Court Opinion

ID: 29008
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:33:23+00
Date Added: 2024-06-11T09:38:03.854968
License: Public Domain

UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT

                           No. 01-20609

                           RAND MINTZER,

                                                        Plaintiff -
                                                Counter Defendant -
                                                          Appellee,

                              versus

                         RICHARD M LESTER,
                      individually and doing
                      business as Law Offices
                       of Richard M. Lester,

                                                       Defendant -
                                                Counter Claimant -
                                                        Appellant.

           Appeal from the United States District Court
                For the Southern District of Texas
                        (No. H-00-CV-4383)

                         October 10, 2002
Before WIENER, EMILIO M. GARZA and PARKER, Circuit Judges.

PER CURIAM*:

      The district court entered summary judgment against

Defendant-Appellant Richard M. Lester on his claim for unpaid

referral fees.   On appeal, we conclude that the district court

  *
     Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
lacked subject matter jurisdiction and are therefore constrained

to reverse and remand with instructions to dismiss.

                             BACKGROUND

     This is an attorney’s fees dispute.    Richard Lester, a

California attorney, agreed to refer his Texas motorcycle

accident cases to Rand Mintzer, who practices in Houston.    The

two memorialized their agreement by letter each time Lester

referred a client.   One such letter provides that they would

divide the work between themselves and that any fee recovered

“shall be divided on a quantum meruit basis.”    Each letter was

the same from one to the next.

     At some point Lester claimed he was due referral fees under

one or more agreements that Mintzer was refusing to pay.    On

November 24, 1997, Mintzer initiated a declaratory judgment

action in the federal district court in Galveston.    Thereafter,

the Unauthorized Practice of Law Committee (“UPLC”) began an

investigation of Lester.    Relying on the pendancy of the UPLC

proceeding, and concluding that “the outcome of the Committee’s

investigation may render this matter moot,” a magistrate judge

“abated” the proceeding pending further order.    The judge asked

that he be notified upon the completion of the UPLC’s

investigation.   The UPLC completed its investigation in June

2000, exonerating Lester.

     On April 20, 2000, more than two months before the UPLC’s

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investigation was officially terminated, Lester filed suit

against Mintzer in Dallas County state district court.     The

parties proceeded with discovery in that action.     On March 19,

2001, it was transferred to Harris County.

     Almost two years after the instant case had been abated, and

two months after the UPLC proceeding ended, Mintzer moved for

this case to be reopened and simultaneously for summary judgment.

Several months later, on December 4, Lester responded to the

motion to reopen and additionally moved for stay, citing the

pending state-court action.   The district court scheduled the

motion to reopen for a hearing, after which it sua sponte

transferred the case to the Houston Division.     In so doing, the

court did not rule on any of the pending motions.     Upon receipt

of the case, the transferee court in Houston set it for a

scheduling conference.   In the court’s notice it advised that it

“may rule on any pending motions at the conference.”

     At the March 22, 2001 hearing, the district court (1)

granted Mintzer’s motion to reopen the case; (2) granted

Mintzer’s motion for summary judgment; and (3) denied Lester’s

motion for stay.   It entered final judgment the same day.    On

April 4, Lester filed a motion for relief under Rules 59 and 60,

cast as a “motion for reconsideration and alteration of

judgment.”   The district court subsequently denied the motion

without explanation.

     Lester made a timely appeal.     He argues that the district

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court erred in granting summary judgment solely on the basis of

Lester’s failure to file a response, and that the Court abused

its discretion in denying his motion for reconsideration.                  He

also now asserts that the federal district court lacks subject

matter jurisdiction.

                                    DISCUSSION

     In his reply brief, Lester for the first time argues that

the court lacks subject matter jurisdiction.                 Whenever it appears

that our jurisdiction is in doubt--even when the question is

raised for the first time on appeal--we must satisfy ourselves of

our authority to act before proceeding further.                 See 14B CHARLES

ALAN WRIGHT,   ET AL.,   FEDERAL PRACTICE   AND   PROCEDURE § 3739 (3d ed. 1998).

When jurisdiction is conferred on the basis of diversity of

citizenship, the amount in controversy must exceed $75,000.                     See

28 U.S.C. § 1332(a).          To determine whether the jurisdictional

amount is met we look first to the face of plaintiff’s complaint.

See St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253

(5th Cir. 1998).         If from that the amount in controversy is

uncertain we can look to summary judgment-like evidence, but only

to the extent such evidence sheds light on the amount in

controversy at the time suit was first brought.                 See id. at 1253-

54; see also State Farm Mutual Auto. Ins. Co. v. Powell, 87 F.3d

93, 97 (3d Cir. 1996)(holding that discovery is admissible to

prove the amount in controversy).                 Dismissal for want of

                                         -4-
jurisdiction is proper only if the court determines to a “legal

certainty” that the jurisdictional amount is not met.    See St.

Paul, 134 F.3d at 1253.

     In his complaint, Mintzer seeks a declaration that he owes

Lester nothing arising from the referral agreements.

“Alternatively, if the Court finds that Mintzer does owe fees to

Defendant in quantum merit, Mintzer seeks a declaration that he

be permitted to offset the amounts owed to Defendant by the

amount paid to Defendant on past cases in excess of quantum

merit.”   Compl. ¶ 10 (emphasis added).   Nowhere in his complaint

does Mintzer suggest the precise amount that is at stake, instead

only claiming that it exceeds $75,000.    Similarly, Lester’s

answer-and-counterclaim makes no reference to the amount he

claims he is due under the referral agreements, although he did

stipulate to Mintzer’s contention that the amount in controversy

exceeds the jurisdictional amount.    Of course the parties cannot

stipulate to jurisdiction.   Because the pleadings in this case

are not helpful, we must consider other evidence that sheds light

on the amount in controversy at the time Mintzer filed his

complaint.

     An affidavit submitted by Lester’s attorney states that

Lester is due approximately $26,000.   The attorney reached this

conclusion during the course of discovery.    Lester’s reply brief

also claims $26,000.   Mintzer, in his surreply, does not contest

                                -5-
the veracity of this amount or otherwise suggest that Lester

amended his claim to avoid federal jurisdiction.    Instead,

Mintzer argues that his setoff--the amount he allegedly overpaid

Lester--is worth $176,000, and that therefore the jurisdictional

amount is met.   Importantly, Mintzer is not seeking return of the

amount exceeding the value of Lester’s work.

      We are constrained to conclude that the amount in

controversy does not exceed $75,000.    Though the parties both

initially argued that the value of the litigation did exceed the

jurisdictional amount, subsequent discovery reveals that Lester

all along was claiming only about $26,000 in damages.     The

purported setoff is irrelevant.    It is an affirmative defense,

not a claim for relief, see Giles v. Gen. Elec. Co., 245 F.3d

474, 494 n.36 (5th Cir. 2001), being that it is entirely

contingent on Lester sustaining his claim.1    An offset cannot

therefore be included in the amount in controversy.     See Wolde-

Meskel v. Vocational Instruction Proj. Cmty. Servs., Inc., 166

F.3d 59, 63 & n.6 (2d Cir. 1999); see also Rosen v. Chrysler

Corp., 205 F.3d 918, 921-22 (6th Cir. 2000)(refusing to include

defendant’s setoff in determining the amount in controversy).

      Depending on the substantive law of the state, attorney’s

  1
     See BLACK’S LAW DICTIONARY 430 (7th ed. 1999)(defining
affirmative defense as an “assertion raising new facts and
arguments that, if true, will defeat the plaintiff’s or
prosecution’s claim, even if all allegations in the complaint are
true.”)(emphasis added).

                                  -6-
fees may also be considered part of the amount in controversy.

See 14B WRIGHT,   ET AL.   § 3712.   Both parties have asserted a claim

for fees, but there is no evidence whatsoever of the amount they

have incurred.     Nor has either side discussed the issue in their

briefs.   Irrespective of whether attorney’s fees would be

permitted, we cannot simply guesstimate their amount and add them

to the other damages to arrive at the amount in controversy.

Some kind of allegation or proof of the amount of fees incurred

is needed.   Cf. Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340

(10th Cir. 1998).      None here has been provided.

                                 CONCLUSION

      In light of the foregoing, we REVERSE and REMAND with

instructions to dismiss.2

  2
     As we did at oral argument, we admonish the parties for
tying up the courts with this vexatious litigation. It is a
waste of our limited judicial resources and does not reflect well
on either side.

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