Court Opinion

ID: 9498059
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:07:11.32408+00
Date Added: 2024-06-11T17:58:35.693683
License: Public Domain

KAREN NELSON MOORE, Circuit Judge,
dissenting.
Because I believe Terrance Golden’s (“Golden”) complaint sufficiently alleges an amount in controversy exceeding $50,000,1 would reverse the district court’s order dismissing Golden’s Magnuson-Moss Warranty Act (“MMWA”) suit for lack of subject matter jurisdiction.
In St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845(1938), the Supreme Court established the now-familiar “legal certainty” test for amount-in-controversy challenges to federal jurisdiction; that is, if a plaintiff filing suit in federal court has alleged in his or her complaint damages in excess of the amount-in-controversy threshold for federal jurisdiction, the defendant must show to a legal certainty that the plaintiff cannot recover such damages in order to defeat federal jurisdiction:
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the juris*886diction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent, to a legal certainty that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.-
Id. (footnotes omitted). Because Golden’s complaint specifically claims damages in excess of the MMWA’s $50,000 amount-in-controversy requirement, Golden’s suit should be dismissed for lack of federal subject matter jurisdiction only if Gorno Bros., Inc. (“Gorno Ford”) can establish to a legal certainty that Golden cannot recover such damages.
The majority opinion, adopting the MMWA amount-in-controversy formula set forth in Schimmer v. Jaguar Cars, Inc., 384 F.3d 402 (7th Cir.2004); Voelker v. Porsche Cars North America, Inc., 353 F.3d 516 (7th Cir.2003); and Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955 (7th Cir.1998), concludes that the proper measure of the amount in controversy in this case is the cost of a replacement vehicle minus both the salvage value of Golden’s defective car and the value Golden obtained from using the defective ear. When devising this formula, the Seventh Circuit began with the observation that “[t]he standard remedy under [Illinois] state law for delivery of a defective and useless product is ‘cover’ — the purchase of a conforming product in the market, with damages equal to the price difference.” Gardynski-Leschuck, 142 F.3d at 957 (citing Illinois’s version of Uniform Commercial Code § 2 — 712(1), enacted as 810 ILCS 5/2-712(1)). Because the Seventh Circuit’s formula bases the amount in controversy only on “cover” damages, I believe it fails to account for the full scope of relief available to Golden under Michigan law and is not an accurate determinant of the amount in controversy in this case.
As the majority correctly notes, determining the amount in controversy in this case requires an examination of what relief Golden could obtain under Michigan law. See Schimmer, 384 F.3d at 405. Michigan Compiled Laws § 440.2711 provides that:
(1) Where ... the buyer rightfully rejects or justifiably revokes the acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (section 2612), the-buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid
(a) “cover” and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or
(b) recover damages for nondelivery as provided in this article (section 2713).
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(3) On rightful rejection or justifiable revocation of acceptance- a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller.
Id. (cross references omitted); see also MICH. COMP. LAWS § 440.2712 (providing that when a buyer covers, “[t]he buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages ..., but less expenses saved in consequence of the seller’s breach,” but noting that “[failure of the buyer to effect cover within this *887section does not bar him from any other remedy”).
Thus, pursuant to § 440.2711, when a buyer revokes his or her acceptance, the result is not only that the buyer is entitled to monetary damages, but also that the “buyer may cancel” his or her contract with the seller. MICH. COMP. LAWS § 440.2711(1). When a buyer cancels a contract under Michigan law, the buyer is released from his or her future obligations under the contract. See MICH. COMP. LAWS § 440.2106(4) (“ ‘Cancellation’ occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of ‘termination’ except that the canceling party also retains any remedy for breach of the whole contract or any unperformed balance.”); see also MICH. COMP. LAWS § 440.2106(3) (noting that “[o]n ‘termination’ all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives”). The amount-in-controversy formula adopted by the majority in this case, however, does not account for the fact that, if Golden is entitled to revoke his acceptance of the vehicle, Golden will no longer be obligated to pay the $61,708.80 owed under the Retail Installment Contract.
I also disagree with the majority’s position that the financing charges included in the Retail Installment Contract should not be included in determining the amount in controversy in this case. In the majority’s view, financing charges should not be included when calculating the amount in controversy in MMWA suits because the MMWA provides that there is no federal jurisdiction “if the amount in controversy is less than the sum or value of $50,000 exclusive of interests and costs).” 15 U.S.C. § 2310(d)(3)(B) (emphasis added). I do not believe, however, that Congress, in excluding “interests .and costs” from the amount in controversy, intended to exclude amounts such as vehicle financing charges owed under the contract that forms the basis of the suit. Rather, I believe that the phrase “exclusive of interests and costs” is more appropriately understood to refer to amounts such as pre-judgment interest and filing fees that parties incur during the litigation process. • See Transaero, Inc. v. La Fuerza Area Boliviana, 24 F.3d 457, 461 (2d Cir.1994) (“It seems clear under Edwards [v. Bates County, 163 U.S. 269, 16 S.Ct. 967, 41 L.Ed. 155 (1896) ] that where, as here, interest is owed as part of an underlying contractual obligation, unpaid interest becomes part of the principal for jurisdictional purposes.”); Brainin v. Melikian, 396 F.2d 153, 155 (3d Cir.1968) (noting distinction between interest as “a charge for delay in the payment of money” and interest “as the agreed upon price for the hire of money” and explaining that “Congress’ purpose in excluding ‘interest’ in determining the jurisdictional amount ... [in diversity cases was] to prevent the delaying of a suit merely to accumulate the necessary amount for federal jurisdiction”) (internal quotation marks omitted).
Gorno Ford also contends that the vehicle financing charges should be excluded from the amount in controversy in this case because Ford Motor Credit Company was dismissed subsequent to the filing of Golden’s complaint. Because federal jurisdiction is determined at the time a complaint is filed, however, I do not believe that Ford Motor Credit Company’s dismissal impacts the amount in controversy. See St. Paul Mercury Indem. Co., 303 U.S. at 289-90, 58 S.Ct. 586 (“Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.”) (footnote omitted); Klepper v. First Am. Bank, 916 F.2d 337, 340 (6th Cir.1990).
In sum, I respectfully disagree with the majority’s conclusion that Gorno Ford has *888established to a legal certainty that Golden cannot satisfy the MMWA’s amount-in-controversy requirement. By failing to take into account the Retail Installment Contract’s cancellation when calculating the amount in controversy, the majority underestimates the amount in controversy in this suit, and as a result, impedes the ability of the MMWA to serve its intended purpose: “to make warranties on consumer products more readily understood and enforceable.” H.R. REP. No. 93-1107 (1974), reprinted in 1974 U.S.C.C.A.N. 7702, 7702.