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Am-Rail Construction, Inc. v. A&K Railroad Materials, Inc.

United States District Court, D. Utah

January 31, 2017



          Loretta C. Biggs United States District Judge

         Plaintiff, AM-Rail Construction, Inc. (“AM-Rail”), initiated this action in state court on or about April 11, 2016. On May 24, 2016, Defendant, A&K Railroad Materials, Inc. (“A&K”), removed the action to this Court, pursuant to 28 U.S.C. §§ 1332, 1441 and 1446. (ECF No. 1.) Before the Court are Defendant's Motion to Transfer Venue, (ECF No. 9), filed on July 20, 2016, and Plaintiff's Motion to Remand to State Court for lack of subject matter jurisdiction, (ECF. No. 18), filed on August 15, 2016. For the reasons set forth below, the Court will deny Plaintiff's motion to remand this case to state court and will allow Defendant's motion to transfer venue to the United States District Court of Utah.


         Plaintiff asserts in its Motion to Remand that, because the Court lacks subject matter jurisdiction, this matter must be remanded to state court. (ECF No. 17 at 5.) Subject matter jurisdiction relates to the Court's power to hear this case. Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 453 (4th Cir. 2012) (citing Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)). Thus, the Court must address this issue before addressing other issues in the case. Jones v. Am. Postal Workers Union, 192 F.3d 417, 422 (4th Cir. 1999). The burden of establishing subject matter jurisdiction rests with the party seeking removal. Hoschar v. Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). Remand is required “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c).

         A defendant can remove a state court action to federal court if it is one over which the district courts of the United States have original jurisdiction. Id. § 1441(a). Defendant removed this case based on diversity of citizenship. (ECF No. 1 at ¶ 8.) Diversity jurisdiction exists where the amount in controversy exceeds $75, 000 and the parties are completely diverse, meaning no plaintiff is a citizen of the same state as any defendant. 28 U.S.C. § 1332(a); Johnson v. Am. Towers, LLC., 781 F.3d 693, 704 (4th Cir. 2015). It is undisputed that the parties in this case are citizens of different states.[1] The sole issue here is whether the amount in controversy has been satisfied. In determining the amount in controversy, courts generally look to whether the complaint on its face specifies an amount in damages. Dash v. FirstPlus Home Loan Tr. 1996-2, 248 F.Supp.2d 489, 497 (M.D. N.C. 2003). The amount claimed in the complaint controls, unless it appears to a legal certainty, from the face of the complaint, that the claim is really for less than the jurisdictional amount. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938).

         Where, as alleged here, an action is based on diversity of citizenship and was not initially filed in federal court, the court may exercise jurisdiction only if the case is properly removed to federal court. See §§ 1441, 1446. A notice of removal is proper when the grounds for removal are “apparent within the four corners of the initial pleading or subsequent paper.” Lovern v. Gen. Motors Corp., 121 F.3d 160, 162 (4th Cir. 1997). Subsequent paper, or other paper as referenced in the removal statute, § 1446(b)(3), encompasses formal or informal communication, including written settlement and demand letters. See Yarnevic v. Brink's, Inc., 102 F.3d 753, 755 (4th Cir. 1996); Rodgers v. Nw. Mut. Life. Ins. Co., 952 F.Supp. 325, 327-28 (W.D. Va. 1997) (“finding that the plaintiff's offer of settlement constitute[d] an ‘other paper' within the meaning of § 1446(b)”).

         When removal is challenged based on the amount in controversy, Defendant, as the party invoking the Court's jurisdiction, bears the burden of proving that the amount in controversy exceeds the $75, 000 jurisdictional threshold. See Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (“The burden of establishing federal jurisdiction is placed upon the party seeking removal.”); Talantis v. Paugh Surgical, Inc., 273 F.Supp.2d 710, 712-13 (M.D. N.C. 2003) (explaining that “in removal cases it is the defendant's burden to prove that the case satisfies all of the jurisdictional requirements for removal”). Defendant must carry its burden by a preponderance of the evidence. See Roche v. Lincoln Prop., 373 F.3d 610, 616 (4th Cir. 2004), rev'd on other grounds, 546 U.S. 81 (2005); Lee v. Citimortgage, Inc., 739 F.Supp.2d 940, 945 (E.D. Va. 2010). “Mere allegations in the notice of removal are insufficient.” Lee, 739 F.Supp.2d at 945 (quoting LJT & Assocs., Inc. v. Koochagian, No. WDQ-09-2405, 2009 WL 4884525, at *3 (D. Md. Dec. 10, 2009)). Also insufficient is the parties' subjective assessment of the amount in controversy. See Lovern, 121 F.3d at 162. “Competent proof” is required, and such proof may include any evidence in the record. Lee, 739 F.Supp. at 945.

         Because of the significant federalism concerns inherent in removal, the removal statute must be strictly construed. Rizwan v. FCI Lender Servs. Inc., 176 F.Supp.3d 513, 515 (D. Md. 2016); see Barbour v. Int'l Union, 640 F.3d 599, 615 (4th Cir. 2011) (en banc), abrogated on other grounds by 28 U.S.C. § 1446(b)(2)(B). All doubts must be resolved in favor of granting the plaintiff's motion to remand. Rizwan, 176 F.Supp.3d at 515.

         Here, Plaintiff argues that “[i]n strictly construing Defendant's motion to remove, Defendant has not established [that] the jurisdictional amount has been satisfied by a preponderance of the evidence. Thus, this Court should remand the case to the Superior Court of Cabarrus County because federal jurisdiction is doubtful.” (ECF No. 17 at 7.) This Court disagrees.

         Defendant, in its Notice of Removal, relies principally upon Plaintiff's Complaint to support its contention that the amount in controversy exceeds the $75, 000 threshold necessary to invoke this Court's subject matter jurisdiction. The notice provides, in pertinent part, the following:

4. The amount in controversy exceeds $75, 000.00, exclusive of interest and costs. In the Complaint, Plaintiff seeks an award “in excess of twenty-five thousand dollars” in compensatory damages, as well as punitive damages or treble damages for Defendant's alleged fraud and alleged violation of the North Carolina Unfair and Deceptive Trade Practices Act . . . . See Compl. ¶¶ 58, 60.
5. While North Carolina law does not require a plaintiff to plead damages with specificity in the complaint, . . . Plaintiffs have demanded payment from A&K in the principal amount of $67, 502.31. See Letter dated October 20, 2015 attached hereto as Exhibit D.
6. . . . Plaintiff's stated compensatory damages in excess of $25, 000, when taken together with treble damages claimed under N.C. Gen. Stat. ยง 75-16.1, or claimed punitive damages . . . bring the amount in ...

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