United States District Court, S.D. Illinois
August 9, 2005.
MEDICARE TRAINING AND CONSULTING, INC., Plaintiff,
MARK BAIRD, individually, and GOVERNMENTAL REPORTING SERVICES, INC., Defendants.
The opinion of the court was delivered by: WILLIAM STIEHL, Senior District Judge
MEMORANDUM & ORDER
Before the Court are plaintiff's motion to remand and defendants' motion
to dismiss. The parties have filed responses to the motions.
Plaintiff, Medicare Training and Consulting, Inc.
("plaintiff"), commenced an action against defendants, Blue &
Company LLC and Mark Baird in the Circuit Court for the Twentieth
Judicial Circuit, St. Clair County, Illinois. Plaintiff settled
with Blue & Company LLC before trial in the state court. The
court approved the settlement as a "good faith" settlement.
Plaintiff then filed its amended complaint, but failed to serve
the amended complaint on defendant Government Reporting Services,
Inc. ("GRS") for five months. Plaintiff's amended complaint
alleges damages in excess of $250,000 "as a result of the
tortious acts of defendants." In addition, plaintiff alleges
damages in excess of $75,000 in each of the five counts of its
amended complaint, Counts I-III are directed against Mark Baird,
and Counts IV and V against GRS.
Defendant GRS filed a timely petition to remove plaintiff's
amended complaint pursuant to 28 U.S.C. § 1332. The removal was accompanied by defendant
Baird's consent to the removal. Two weeks after removal,
plaintiff filed a sworn affidavit of its president, James E.
Plonsey, which certified that the damages sought by plaintiff
exceeded $50,000, but not $75,000. Plaintiff then sought remand
claiming that this Court lacks subject matter jurisdiction
because the amount in controversy does not exceed $75,000.
Defendants argue plaintiff cannot defeat diversity by reducing
the amount in controversy by affidavit two weeks after removal.
Defendants have also filed a motion to dismiss for lack of
diligence and want of prosecution. Defendants claim the Honorable
Robert LeChien granted plaintiff thirty days from its settlement
with Blue & Company LLC on June 20, 2003, to amend its complaint.
Plaintiff filed the amended complaint in September 2004, and did
not serve it on defendants until February 2005, more than one
year after being granted leave to amend. Defendants argue that
the Court should not condone such conduct. Plaintiff, on the
other hand, claims Judge LeChien granted it leave to amend on
September 8, 2004, the same day on which plaintiff filed its
Motion to Remand
As set forth in 28 U.S.C. § 1332, "district courts shall have
original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of
interest or costs and is between citizens of different states."
Defendant removed this case from state court on diversity grounds
under 28 U.S.C. § 1332. Plaintiff moves this Court to remand this
case for lack of subject matter jurisdiction and claims the
amount in controversy does not exceed $75,000.
The starting point in determining the amount in controversy is
typically the face of the complaint, where the plaintiff indicates the claim value in the
request for relief. Chase v. Shop N' Save Warehouse Foods,
Inc., 110 F.3d 424, 427 (7th Cir. 1997). Plaintiff's
complaint alleged damages in excess of $250,000 "as a result of
the tortious acts of defendants." In addition, plaintiff alleged
damages in excess of $75,000 in each of the five counts of its
amended complaint. These allegations satisfied the amount in
controversy requirement for diversity jurisdiction, for the
damages plaintiff alleged exceeded the $75,000 threshold.
28 U.S.C. 1332.
In the motion to remand, plaintiff contends the amount in
controversy exceeds $50,000, but not $75,000. Plaintiff verified
the amount in controversy by a sworn affidavit signed by Jim
Plonsey, President of Medicare Training and Consulting, Inc., and
filed the affidavit after defendant removed this case.
Jurisdiction, however, depends on the situation at the time of
removal. St. Paul Mercury Indem. Co. v. Red Cab Co.,
303 U.S. 283, 293 (1938). Reductions of the amount in controversy after
removal, by stipulation, by affidavit, or by amendment of the
pleadings do not deprive the district court of jurisdiction.
Id. at 292. "Events occurring subsequent to removal which
reduce the amount recoverable, whether beyond the plaintiff's
control or the result of his volition, do not oust the district
court's jurisdiction once it has attached." Id. at 293.
"Litigants seeking to prevent removal must file a binding
stipulation or affidavit with their complaints; once a
defendant has removed the case, St. Paul makes later filings
irrelevant." In re Shell Oil Co., 970 F.2d 355, 356 (7th
Cir. 1992) (emphasis added). Following St. Paul, therefore,
plaintiff's attempt to reduce the amount in controversy via a
sworn affidavit subsequent to the removal of the case cannot
defeat federal diversity jurisdiction. Allowing plaintiff to
follow such a "wait and see" approach to choosing a forum is
unfair to defendants. Shaw v. Dow Brands, Inc., 994 F.2d 364,
367 (7th Cir. 1993). As the Supreme Court emphasized in St. Paul:
If the plaintiff could, no matter how bona fide his
original claim in the state court, reduce the amount
of his demand to defeat federal jurisdiction the
defendant's supposed statutory right of removal would
be subject to the plaintiff's caprice. The claim,
whether well or ill founded in fact, fixes the right
of the defendant to remove, and the plaintiff ought
not to be able to defeat that right and bring the
cause back to the state court at his election.
St. Paul, 303 U.S. at 294. Therefore, the very allegation of
the complaint precludes remand, because the complaint shows, to a
reasonable probability, that the amount in controversy exceeded
$75,000 at the time of removal.
Motion to Dismiss of Lack of Diligence and Want of
Defendants move this Court to dismiss this case for plaintiff's
lack of diligence and want of prosecution under Fed.R.Civ.P.
41(b). The problem with the motion is that defendants are asking
this court to pass judgment on procedural activities of the
litigants while in state court. The lack of clarity reflected in
the record makes ruling on this issue difficult. Although
defendants cite prevailing Illinois case law in support or their
motion, federal law governs this issue.
Defendants claim Judge LeChien granted plaintiff leave to amend
within 30 day following plaintiff's settlement with Blue &
Company LLC, on June 20, 2003. Plaintiff argues Judge LeChien
granted it leave to amend on September 8, 2004, the same day
plaintiff filed the amended complaint.
The harsh sanction of dismissal for failure to prosecute under
Rule 41(b) typically arises in cases where a party demonstrates a
pattern of delay tactics or contumacious behavior. However,
before being dismissed, there is a requirement that notice be
given to the offending party. Rice v. City of Chicago,
333 F.3d 780, 786-87 (7th Cir. 1993); Pyramid Energy Ltd. v. Heyl & Patterson, Inc., 869 F.2d 1058, 1061 (7th Cir. 1989).
Dismissals without warning are appropriate only in extreme
cases, such as those in which counsel must have expected his
actions (or inaction) to be answered with dismissal. In re
Bluestein & Co., 68 F.3d 1022, 1026 (7th Cir. 1995); Ball
v. City of Chicago, 2 F.3d 752, 756 (7th Cir. 1993). Such
extreme cases are rare and require plaintiff's attorney both to
know its dilatory conduct may result in dismissal of the action
and to appreciate the imminent threat that dismissal is likely.
In re Bluestein, 68 F.3d at 1025-26. Moreover, inactivity alone
does not require dismissal under Rule 41(b). See GCIU Employer
Ret. Fund v. Chicago Tribune Co., 8 F.3d 1195, 1199-1200
(7th Cir. 1993) (twenty two months of inactivity did not
warrant dismissal under Rule 41(b)); Gibbs v. Hawaiian Eugenia
Corp., 966 F.2d 101, 109 (2d Cir. 1992) (upholding denial of
Rule 41(b) in which case lay dormant for five and a half years).
A decision to dismiss for want of prosecution must take into
account not only the period of inactivity, but also the
particular circumstances of the case and the procedural history.
Williams v. Chicago Bd. of Educ., 155 F.3d 853, 857 (7th
Cir. 1998). Such a decision must also consider the frequency and
magnitude of plaintiff's failure to comply with court deadlines,
the effect of these failures on the court's time and schedules,
the prejudice to other litigants, and the possible merits of the
plaintiff's suit. Ball v. City of Chicago, 2 F.3d 752, 759-60.
Although plaintiff delayed serving its amended complaint upon
defendant for six months, one missed deadline is not a pattern of
dilatory conduct. Kruger at 214 F.3d 784, 787. The remainder of
the facts and procedural history of this case fail to evidence a
clear record of delay or contumacious conduct, and, therefore, do
not reveal grounds for dismissal for failure to prosecute.
Dunphy v. McKee, 134 F.3d 1297, 1299 (7th Cir. 1998); In re
Bluestein & Co., 68 F.3d at 1025 (citations omitted). CONCLUSION
Accordingly, plaintiff's motion to remand is DENIED, and
defendants' motion to dismiss for want of prosecution is DENIED
on all grounds.
IT IS SO ORDERED.
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