The opinion of the court was delivered by: Robson, District Judge.
MEMORANDUM AND ORDER ON MOTIONS TO DISMISS
This is a diversity action brought by plaintiffs, Indiana
citizens, against defendant Bank of America National Trust and
Savings Association, a national banking association located in
California, and defendants Automobile Recovery Bureau, Inc.,
and Paul and Lueet Bishop doing business as the National
Bureau of Investigation, both Illinois citizens. Plaintiffs
allege that on May 27, 1964, they purchased a 1962 Chevrolet
Impala which was financed by defendant Bank. The purchase
price of $2,712.30 was to be paid in 30 monthly installments
of $65.41, beginning July 5, 1964. Plaintiffs left California
and returned to their home in Michigan City, Indiana.
Plaintiffs allege that they paid all the installments when
due. Plaintiffs further allege that on July 31, 1965, the
defendants Automobile and National came to their home and they
gave the defendants a check for $68.41, which represented
their regular monthly payment plus a late charge. These
defendants were apparently acting on behalf of the defendant
Bank of America National Trust and Savings Association.
Plaintiffs also allege that on August 3, 1965, defendants
National and Automobile broke into the car and repossessed it
in the name of the Bank of America National Trust and Savings
Association and transported it to California. An explanation
of this repossession came from the defendant National in the
form of a note dated August 3, 1965, from defendant Lueet
Bishop. The note informed them that the Bank of America
National Trust and Savings Association did not receive the
check (the same one, apparently, that was collected on July
31, 1965), and that anyway, a certified check would be
necessary. The plaintiffs allege that they had no knowledge of
this requirement. The Bank informed the plaintiffs on August 10
that the car was in California, and, if payment of $1227.38 was
not made by August 20 the car would be sold, with the
plaintiffs liable for any deficiency.
The defendant Bank of America National Trust and Savings
Association has moved to dismiss this suit as to them on the
ground that the required venue as to national banks, 12 U.S.C. § 94,
has not been secured. The plaintiff argues that the venue
statute is unconstitutional. The other defendants have moved to
dismiss on the ground that the amount in controversy does not
exceed the required $10,000. The Bank of America National Trust
and Savings Association's motion will be considered first.
The venue statute for national banks,*fn1 if
constitutional, would not give this court jurisdiction over
the defendant Bank without its consent. The plaintiff argues
that this statute is unconstitutional because it violates the
fundamentals of due process by being an unreasonable,
arbitrary and capricious exercise of Congressional power. The
United States Supreme Court has disagreed with plaintiff's
position. In Mercantile National
Bank at Dallas v. Langdeau, 371 U.S. 555, at 559, 83 S.Ct.
520, at 522, 9 L.Ed.2d 523 (1963), the court said:
"* * * Unquestionably Congress had authority to
prescribe the manner and circumstances under which
the banks could sue or be sued in the courts."
This court is of the opinion that the venue provision for
national banks has been determined beyond doubt to be
constitutional. See also Michigan National Bank v. Robertson,
372 U.S. 591, 83 S.Ct. 914, 9 L.Ed.2d 961 (1963), and Buffum
v. Chase National Bank of City of New York, 192 F.2d 58 (7th
Cir. 1951), cert. denied 342 U.S. 944, 72 S.Ct. 558, 96 L.Ed.
702. On this ground, therefore, it is hereby ordered that
defendant Bank of America National Trust and Savings
Association's motion to dismiss be granted.
The defendants, Automobile Recovery Bureau, Inc. and Paul
and Lueet Bishop doing business as the National Bureau of
Investigation, have moved to dismiss on the ground that the
amount in controversy could not reasonably exceed the
jurisdictional minimum. The plaintiffs have claimed a total of
$3,315 in actual damages, and $50,000 in punitive damages. The
punitive damages are demanded as a result of the acts of the
defendants in repossessing the car, which were allegedly
"malicious, willful, unlawful, wrongful, harmful and
injurious." The plaintiffs allege further that Mrs. Brown, who
was pregnant at the time, became "seriously ill" as a result
of a reduction and delay in her visits to the doctor because
of the loss of the car. However, the plaintiffs also allege
(and claim actual damages for) the use of taxicabs, borrowed
automobiles and rented vehicles in place of the repossessed
car. In addition, the plaintiffs claim that they suffered
inconvenience, "mental and bodily suffering, * * * loss of
honor, * * * psychosis, worry, nervousness."
The purpose of the jurisdictional amount is to remove from
the federal courts claims which are insubstantial in
character, Brown v. Bodak, 188 F. Supp. 532 (S.D.N.Y. 1960),
and to avoid encroaching on the jurisdiction of the state
courts in diversity cases, Johns-Manville Sales Corp. v.
Chicago Title and Trust Co., 261 F. Supp. 905 (N.D.Ill. 1966).
This court can dismiss an action for not meeting the
jurisdictional minimum if it appears to a "legal certainty
that the claim is really for less than the jurisdictional
amount." St. Paul Mercury Indemnity Co. v. Red Cab Co.,
303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938); Horton v. Liberty
Mutual Ins. Co., 367 U.S. 348, 81 S.Ct. 1570, 6 L.Ed.2d 990
In computing the jurisdictional amount, punitive damages can
be included, but the claim will be scrutinized even more
carefully than would a claim of actual damages. Gauldin v.
Virginia Winn-Dixie, Inc., 370 F.2d 167, 170 n. 1 (4th Cir.
1966); F & S Construction Co., Inc. v. Jensen, 337 F.2d 160
(10th Cir. 1964). The jurisdictional minimum cannot be reached
in this case without adding the exemplary damages. It is thus
the duty of this court to determine whether it is "legally
certain" that approximately $7,000 in punitive damages could
not be recovered.
Several cases appear to restrict the District Court's
discretion in matters of this type by allowing the District
Court to dismiss only in the "plainest" circumstances. E. g.,
Jaconski v. Avisun Corporation, 359 F.2d 931 (3rd Cir. 1966).
In those cases, however, there was no demand for punitive
damages. They were concerned with actual damages, and whether
the good faith allegations were over the jurisdictional limit.
Where, as here, punitive damages are involved, the judge can
exercise more discretion in determining whether the damages as
claimed could be recovered. Petroleum Transit Co. v. Copeland,
240 F. Supp. 585 (E.D.S.C. 1965); Anthony v. United Insurance
Co., 240 F. Supp. 95 (E.D.S.C. 1965); Thomas v. Travelers Ins.
Co., 258 F. Supp. 873 (E.D.La. 1966); Francis v. Bothwell,
263 F. Supp. 354 (D. Colo. 1967).
In view of the policy behind the jurisdictional minimum,
this court finds that this case is not properly brought here.
Under no conceivable reading could this complaint bring the
plaintiffs anywhere near the jurisdictional amount. It is
admitted that the plaintiffs secured substitute transportation
after their car was repossessed, even though these substitutes
were borrowed or rented. The plaintiffs are even claiming
actual damages for the cost of borrowing or renting these
The court is of the opinion that the complaint on its face
reveals that an amount in excess of $10,000 is not involved,
and that the plaintiffs' claims for sums in excess of that
amount are not made in legal good faith, but that they are,
instead, mere colorable claims asserted for the purpose of
invoking the jurisdiction of the court. This contravenes the
policy behind 28 U.S.C. § 1332.
It is, therefore, ordered that the motions to dismiss by the
defendants Automobile Recovery Bureau, Inc., and Paul and
Lueet Bishop doing business as the National Bureau ...