages
(in the amount of $42,000) by including it in their argument regarding Count II. As
noted earlier, however, the Court has ruled that the plaintiffs failed to state a claim
for lost wages and this amount therefore does not count towards the jurisdictional
threshold. As there is no other basis for jurisdiction, the Court must dismiss this
action without prejudice.

A final cautionary word to the parties is in order, for the Court observed yet
another jurisdictional problem, of which neither party seems to be aware. Federal Rule
of Civil Procedure 17(a) requires that “Every action shall be prosecuted in the name
of the real party of interest.” Rule 17(a), similar to the requirement that the plaintiff

have standing to sue, ensures that “a plaintiff... possesses a sufficient interest in the

? Count IV alleges that the defendants interfered with $48,500 in contracts, from which
the plaintiffs would make $24,250 in net profit. In a commercial dispute, the amount in
controversy is the cost of cover. See Caudle v. American Arbitration Assoc., 230 F.3d 920, 923
(7th Cir. 2001); Gardynski-Leschuck v. Ford Motor Co., 142 F.8d 955 (7th Cir.1998).
Similarly, in this case, the Court finds that the amount in controversy is only that
lost profit necessary to make the plaintiffs whole.

3 For completeness’ sake, the Court notes that the defendants’ counterclaim also fails to
satisfy the jurisdictional threshold. The defendants seek $64,352 and a declaration that a lien
recorded against their home by the plaintiffs that claimed a balance due of $8,200. In any event,
a defendant’s counterclaim filed after a failed challenge to jurisdiction, on the grounds that the
claim does not satisfy the jurisdictional amount, does not provide a basis for federal jurisdiction.
Motorists Mut. Ins. Co. v. Simpson, 404 F.2d 511, 514 (7th Cir. 1969).


-

> sBioue Onder Form (06/97)

aon (. United States District Court, Northern District of Illinois
5
Nemes Aeienljuie | William J. Hibbler _| Stine oer f rhe
CASE NUMBER 00 C 7187 DATE September 16, 2002
CASE johnson and Johnson v. Wattenbarger and Wattenbarger
8 8
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the
nature of the motion being presented.]

MOTION:
Defendants’ Motion for Summary Judgment (Doc. # 28 )

Plaintiffs’ Cross Motion for Sumamry Judgment (Doc. # 30)
DOCKET ENTRY:
(1) im} Filed motion of [ use listing in “Motion” box above.]
(4) ia] Brief in support of motion due
(3) o Answer brief to motion due___. Reply to answer brief due___.
4 Oo Ruling/Hearingon_sset for sat
(6) a Status hearing {held/continued to] [set for/re-set for]on___setfor___at
© Qo Pretrial conference [held/continued to] [set for/re-set for]on__——setfor at.
) Qo Trial (set for/re-set for]on___at
(8) Qo [Bench/Jury trial] [Hearing] held/continued to__at
(9) Qa This case is dismissed [with/without] prejudice and without costs [by/agreement/pursuant to]

OFRCP4(m) OGeneral Rule21 OO FRCP41(a)(1) O FRCP41(a)(2).
(10) mt [Other docket entry]

For the attached reasons, the Court DISMISSES without prejudice the Plaintiffs’ First Amended Complaint and Defendants’
counterclaim for lack of subject matter jurisdiction. All other pending motions are denied as moot.

(11) iz [For further detail see order on the reverse side of the original minute order.]

No notices required, advised in open court,

No notices required. number of notices

SEP 17 2002

date docketed
focketing deputy initials

date mailed notice

Notices mailed by judge's staff.

Notified counsel by telephone.

V_ | Docketing to mail notices.

UE | Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom oe
JHC deputy’s
initials

TE Date/time received in 7 7
central Clerk’s Office mailing deputy initials



action to entitle him to be heard on the merits." Weisman v. Weener, 12 F.3d 84, 86
(7th Cir. 1996) (quoting 6A Charles Alan Miller et al., Federal Practice and Procedure
§ 1542 (2d ed. 1990)) (ellipsis added). In this case, the contracts in dispute are not
between the Wattenbargers and the Johnsons. Instead, the contracts at issue are
between the Wattenbargers and two corporations—RLJ & Associates, Inc. and Pippen
Home Improvements. The plaintiffs allege in their complaint that the parties agreed
that they would pay Raymond Johnson directly, but this allegation is simply
irrelevant. Because corporations are allowed to sue in their own name, courts “must
exclude attempts by the participants in the venture to recover for their individual
injuries.” Weisman, 12 F.3d at 86. The parties to the contracts are the Wattenbargers
and the two corporations—RLJ & Associates and Pippen Home Improvements. Thus
those corporations (and not the Johnsons) have a claim for a breach of contract, and are
the real party in interest under Rule 17(a).

For the foregoing reasons, the plaintiffs’ claim and the defendants’ counterclaim
are DISMISSED for want of subject matter jurisdiction. All other pending motions are

DENIED as moot.

ont loa bee WML)
William J(Hibbler, Judge

United States District Court


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
RAYMOND JOHNSON and
ROBERT JOHNSON, DOCKETED
SEP
Plaintiff, 17 2002
No. 00 € 7187
Vv.

Judge William J. Hibbler
LEE WATTENBARGER and
RUTH WATTENBARGER

wes SS SS SS SY

Defendants.

MEMORANDUM OPINION AND ORDER

The Court has before it the Plaintiffs’ and Defendants’ cross-motions for
summary judgment concerning the parties’ contract dispute. The motions are fully
briefed and the Court has examined the parties' submissions. The Court earlier ruled
on defendants’ motion to dismiss for lack of subject-matter jurisdiction as well as
failure to state a claim upon which relief can be granted, which it granted in part and
denied in part. Upon further development of the record, however, the Court finds that
subject matter jurisdiction is lacking, and dismissal required. For the reasons cited
herein, the Court therefore DISMISSES all remaining counts for lack of jurisdiction.

Background

This dispute arises out of a series of failed contracts for home construction and
repair work. Plaintiffs Raymond and Robert Johnson allege that they contracted with
Lee and Ruth Wattenbarger to perform remodeling work on the defendants’ home. The
plaintiffs further maintain that the parties had an oral understanding that they would

1

d]


perform the agreed upon work at a reduced rate in exchange for defendants serving as
a “referral” for other projects. Unfortunately for the parties, the business relationship
turned sour, and both parties complain that the other failed to fulfill their obligations
under the contracts. The Johnsons claim that the Wattenbargers refused to pay the
balance due upon completion of the work, failed to allow them to post a sign in their
yard to serve as a referral, and intentionally delayed and frustrated completion of the
work causing the Johnsons ’ to lose other contracts. Accordingly, the Johnsons filed this
suit, alleging that the defendants are liable for breach of written contract (Count 1),
breach of oral contracts (Count 2), and tortious interference with contracts (Count 4).
The defendants filed a counterclaim, alleging that the plaintiffs performed substandard
work, damaged their property, and failed to complete the work contracted for. The
defendants also allege that the plaintiffs provided false information and statements in
order to obtain a contractor’s lien against their home.

Before proceeding to the merits of the parties’ motions for summary judgment,
the Court must first assure itself of the jurisdictional basis for plaintiffs’ claims.
Although the Court previously examined the existence of jurisdiction, it is well settled
that courts are required to notice jurisdictional faults at any time and can raise the
issue of jurisdiction sua sponte. Wellness Community-National v. Wellness House, 70

F.3d 46, 51 (7th Cir. 1995). "The requirement that jurisdiction be established as a

' The Court previously dismissed pursuant to Fed. R. Civ. P. 12(b)(6) the plaintiffs’
claims for tortious interference with business relationships (Count 3), intentional infliction of
emotional distress (Count 5) and loss of net profits and wages/income (Count 6).

2