Court Opinion

ID: 2664004
Source: CourtListenerOpinion
Date Created: 2014-04-04 03:10:15.160487+00
Date Added: 2024-06-11T13:04:14.906641
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

   DEAN MOSTOFI,

                          Plaintiff,

                         v.
                                                             Civil Action 11-00716 (HHK)
   NETWORK CAPITAL FUNDING
   CORP.,

                          Defendant.

                                  MEMORANDUM OPINION

       Plaintiff Dean Mostofi brought this action against Network Capital Funding Corporation

in the Superior Court for the District of Columbia, alleging that Network, a mortgage company,

engages in unfair and deceptive trade practices in violation of the D.C. Consumer Protection

Procedures Act (“CPPA”), D.C. CODE § 28-3901 et seq. On April 12, 2011, Network removed

the case to this Court. See Notice of Removal [#1]. Before the Court is Mostofi’s motion for

remand [#5], which argues that this case does not satisfy the amount-in-controversy requirement

of federal diversity jurisdiction. Upon consideration of the motion, the opposition thereto, and

the record of this case, the Court concludes that the motion must be granted.

                                       I. BACKGROUND

       Mostofi brings this suit under the “private attorney general” provision of the CPPA,

which provides that “[a] person, whether acting for the interests of itself, its members, or the

general public may bring an action under this chapter in the Superior Court of the District of

Columbia seeking relief from the use by any person of a trade practice in violation of the law of
the District of Columbia.” D.C. CODE § 28-3905(k)(1). He alleges that Network engages in

unlawful bait-and-switch practices by advertising low mortgage interest rates and then forcing

customers to complete a full loan application before disclosing the interest rate that will apply in

their individual cases (which is much higher). Compl. ¶ 2. His complaint seeks actual, statutory,

and punitive damages, the disgorgement of all money that Network acquired by its unlawful

practices, and an injunction barring Network from continuing those practices. Compl. ¶ 82.

                                          II. ANALYSIS

A.     Network Has Not Established the Amount in Controversy

       At issue here is whether this case satisfies the amount-in-controversy component of

federal diversity jurisdiction, which requires that “the matter in controversy exceed[] the sum or

value of $75,000.” 28 U.S.C. § 1332(a); see id. § 1441(a) (allowing removal of actions over

which the district courts have original jurisdiction).1 Normally, each individual plaintiff must

present a claim or claims exceeding this amount; that is, multiple plaintiffs’ claims usually

cannot be aggregated to satisfy the amount-in-controversy requirement. See Snyder v. Harris,

394 U.S. 332, 335 (1969). The Supreme Court has, however, recognized an exception to that

rule where “two or more plaintiffs unite to enforce a single title or right in which they have a

common and undivided interest.” Id.

       Here, Mostofi’s complaint expressly states that “[n]either Mostofi” — who is the only

plaintiff — “nor any consumer seeks damages exceeding $74,000.00 in sum total.” Compl. ¶ 81.

Network nevertheless contends that removal was proper (and remand is improper) because a

       1
               The parties’ diversity of citizenship is undisputed.

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claim that seeks the disgorgement of funds, as Mostofi’s does, qualifies for the exception

recognized in Snyder. Mostofi responds that such aggregation is not permissible in CPPA cases,

and further that his suit seeks the restitution of payments to individual plaintiffs and not a mass

disgorgement of funds that would fit within the Snyder exception.

       The Court does not agree with Mostofi that CPPA claims can never be aggregated. On

the contrary, case law in this district suggests that CPPA claims seeking the disgorgement of

funds can be aggregated to satisfy the amount-in-controversy requirement. Compare Williams v.

Purdue Pharma Co., 2003 WL 24259557, at *5 (D.D.C. Feb. 27, 2003) (holding that the

plaintiffs’ complaint, which sought the refund of all monies unlawfully acquired by the

defendant, presented an aggregable claim for disgorgement that satisfied the amount-in-

controversy requirement), with Reigner v. Ingersoll-Rand Co., 461 F. Supp. 2d 1, 2 (D.D.C.

2004) (holding that the amount in controversy had not been established where the complaint

sought “damages for individual consumers, not disgorgement” (emphasis added)).2

Nevertheless, remand is necessary here because Network has not established that Mostofi’s

disgorgement claim, even if aggregable, exceeds the sum or value of $75,000.3

       Where a state- or local-court complaint seeks an unspecified amount of damages, the

defendant must, to justify removal to federal court, establish the amount in controversy by a

       2
              See also Aetna U.S. Healthcare Inc. v. Hoechst Aktiengesellschaft, 48 F. Supp. 2d
37, 40–42 (D.D.C. 1999) (holding that a disgorgement claim could be aggregated to satisfy the
amount-in-controversy requirement in a case brought under the D.C. Restraint of Trade Act, D.C.
CODE § 28-4501 et seq.).
       3
               Because Network has not made that showing, the Court need not determine
whether Mostofi’s complaint actually seeks a mass disgorgement or whether, as he contends, it
merely seeks restitution payments to individual consumers.

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preponderance of the evidence. Everett v. Verizon Wireless, Inc., 460 F.3d 818, 822 (6th Cir.

2006); Williams, 2003 WL 24259557, at *5. And the Court, in determining whether the

defendant has done so, considers the value of the claim as of the date of removal. Everett, 460

F.3d at 822. Thus, Network must show that as of April 12, 2011, Mostofi’s putative

disgorgement claim exceeded $75,000. It cannot do so.

       Network’s opposition brief states that at the time of removal Network “had received

revenues in excess of $65,000 from transactions with District of Columbia residents.” Def.’s

Opp’n to Pl.’s Mot. for Remand (“Def.’s Opp’n”) at 2. That figure, however, is not supported by

Network’s affidavit, which addresses only its revenues as of May 18, over a month after removal.

See Def.’s Opp’n Ex. A ¶ 2 (stating that Network had generated $99,352.03 from District

transactions as of May 18, 2011). Thus, Network’s $65,000 figure is simply an unsworn

averment by Network’s counsel. Moreover, while Network asserts that Mostofi’s complaint

“seeks the disgorgement of all revenue Network obtains from transactions in the District of

Columbia,” Def.’s Opp’n at 2, the complaint actually seeks all funds that Network has “acquired

by means of its unlawful trade practices.” Compl. ¶ 82(6). Thus, for the entirety of Network’s

unsubstantiated $65,000 figure to count toward the amount in controversy, Network would have

to show that every penny it had earned from transactions with District residents as of April 12 is

attributable to its alleged unlawful trade practices. It makes no effort to do so.

       In any event, $65,000 is of course $10,000.01 shy of the jurisdictional amount. See

Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 253 (6th Cir. 2011) (a claim for exactly

$75,000.00 does not satisfy the amount-in-controversy requirement). Network attempts to close

this gap by adding to $65,000 the statutory damage amount ($1,500) for each of the numerous

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CPPA violations that Mostofi’s complaint alleges. But Network offers no support for its

assertion that, where aggregation is allowed, “components of plaintiffs’ individual claims are to

be aggregated along with the value of the disgorgement claim.” Def.’s Opp’n at 2. Indeed, that

position is contrary to the Supreme Court’s holding in Snyder that multiple-plaintiff aggregation

is only permissible where “two or more plaintiffs unite to enforce a single title or right in which

they have a common and undivided interest.” 394 U.S. at 335 (emphasis added). Multiple

plaintiffs do not have a “common and undivided interest” in each others’ individual claims, nor

do those claims create “a single title or right.” See Breakman v. AOL LLC, 545 F. Supp. 2d 96,

105 (D.D.C. 2008) (“[C]ase law . . . establishes clearly that actual and statutory damages should

not be aggregated in representative actions like [CPPA cases].”). And here, the actual and

statutory damages that Mostofi seeks under the CPPA are unquestionably individual. See id.;

Reigner, 461 F. Supp. 2d at 2 (explaining that actual and statutory damages under the CPPA are

paid to the individual consumer). Thus, the Court cannot combine Mostofi’s putative mass

disgorgement claim with his individual CPPA claims.

       In sum: Network’s unsubstantiated assertions are insufficient to establish that this action

meets the amount-in-controversy requirement. Network provides no basis for its calculations,

nor for its assertion that Mostofi’s disgorgement claim can be combined with his individual

damages claims. Further, for reasons of federalism and comity, “any doubts about the existence

of subject matter jurisdiction are to be resolved in favor of remand.” District of Columbia v.

2626 Naylor Road, S.E., Wash., D.C. 20020, 763 F. Supp. 2d 5, 7 (D.D.C. 2011) (citing Hood v.

F. Hoffman-La Roche, Ltd., 639 F. Supp. 2d 25, 28 (D.D.C. 2009)). Accordingly, the Court will

remand this action to the Superior Court for the District of Columbia.

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B.     Attorney Fees

       Mostofi asks the Court to award him attorney fees for his time spent resisting removal.

See 28 U.S.C. § 1447(c) (a district court “may require payment of just costs and any actual

expenses including attorney fees, incurred as a result of the removal”). “Absent unusual

circumstances, courts may award attorney’s fees under § 1447(c) only where the removing party

lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively

reasonable basis exists, fees should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 132,

141 (2005). Here, the Court does not believe that removal was objectively unreasonable.

Network’s argument that disgorgement claims in CPPA actions can be aggregated is supported

by case law in this district. Cf. Nat’l Consumers League v. Gen. Mills, Inc., 680 F. Supp. 2d 132,

141 (D.D.C. 2010) (declining to grant attorney fees to the plaintiff where removal “was not

contrary to well-settled law or binding authority”). Further, the Court believes that Network’s

reading of Mostofi’s complaint as presenting an aggregable disgorgement claim is reasonable.

Network simply failed to bolster its legal arguments with a factual showing sufficient to confer

jurisdiction. Accordingly, Mostofi’s request for attorney fees will be denied.

                                      III. CONCLUSION

       For the foregoing reasons, plaintiff’s motion to remand this action to the Superior Court

for the District of Columbia [#5] will be granted. An appropriate order accompanies this

memorandum opinion.

                                                     Henry H. Kennedy, Jr.
                                                     United States District Judge

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