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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Plaintiffs Can’t Complain About The Defendants Looking at the Amount in Controversy in a Similar Case by the Plaintiffs Against the Defendants

Posted in Case Summaries

Lias v. Galbut, No. 10-22699-CIV, 2011 WL 335346 (S. D. Fla. Jan. 31, 2011).

What??? You think because you said it in another case means it can’t be used against you in this one?

In this case, a District Court in Florida declined to remand the action to state court holding that while ascertaining the amount in controversy, the Court can look into the pleadings filed by the same plaintiffs in a previous action alleging the same causes of action that acknowledge federal diversity jurisdiction and allege damages in excess of the threshold.

The plaintiffs, purchasers of condominium apartments in San Diego, California (which is a beautiful city), brought an action alleging that the developer and its marketing company provided an unconscionable contract and falsely advertised that the ultimate apartments would be bigger than they turned out to be. Accordingly, the plaintiffs sought the court to void their contracts and provide them with money damages. 

All 290 plaintiffs are residents of California and all seven defendants are either residents of New York or Florida. 

The defendants filed a notice of removal in the federal court asserting that they met the jurisdictional amount under CAFA.  The defendants averred that the plaintiffs previously filed a complaint in the Southern District of California against the same defendants using the same facts to support four of the same claims.  In that complaint, the plaintiffs acknowledged the diversity jurisdiction of the federal court in the Southern District of California.   

The California lawsuit sought to void the contracts for the purchase of the condominiums, which totaled $200 million in gross receipts.  The defendants also showed that in the California lawsuit, the purported class alleged that a proper damage calculation for the allegations would be to multiply the allegedly “lost” square feet by the number of apartments in the project, by the average price per square foot.  Under this formula, the defendants established damages in excess of $6 million.  Finally, the defendants pointed out that in Count II of the Complaint, the fraud in the inducement claim, the plaintiffs asked for “actual damages in an amount no less than $74,999 per plaintiff and class member.  There being 290 Plaintiffs, thus far, the defendants argued that count alone established damages in excess of $5 million. 

The plaintiffs argued that the notice of removal contained insufficient evidence to establish that the jurisdictional amount was met.

The Court stated that because the plaintiffs had alleged damages under the jurisdictional amount except for Count II, which was in excess of the jurisdictional amount, the defendants must “prove to a legal certainty” that the plaintiffs would not recover below the jurisdictional amount.  

The Court observed that putting aside that Count II of the complaint established damages in excess of the jurisdictional amount, the notice of removal established to a “legal certainty” that if successful, the plaintiffs would be entitled to damages in excess of the jurisdictional amount. First, the defendants provided the Court with pleadings filed in California by the same plaintiffs alleging the same causes of action that acknowledge federal diversity jurisdiction and allege damages in excess of the threshold.  Second, the defendants provided the Court with a very straight-forward damage calculation (i.e. price per square foot) to remedy the plaintiffs’ claim that the apartments were smaller than promised.  Finally, the defendants showed the proceeds from the contracts the plaintiffs sought to void were well in excess of the jurisdictional amount.  

Accordingly, the Court found that the notice of removal was proper and denied the motion for remand.