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Jansen v. American Express Corp.

December 6, 2007


The opinion of the court was delivered by: Wayne R. Andersen District Judge


This matter is before the court on defendant American Express Corporation's motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. For the following reasons, we grant the motion.


On August 31, 2007, plaintiff Christopher A. Jansen filed this third amended complaint alleging fraud and breach of contract by American Express. He invoked jurisdiction pursuant to 28 U.S.C. § 1332 on the basis of diversity of citizenship, alleging that the amount in controversy exceeded $100,000.

Plaintiff sought class action status in previous iterations of this suit, including a state court action he filed in November 2003 and then voluntarily dismissed, and his original federal court action, filed on May 16, 2006. In both the state court action and in the original complaint filed in this court, plaintiff said he was not seeking "individual compensatory damages in excess of $65,000." This court dismissed plaintiff's first amended complaint on May 15, 2007, finding that plaintiff had not satisfied by a preponderance of the evidence the jurisdictional requirements of the Class Action Fairness Act of 2005 (CAFA), namely that the amount in controversy exceeded five million dollars and that the proposed class had 100 or more members. We denied plaintiff's motion for leave to file a second amended complaint but granted him permission to file this third amended complaint.

Plaintiff's allegations in his third amended complaint are similar to those in his previous complaints and stem from a purchase he made in 1984 of what were purported to be limited edition, autographed lithographs of paintings by the well-known Spanish painter, Salvador Dalí. Jansen alleges that, as a premium American Express account holder, he took advantage of an offer from American Express to purchase four investment-quality, limited edition lithographs signed by Dalí. Jansen alleges that the brochure describing the lithographs characterized them as "original" works of art, "individually hand-numbered," and "individually pencil signed by Dalí himself." The lithographs cost $975 each or $3,510 for all four. Plaintiff purchased the set for $3,510.

Plaintiff alleges that he relied on American Express's representations as to the authenticity of the Dalí works in deciding to purchase the lithographs. He also alleges that he expected the lithographs to appreciate in value in accordance with other investment-quality lithographs, and that the lithographs should have increased even more after Dalí's death. Plaintiff alleges, however, that after he made the purchase, American Express learned that the lithographs were fakes. He alleges that American Express never notified him that the lithographs were frauds, despite having his contact information, and that American Express claims it has no record or evidence of notifying him. Plaintiff also alleges that American Express sold far more of the "limited edition" prints than it promised when the original offer was made.

Plaintiff alleges that he did not discover the lithographs were worthless until the summer of 2003 when he inquired at art galleries about the value of his investment and was informed that he owned "a set of those American Express frauds." Plaintiff alleges that, if the lithographs had been authentic, today they would be worth in excess of $30,000 each or more than $100,000 collectively.


A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) challenges the subject matter jurisdiction of a complaint. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003). There are two ways to challenge subject matter jurisdiction under Rule 12(b)(1): a) a challenge as a matter of law, in which the factual allegations of the complaint are assumed to be true; or b) an attack on the jurisdictional facts on which the complaint relies, in which no presumptive truthfulness attaches to plaintiff's allegations. W. Transp. Co. v. Couzens Warehouse & Distrib., Inc., 695 F.2d 1033, 1038 (7th Cir. 1982).

When a defendant has properly raised a factual attack concerning the trial court's power to proceed with the action, the court is not bound to accept as true allegations in the complaint seeking to establish jurisdiction. Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979). In evaluating a Rule 12(b)(1) motion that makes a factual attack, the court may look beyond the jurisdictional allegations of the complaint to the evidence that has been submitted to determine whether, in fact, jurisdiction exists. Id. Moreover, the existence of issues of material fact will not preclude a court from first evaluating the merits of the jurisdictional claims. W. Transp., 695 F.2d at 1038. While the court is free to weigh the evidence and satisfy itself as to the existence of subject matter jurisdiction, the plaintiff has the burden of proof that jurisdiction exists. Id. Here, American Express challenges as a factual matter the basis of plaintiff's subject matter jurisdiction, attacking plaintiff's assertion that the amount in controversy exceeds $75,000.


Federal district courts have original jurisdiction over all civil actions "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." 28 U.S.C. § 1332(a)(1). American Express claims that there is no subject matter jurisdiction in this case for three reasons: a) because plaintiff has previously claimed in this court and in state court that he was not seeking more than $65,000 in compensatory damages; b) because plaintiff is not entitled to punitive damages in this action; and c) because plaintiff has not shown that he is entitled to legal fees that would enable him to exceed the minimum amount in controversy.

The amount in controversy is the amount required to satisfy the plaintiff's demands in full on the day the suit begins. Hart v. Scherin-Plough Corp., 253 F.3d 272, 273 (7th Cir. 2001). Generally, unless a plaintiff's amount in controversy claim is false to a "legal certainty," the amount will be taken as true for purposes of jurisdiction. Smoot v. Mazda Motors of Am., Inc., 469 F.3d 675, 677 (7th Cir. 2006). But when jurisdiction is challenged as a factual matter by the opposing party, the party invoking jurisdiction bears the burden of supporting its allegations by competent proof. Meridian Sec. ...

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