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

Unsupported Allegations That Diverse Class Members Exist Are Insufficient To Establish CAFA Jurisdiction

Posted in Case Summaries, Jurisdictional Amount

Calmes v. Boca West Country Club, 2017 WL 4621112 (S.D. Fl. Oct. 16, 2017).

A district court in Florida dismissed the plaintiff’s complaint for lack of subject-matter jurisdiction under the Class Action Fairness Act (CAFA) finding that the plaintiff did not satisfy his burden to establish that there were diverse class members or that the amount in controversy exceeded $5,000,000.

Background Facts: 

The plaintiff brought a putative class action in the United States District Court, Southern District of Florida, on the behalf of a class of property owners at Boca West County Club. The plaintiffs allege that the defendants committed various acts of mismanagement of the country club, including mismanaging the sale of club property by not timely building the Akoya condo units, leading to losses in initiation and membership fees, both of which negatively impacted the values of the class members’ properties.

The plaintiff asserted that the District Court had subject-matter jurisdiction under CAFA because some class members were from different states, and the amount in controversy exceeded $5,000,000.  The defendants moved to dismiss, which the District Court granted.

Amount in Controversy:

For the CAFA amount in controversy requirement, the plaintiff alleged that the defendants’ mismanaging the sale of club property led to a loss of over $17,000,000.  The District Court found that the losses the plaintiffs alleged were suffered by the country club, and the plaintiffs did not explain how the class members suffered any injury as a result of the defendants’ alleged actions.

The plaintiffs also alleged that the defendants’ mismanagement reduced the class members’ property values over $120,000 per unit, for a total loss of $500,000,000.  The District Court, however, found that the plaintiff did not explain how he calculated the loss of over $120,000 per unit.

Because plaintiffs did not suffer any loss due to the lack of initiation and membership fees, and did not explain how their property values decreased $120,000 per unit due to the county club’s management, the court held that the plaintiff failed to allege sufficient facts to plausibly infer that the amount in controversy exceeded the jurisdictional requirement of $5,000,000.

Minimal Diversity Analysis: 

Next, for the minimal diversity requirement, the plaintiff alleged that there were class members who were citizens of states other than Florida.  The District Court, however, found that the plaintiff did not offer any support for those statements or even name the states of which the other class members were citizens.  The District Court thus ruled that there was insufficient facts to prove that minimal diversity was met.

Alternatively, the District Court opined that even if the plaintiff had alleged sufficient facts to establish the amount in controversy and minimal diversity, it still lacked subject-matter jurisdiction under 28 U.S.C. § 1332(d)(4).  The District Court found that the amended complaint did not provide what percentage of the class were citizens of Florida and what percentage were non-citizens, or identify if other class actions asserting similar factual allegations against the defendant had been brought during the past three years. The District Court concluded that there were insufficient facts to support a finding that it had subject-matter jurisdiction under CAFA.

Federal Question Jurisdiction:

The court also held that it did not have subject-matter jurisdiction under federal question jurisdiction for the plaintiffs’ claims under the Civil RICO statutes and for declaratory judgment. When evaluating the declaratory judgment claim, the court held the Declaratory Judgment Act does not confer jurisdiction itself, but rather a suit brought under the Act must state some independent source of jurisdiction, such as the existence of diversity or the presumption of a federal question. As for the RICO claim, the court was unsure if the claim was under state or federal law, but determined the claim to be under state law due to the complaint’s allegations, further depriving the court of subject-matter jurisdiction.

Accordingly, the District Court granted the defendants’ motion to dismiss.

By Nicholas Kopcho