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Twyman v. S&M Auto Brokers

United States District Court, N.D. Illinois, Eastern Division

October 18, 2016

Donaldson Twyman, Plaintiff,
v.
S&M Auto Brokers, Saed Ihmoud, and Mohammed Ihmoud, Defendants.

          MEMORANDUM OPINION AND ORDER

          Virginia M. Kendall United States District Court Judge Northern District of Illinois

         Plaintiff Donaldson Twyman, a citizen and resident of Indiana sued Defendants[1] S&M Auto Brokers, Inc., Saed Ihmoud (S&M's owner), and Mohammed Ihmoud (S&M's General Manager), alleging they violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Count I), Federal and State Odometer Acts (Count II), and committed common law fraud (Count III) when they misstated the mileage on a vehicle they sold him and failed to inform him that the vehicle had a bent frame, was “a rebuilt wreck, ” and was dangerous to drive. (Dkt. 1.) Twyman seeks at least $30, 000 in actual damages and $120, 000 in punitive damages “due to the willful and wanton nature of Defendants' conduct and also because [the alleged misrepresentations were] part of [a] long standing pattern and practice of similar misconduct which needs to be punished and deterred.” (Dkt. 1 ¶¶ 9, 25.)

         Since filing the suit, the parties have been engaged in unusually antagonistic litigation necessitating this Court to admonish counsel several times for their lack of civility during discovery. (See, e.g., Dkt. 35.) Under current consideration are two motions stemming from the parties' ongoing discovery disputes: Plaintiff's motion to compel sworn answers to interrogatories (Dkt. 29) and Defendants' motion for a protective order (Dkt. 41). Additionally, the Court considers two dispositive motions: Plaintiff's motion to dismiss Count II of his complaint (Dkt. 39) and Defendants' motion to dismiss for lack of subject matter jurisdiction (Dkt. 20).[2] For the reasons stated below, Plaintiff's motion to dismiss Count II of the complaint with prejudice is granted (Dkt. 39), Defendants' motion to dismiss for lack of subject matter jurisdiction is denied (Dkt. 20), Plaintiff's motion to compel is granted (Dkt. 29), and Defendants' motion for a protective order is denied (Dkt. 41).[3]

         PLAINTIFF'S MOTION TO DISMISS COUNT II

         Plaintiff has filed an unopposed motion to dismiss Count II of his complaint, which alleged that Defendants violated the Federal Odometer Act, 49 U.S.C. § 32705 and Illinois' odometer disclosure statute, 625 ILCS 5/3-112.1, by rolling back the odometer of the vehicle Defendants sold Plaintiff. After engaging in third party discovery, Plaintiff determined that the odometer of the vehicle Defendants sold to him had not been rolled back. Since he has determined that Count II is not supported by the facts, Plaintiff's motion to dismiss Count II of the complaint is granted.[4]

         DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

         Defendants have also filed a motion to dismiss pursuant to Rule 12(b)(1) (which was filed prior to Plaintiff's motion to dismiss Count II), arguing that the Court lacks subject matter jurisdiction over Plaintiff's claims because: (1) his Federal Odometer Act claim lacks merit, depriving him of federal question jurisdiction; and (2) the Court lacks diversity jurisdiction because the amount in controversy is less than the minimum $75, 000 required by 28 U.S.C. § 1332.

         Federal Rule of Civil Procedure 12(b)(1) requires dismissal when courts lack subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). With Count II already dismissed, diversity jurisdiction provides the only potential avenue for subject matter jurisdiction. Diversity jurisdiction exists if the amount in controversy exceeds $75, 000 and the suit is between citizens of two different states. 28 U.S.C. § 1332(a).

         In evaluating a motion filed pursuant to Rule 12(b)(1), the Court must “accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff.” Evers v. Astrue, 536 F.3d 651, 656 (7th Cir. 2008) (citation omitted). “In all cases, the party asserting federal jurisdiction has the burden of proof to show that jurisdiction is proper.” Travelers Prop. Cas. v. Good, 689 F.3d 714, 722 (7th Cir. 2012) (citing McNutt v. Gen. Motors Acceptance Corp., 289 U.S. 178, 189 (1936). In assessing factual challenges to subject matter jurisdiction, courts may look beyond the jurisdictional allegations and evaluate the evidence submitted to determine whether subject matter jurisdiction exists. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-44 (7th Cir. 2009). If “material factual allegations” relating to jurisdiction are contested, the plaintiff must “prove the jurisdictional facts by a preponderance of the evidence” with competent proof. McMillian v. Sheraton Chicago Hotel & Towers, 567 F.3d 839, 844 (7th Cir. 2009) (quotation omitted).

         Defendants do not dispute that the parties are diverse. (Dkt. 20 at 4.) Instead, they argue that the amount in controversy requirement has not been met because Plaintiff only claims actual damages of $30, 000, $45, 000 below the amount in controversy requirement.[5] (Dkt. 1 ¶ 9.) Although Plaintiff claims $120, 000 in punitive damages, Defendants argue that Plaintiff is not entitled to punitive damages sufficient to meet the amount in controversy requirement. (Dkt. 20 at 4-10.)

         As both parties point out, punitive damages can be considered when evaluating whether a party has satisfied the amount in controversy requirement. See Cadek v. Great Lakes Dragaway, Inc., 58 F.3d 1209, 1211 (7th Cir. 1995). When punitive damages are required to meet the amount in controversy requirement, courts perform a two-part test. See Anthony v. Sec. Pac. Fin. Servs., Inc., 75 F.3d 311, 315 (7th Cir. 1996). First, the Court must determine “whether punitive damages are recoverable as a matter of state law.” Id. “If punitive damages are available, subject matter jurisdiction exists unless it is ‘legally certain' that the plaintiff will be unable to recover the requisite jurisdictional amount.” LM Ins. Corp. v. Spaulding Enterprises Inc., 533 F.3d 542, 551 (7th Cir. 2008); see also Hunt v. DaVita, Inc., 680 F.3d 775, 777 (7th Cir. 2012) (finding subject matter jurisdiction over matter because movant had not shown it was “legally certain” that amount in controversy would not exceed $75, 000 because even a “modest punitive-to-compensatory damages ratio of two or three to one could have led to an award in excess of $75, 000”); Casey-Beich v. United Parcel Serv., Inc., 295 F. App'x 92, 94 (7th Cir. 2008) (“If punitive damages are available, the court has subject-matter jurisdiction unless it is legally certain that the plaintiff cannot recover the jurisdictional amount.”). When punitive damages claims are challenged, courts “require the plaintiff to support its claim with competent proof, lest fanciful claims for punitive damages end up defeating the statute's requirement of a particular amount in controversy.” Del Vecchio v. Conseco, Inc., 230 F.3d 974, 979 (7th Cir. 2000).

         “When a claim for punitive damages makes up the bulk of the amount in controversy, and may even have been colorably asserted solely to confer jurisdiction, we should scrutinize that claim closely.” See, e.g., Priddle v. Malanis, No. 12-CV-5831, 2016 WL 164330, at *4 (N.D. Ill. Jan. 12, 2016) (quoting Anthony, 75 F.3d at 315); see also Smith v. American Gen. Life & Acc. Ins. Co., Inc., 337 F.3d 888, 893 (7th Cir. 2003); Del Vecchio 230 F.3d at 979-80 (dismissing suit seeking $600 in compensatory damages and $75, 000 in punitive damages because it was highly unlikely state court would allow such an award). “The purpose of awarding punitive damages is to punish the wrongdoer and in doing so deter that party and others from committing similar wrongful acts.” Ciampi v. Ogden Chrysler Plymouth, Inc., 634 N.E.2d 448, 461 (Ill.App.Ct. 1994). Punitive damages may be awarded “[F]or conduct that is outrageous, either because the defendant's motive was evil or the acts showed a reckless disregard of others' rights.” Kirkpatrick v. Strosberg, 894 N.E.2d 781, 794 (Ill.App.Ct. 2008).

         First, “[p]unitive damages are available under both the common law of fraud and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 to 505/12.” Keeling v. Esurance Ins. Co., 660 F.3d 273, 275 (7th Cir. 2011). Second, even when carefully scrutinized, it is not legally certain that Plaintiff will be unable to satisfy the amount in controversy threshold. Plaintiff has alleged that the Defendants' sales representatives misrepresented and concealed the fact that the vehicle had never been in an accident and failed to disclose that it “was a rebuilt wreck with a bent frame.” (Dkt. 1 ¶¶ 2, 12-15.) Once he purchased the vehicle, Plaintiff soon discovered that the car did not perform as advertised, and he learned from a mechanic that the car needed extensive repairs. (Dkt. 1 ¶¶ 21-22.) Plaintiff has also submitted evidence that the vehicle had a “rough” grade, indicating that it had “been severely abused or has sustained major collision damage” and other evidence indicative of a serious collision. (Exs. A, B, C to Dkt. 23; Ex. 1 to Dkt. 57.) Plaintiff has also submitted newly received documentation from Progressive Insurance, demonstrating that the subject vehicle had, in fact, previously been in a collision, including pictures of the damaged vehicle and estimates for repairs. (Dkt. 65.) In light of these allegations and supporting facts of conduct, it is not legally certain that Plaintiff cannot recover at least $75, 000.[6]

         The Illinois Appellate Court has repeatedly affirmed significant punitive damage awards in factually similar situations. See Totz v. Cont'l Du Page Acura, 602 N.E.2d 1374, 1386 (Ill.App.Ct. 1992) (affirming significant punitive damages award for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act related to misrepresentations by a used car dealer regarding a vehicle being accident free); Ciampi, 634 N.E.2d at 462 (Ill.App.Ct. 1994) (affirming $100, 000 punitive damages award due to car dealer's “reckless disregard” for the buyer's rights when the dealer misrepresented the price and mileage of the subject vehicle); see also Medix Staffing Sols., Inc. v. Williams, Cohen & Gray, Inc., No. 13 C 2640, 2013 WL 5587085, at *2 (N.D. Ill. Oct. 10, 2013) (finding that court had ...


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