Harry Bourg Corporation v. Gulf South Pipeline Company, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

HARRY BOURG CORPORATION CIVIL ACTION

VERSUS NO. 23-4989

GULF SOUTH PIPELINE COMPANY, LLC SECTION: AG@(2)

ORDER AND REASONS

In this litigation, Plaintiff Harry Bourg Corporation (“Plaintiff”) seeks the eviction of

Defendant Gulf South Pipeline Company, LLC (“Defendant”) from its property located in

Terrebonne Parish after the commercial lease between Plaintiff and Defendant expired.1 On July

31, 2023, Plaintiff filed a petition for eviction against Defendant in the 32nd Judicial District Court

for the Parish of Terrebonne, State of Louisiana.2 On August 30, 2023, Defendant removed the

case to this Court pursuant to this Court’s diversity jurisdiction under 28 U.S.C. § 1332(a) and

federal question jurisdiction under 28 U.S.C. § 1331.3 Pending before the Court is Plaintiff’s

Motion to Remand.4 Defendant opposes the motion.5 Having considered the motion, the

memoranda in support and in opposition, the record, and the applicable law, the Court denies

Plaintiff’s Motion to Remand.

1 Rec. Doc. 1-2.

2 Id.

3 Rec. Doc. 1.

4 Rec. Doc. 5.

5 Rec. Doc. 6.

1

I. Background

A. Factual Background

Plaintiff is the owner of a piece of commercial property (“the property”) located in

Terrebonne Parish, Louisiana.6 In the petition, Plaintiff alleges that it entered into a Surface Lease

and Facilities Agreement (“Surface Lease”) with Defendant on January 1, 2003, related to the

property in Terrebonne Parish.7 Plaintiff alleges that Defendant laid its pipelines on the property

as part of its use of the land under the Surface Lease.8 Plaintiff alleges that the initial lease was for

a 10-year period expiring on January 1, 2013, and the parties renewed this lease for another 10-

year period expiring on January 1, 2023.9

Plaintiff alleges that on November 15, 2022, it mailed Defendant a written Notice of

Expiration.10 Plaintiff further alleges that on February 22, 2023, it mailed Defendant a written

Notice to Vacate.11 Plaintiff alleges that between February and June 2023, Plaintiff and Defendant

attempted to renegotiate the Surface Lease and communicated about Defendant’s pipelines on the

property, including the location of easements that Defendant had for the pipelines.12 Plaintiff

alleges that on July 21, 2023, it mailed a second written Notice to Vacate to Defendant.13 Plaintiff

6 Rec. Doc. 1-2 at 1.

7 Id. at 5.

8 Id. at 5–6.

9 Id.

10 Id.

11 Id.

12 Id. at 6.

13 Id.

2

seeks possession of its property and the removal of Defendant’s pipelines and related appurtenant

parts and equipment.14 Plaintiff seeks “all costs to be assessed on the Defendant.”15

B. Procedural Background

On July 31, 2023, Plaintiff filed a petition for eviction in the 32nd Judicial District Court

for the Parish of Terrebonne, State of Louisiana, against Defendant.16 On August 30, 2023,

Defendant removed Plaintiff’s petition to this Court pursuant to this Court’s diversity jurisdiction

under 28 U.S.C. § 1332(a) and federal question jurisdiction under 28 U.S.C. § 1331.17 Defendant

avers that the Court may exercise diversity jurisdiction because there is complete diversity of the

parties, as Plaintiff is a citizen of Louisiana and Defendant is a citizen of New York and Delaware,

and the $75,000 amount in controversy requirement is met because it would cost Defendant more

than $75,000 to remove its pipelines and equipment from Plaintiff’s property.18 Defendant also

argues that removal is proper under 28 U.S.C. § 1331 because Plaintiff’s petition involves natural

gas pipelines and related appurtenances, which are subject to the jurisdiction of federal agencies

like the Federal Energy Regulatory Commission (“FERC”) and the Pipeline and Hazardous

Materials safety Administration (“PHMSA”) and governed by the Natural Gas Act (“NGA”).19 On

14 Id. at 7.

15 Id.

16 Id.

17 Rec. Doc. 1.

18 Id. at 3–5. Defendant asserts that it is a limited liability company in which the first natural person or

corporation in its corporate structure is Boardwalk Pipelines Holding Corporation, which is incorporated in Delaware

and has its principal place of business in New York. Defendant also provided an affidavit from its Regional Vice

President that it would cost more than $75,000 to remove its pipelines and equipment from Plaintiff’s property.

19 Id. at 6.

3

September 25, 2023, Plaintiff filed the instant motion to remand.20 On October 10, 2023,

Defendant filed a response opposing the motion and also requested oral argument.21 On October

13, 2023, the Court denied Defendant’s request for oral argument after determining that oral

argument is unnecessary to resolve the motion.22

II. Parties= Arguments

A. Plaintiff’s Motion to Remand

Plaintiff moves the Court to remand this case to state court.23 First, Plaintiff argues that

this Court does not have diversity jurisdiction because the $75,000 amount in controversy

requirement is not met.24 Plaintiff reasons that it only seeks the eviction of Defendant rather than

any monetary damages such as past rent from Defendant.25 Plaintiff further reasons that the costs

that Defendant would have to incur to effectuate the eviction cannot be the basis of the $75,000

amount in controversy.26 Plaintiff notes that the Fifth Circuit has held “the value to the plaintiff

of the right to be enforced or protected determines the amount in controversy”27 Plaintiff points to

A. Levet Properties Partnership v. Bank One, N.A., where another section of this Court held in an

eviction case that to determine the amount in controversy, it was necessary to “value only the right

20 Rec. Doc. 5.

21 Rec. Docs. 6, 7.

22 Rec. Doc. 8.

23 Rec. Doc. 5.

24 Id.

25 Id. at 1.

26 Rec. Doc. 5-2 at 4–8.

27 Id. at 6 (citing Alfonso v. Hillsborough Cnty. Aviation Auth., 308 F.2d 724, 727 (5th Cir. 1962)).

4

of possession.”28 The value of the right of possession, in turn, is determined by “‘the marginal

change in plaintiff’s economic position if it obtains possession.’”29 Plaintiff appears to argue that

the amount in controversy here is zero dollars, because it has not asked for any back rent owed.30

Plaintiff also argues in the alternative that Defendant’s annual rent was only $2,500, so it would

take 30 years of nonpayment of rent by Defendant to reach the $75,000 in controversy.31

Second, Plaintiff argues that Defendant has waived its right to removal because of a forum

selection clause in the Surface Lease specifying that “the parties agree that the 32nd Judicial

District Court for the Parish of Terrebonne, State of Louisiana shall be the State court of proper

venue and jurisdiction as to resolve any differences between the parties.”32

Third, Plaintiff avers that the Court does not have federal question jurisdiction because

“[t]he fact that Defendant’s facilities and pipelines are governed by federal regulations does not

prohibit Defendant’s eviction by a Louisiana state court.”33 Plaintiff reasons that a summary

eviction proceeding involves the single issue of whether the property owner is entitled to

possession of the property.34 Plaintiff further notes that “[t]he state court can consider any

28 Id. at 6–7 (citing A. Levet Properties Partnership v. Bank One, N.A., No. 3-1708, 2003 WL 21715010, at

*2 (E.D. La. July 21, 2003) (Vance, J.)).

29 Id. at 7 (citing Levet, 2003 WL 21715010, at *3).

30 Id.

31 Id. at 7–8.

32 Id. at 8–9.

33 Id. at 9–10.

34 Id. at 9 (citing Levet, 2003 WL 21715010, at *2).

5

arguments presented to it by Defendant to determine the reasonable timeframe within which

Defendant may be given the opportunity to remove its assets from Plaintiff’s property.”35

B. Defendant’s Opposition to Remand

In opposition, Defendant first counters that the amount in controversy has been met

because Plaintiff seeks to impose costs on Defendant for the removal of the pipelines and other

personal property, should Defendant fail to remove its property on its own.36 Defendant asserts

that it would cost more than $75,000 to remove its personal property from Plaintiff’s property.37

Defendant contends that Levet is distinguishable from the case here because in Levet, the plaintiff

did not seek any damages or costs which would meet the $75,000 amount in controversy.38

Defendant also argues that the amount in controversy is met because Defendant and Plaintiff

negotiated renewal of the Surface Lease in February and March 2023, where Defendant offered to

renew at an annual rent of $5,000 for two 10-year terms and Plaintiff counter-offered $6,000 per

year for an initial 5 year term and three subsequent 5-year terms.39 Defendant points to Wright v.

AT & T Mobility, LLC in support of its argument that the parties’ rental rate negotiations satisfied

the amount in controversy.40

35 Id.

36 Rec. Doc. 6 at 2.

37 Id.

38 Id.

39 Id. at 3.

40 Id. at 3–4 (citing Wright v. AT & T Mobility, LLC, No. 12-136, 2013 WL 1558323, at *3 (E.D. La. Apr.

10, 2013) (Africk, J.)).

6

Second, Defendant counters that it has not waived its right to remove the case to federal

court.41 Defendant reasons that the forum selection clause is limited to which state court Plaintiff

may wish to file its case, but the forum selection clause does not render that state court venue to

be the sole and exclusive venue.42 Defendant cites to several Fifth Circuit cases in support of this

argument.43

Third, Defendant counters that the Court has federal question jurisdiction because the

pipelines associated with the Surface Lease are governed by FERC regulations and the NGA.44

Defendant points to 15 U.S.C. Section 717u, which provides that district courts have exclusive

jurisdiction of issues related to FERC facilities, and 15 U.S.C. Section 717f(b), which provides for

federal jurisdiction.45

III. Legal Standard

“‘Federal courts are courts of limited jurisdiction,’ possessing ‘only that power authorized

by Constitution and by statute.’”46 Pursuant to 28 U.S.C. § 1441(a), a defendant may generally

remove a civil action filed in state court if the federal court has original jurisdiction over the action.

The removing party bears the burden of demonstrating that federal jurisdiction exists.47 In

41 Id. at 4–6.

42 Id.

43 Id. at 4–5 (citing City of New Orleans v. Municipal Admin. Servs., Inc., 376 F.3d 501, 504 (5th Cir. 2004);

McDermott Int’l, Inc. v. Lloyd’s Underwriters, 944 F.3d 1199, 956 (5th Cir. 2001); Waters v. Browning-Ferris Indus.,

Inc., 252 F.3d 796 (5th Cir. 2001); Keaty v. Freeport Indonesia, Inc., 503 F.3d 955, 956–57 (5th Cir. 1974)).

44 Id. at 6–7.

45 Id. (citing 15 U.S.C. §§ 717u, 717f(b)).

46 Gunn v. Minton, 133 S. Ct. 1059, 1064 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511

U.S. 375, 377 (1994)).

47 See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).

7

assessing whether removal was appropriate, the Court “consider[s] the claims in the state court

petition as they existed at the time of removal.”48 The Court is guided by the principle, grounded

in notions of comity and the recognition that federal courts are courts of limited jurisdiction, that

“the removal statute should be strictly construed in favor of remand.”49

IV. Analysis

Plaintiff seeks to remand this case back to state court, contending that Defendant has

waived its right to remove to federal court because of a clause in the Surface Lease.50 Plaintiff also

contends that the Court does not have diversity subject matter jurisdiction because the amount in

controversy requirement is not met and that the Court lacks federal question subject matter

jurisdiction because the NGA and FERC regulations do not provide the Court with federal question

jurisdiction.51 Defendant opposes, arguing that it has not waived its right to remove this case to

federal court.52 Defendant also argues that it has met the amount in controversy requirement

because Plaintiff’s marginal change in its economic position if it obtains possession exceeds

$75,000 and because it would cost more than $75,000 for them to evict themselves from Plaintiff’s

property.53 Defendant further argues that the NGA and FERC regulations accords the Court federal

48 Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).

49 Id.

50 Rec. Docs. 5, 5-2.

51 Id.

52 Rec. Docs. 1, 6.

53 Id.

8

question jurisdiction because Plaintiff’s right to relief depends upon the resolution of a substantial

question of federal law.54

A. Whether Defendant has waived its removal right

1. Applicable Law

As an initial matter, the Court must determine if Defendant has waived its right to remove

this case to federal court. In the Fifth Circuit, “[f]or a contractual clause to prevent a party from

exercising its right to removal, the clause must give a ‘clear and unequivocal’ waiver of that

right.”55 “A party may waive its rights by explicitly stating that it is doing so, by allowing the other

party the right to choose venue, or by establishing an exclusive venue within the contract.”56 In

addition, “[a] party’s consent to jurisdiction in one forum does not necessarily waive its right to

have an action heard in another.”57 The Fifth Circuit explained that “[f]or a forum selection clause

to be exclusive, it must go beyond establishing that a particular forum will have jurisdiction and

must clearly demonstrate the parties’ intent to make that jurisdiction exclusive.”58

2. Analysis

The relevant clause in the Surface Lease that Plaintiff points to in support of its waiver

argument provides in part that “the 32nd Judicial District Court for the Parish of Terrebonne, State

of Louisiana shall be the State court of proper venue and jurisdiction as to resolve any differences

54 Id.

55 Mun. Admin. Servs., Inc., 376 F.3d at 504 (citations omitted).

56 Id.

57 Id.

58 Id. (citing Keaty, 503 F.2d at 955).

9

between the parties.”59 However, this clause merely states that the 32nd Judicial District Court for

the Parish of Terrebonne is the “State court of proper venue and jurisdiction,” not the sole venue

and jurisdiction. The Fifth Circuit has held that clauses similar to the one here do not constitute a

defendant’s waiver of its removal right.60 Even if this clause is susceptible to more than one

reasonable interpretation, the Fifth Circuit has also concluded that “[t]he very presence of

ambiguity indicates that the clause does not contain a ‘clear and unambiguous’ waiver of removal

rights …”61 Further, the Surface Lease does not contain any express waiver of Defendant’s right

to remove to federal court.62 Nor has Plaintiff has cited any law in support of its argument or

provided any evidence that the parties intended the 32nd Judicial District Court to be the sole and

exclusive forum. Therefore, Defendant has not waived its removal right.

B. Whether diversity jurisdiction exists

1. Applicable Law

Pursuant to 28 U.S.C. § 1332, “[t]he 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

59 Rec. Doc. 5-2 at 8; Rec. Doc. 1-2 at 16.

60 Mun. Admin. Servs., Inc., 376 F.3d at 504 (The relevant clause: “The undersigned Contractor does not

further hereby consent and yield to the jurisdiction of the State Civil Courts for the Parish of Orleans and does hereby

formally waive any pleas or jurisdiction on account of the residence elsewhere of the undersigned Contractor.”); Keaty,

503 F.2d at 956 (The relevant clause: “This agreement shall be construed and enforceable according to the law of the

State of New York and the parties submit to the jurisdiction of the courts of New York.”). Compare City of New

Orleans v. Nat’l Serv. Cleaning Corp., No. 96-1601, 1996 WL 419750, at *1, *3 (E.D. La. July 24, 1996) (Duval, J.)

(holding that the defendant waived its right to removal because the clause in the contract was unambiguous, providing

that “[t]he contractor hereby consents to and stipulates to the personal jurisdiction and venue of the Civil District Court

for the Parish of Orleans, Louisiana in any litigation brought under this Article.”).

61 Mun. Admin. Servs., Inc., 376 F.3d at 505–06.

62 See Rec. Doc. 1-2.

10

interest and costs, and is between” “citizens of different states.”63 Fifth Circuit precedent provides

that a removing defendant’s burden of showing that the amount in controversy is sufficient to

support federal jurisdiction differs depending on whether the plaintiff’s complaint alleges a

specific amount of monetary damages.64 When the plaintiff alleges a damage figure in excess of

the required amount in controversy, “that amount controls if made in good faith.”65 If the plaintiff

pleads damages less than the jurisdictional amount, this figure will also generally control, barring

removal.66 Thus, “in the typical diversity case, the plaintiff remains the master of his complaint.”67

Louisiana law ordinarily does not allow a plaintiff to plead a specific amount of damages.68

A plaintiff is, however, permitted to make “a general allegation that the claim exceeds or is less

than” a particular amount if making such an allegation is necessary to establish the lack of

jurisdiction of federal courts due to insufficiency of damages.69 When, as here, Plaintiff has alleged

an indeterminate amount in controversy, the Fifth Circuit requires the removing defendant to prove

by a preponderance of the evidence that the amount in controversy exceeds $75,000.70 A defendant

satisfies this burden either “(1) by demonstrating that it is facially apparent that the claims are

likely above $75,000, or (2) by setting forth facts in controversy—preferably in the removal

63 28 U.S.C. § 1332(a).

64 See Allen, 63 F.3d at 1335.

65 Id. (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)).

66 Id.

67 Id.

68 See La. Code Civ. P. art. 893.

69 Id.

70 Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 882 (5th Cir. 2000); see also Simon v. Wal-Mart Stores,

Inc., 193 F.3d 848, 850 (5th Cir. 1999); Allen, 63 F.3d at 1335.

11

petition, but sometimes by affidavit—that support a finding of the requisite amount.”71 The

defendant must do more than point to a state law that might allow the plaintiff to recover more

than the jurisdictional minimum; the defendant must submit evidence that establishes that the

actual amount in controversy exceeds $75,000.72 Finally, the jurisdictional facts that support

removal “must be judged at the time of the removal, and any post-petition affidavits are allowable

only if relevant to that period of time.”73

In actions where the plaintiff seeks declaratory or injunctive relief, the amount in

controversy is measured by the value of the object of the litigation.74 In the Fifth Circuit, “‘[t]he

value to the plaintiff of the right to be enforced or protected determines the amount in

controversy.’”75 Although determining the amount in controversy is a federal question requiring

the application of federal standards, the Court is required to look to state law to determine the

nature and extent of the right to be enforced in a diversity case.76

Louisiana law “provides a summary process for eviction of a lessee by a lessor because the

lease had ended due to expiration of its term or for other lawful cause.”77 “It is well settled that a

71 Simon, 193 F.3d at 850 (quoting Luckett v. Delta Airlines, Inc., 171 F.3d 295 (5th Cir. 1999)); see also

Allen, 63 F.3d at 1335.

72 See De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995).

73 Allen, F.3d at 1335.

74 See Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 347 (1977); Austin Prop. Assocs., L.L.C. v.

Huntington Beach 2, L.L.C., 747 Fed. Appx. 1000, 1001 (citing St. Paul Reinsurance Co. v. Greenberg, 135 F.3d

1250, 1253 (5th Cir. 1998) (quoting Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983)).

75 Garcia v. Koch Oil Co. of Texas Inc., 351 F.3d 636, 639 (5th Cir. 2003) (quoting and citing Hillsborough,

308 F.2d at 727).

76 See Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 352–53 (1961).

77 Affordable Care, LLC v. Martin, No. 54,286-CA, p. 621 (La. App. 2 Cir. 4/13/22); 337 So. 3d 615 (citations

omitted).

12

summary action for eviction of a tenant or lessee under these articles involves the single issue of

whether the lessor is entitled to receive back possession of the leased premises.”78 A plaintiff in a

summary eviction proceeding cannot seek past rent or other money damages in that summary

eviction proceeding.79 The Fifth Circuit has recognized that “only the value of the right directly in

issue in the particular suit, not the collateral effect of the judgment, may be considered in making

up the necessary jurisdictional amount.”80

The Fifth Circuit has not spoken clearly on how to determine the monetary value of the

right of possession—the object of the litigation in an eviction proceeding. The Fifth Circuit’s

district courts and other federal courts have followed different methods for determining the

monetary value of the right of possession in eviction cases.

First, one method for calculating the value in possession, as outlined in Levet, is the

“marginal change in plaintiff’s economic position if it obtains possession.”81 “To do this, the Court

compares the plaintiff’s economic position with and without possession.”82 In Levet, the presiding

judge explained that “[i]f [the plaintiff] were able to re-lease the premises to another tenant at a

monthly rental amount greater than what it would receive from [the defendant] under the Lease,

then the value of possession could be measured as the difference between the rent received from

the new tenant and the rent [the plaintiff] would have received from [the defendant].”83 The

78 Id.

79 Levet, 2003 WL 21715010, at * 2.

80 Burks v. Texas Co., 211 F.2d 443, 445 (5th Cir. 1954).

81 Levet, 2003 WL 21715010, at *3.

82 Id.

83 Id.

13

presiding judge also explained that “[a]s an alternative, if [the defendant] were unable to pay rent

under the lease, then possession would give [the plaintiff] the ability to re-lease the premises to

another tenant, and the value of possession would be the rent [the plaintiff] could collect from a

new tenant.”84 The presiding judge in Levet also noted that the plaintiff “is entitled to at least the

monthly rent currently due under the lease, whether or not it terminates the Lease and obtains

possession of the leased premises.”85

In Wright v. AT & T Mobility, LLC, another judge in the Eastern District of Louisiana

applied the marginal change method outlined in Levet and held that the amount in controversy was

met because of the rental amount discussed in rental negotiations between the plaintiff and the

defendant.86 In Wright, the plaintiff sought eviction of the defendant after the defendant did not

pay rent for eight years.87 The presiding judge found that the amount in controversy was met

because the plaintiff was collecting zero dollars in rent, as there was no lease agreement, but now

would collect $1,800 monthly rent indefinitely based on the lease negotiations between the

parties.88 The presiding judge further reasoned that the “defendant’s proposed ‘initial’ 20-year

lease term suggest contracting parties would generally contemplate a lease term in excess of 3.5

years” for the $75,000 amount in controversy to be met.89

84 Id.

85 Id.

86 Wright, 2013 WL 1559323 at *3.

87 Id. at *1.

88 Id. at *3.

89 Id. at *3, n.21.

14

Second, another method for determining the value in possession is the rental value for the

length of the lease period, including future rent payments that are contemplated during lease

renewal negotiations. In Scott-Burr Stores Corp. v. Wilcox, the Fifth Circuit held that the amount

in controversy was met when the parties attempted to renew a lease for a period of ten years that

totaled $51,000 in rent.90 Many federal courts have utilized this approach.91

Third, another method for calculating value in possession is the amount of rent for at least

one year, as a judge in the Southern District of Texas held in Ezon v. Cornwall Equities Ltd.92

However, the presiding judge in Ezon noted that his decision was limited to “the instant case.”93

Fourth, other federal courts outside of the Fifth Circuit have looked to the amount of rent

arrears to determine if the amount in controversy was satisfied.94 In Bem I, L.L.C. v. Anthropologie,

Inc., an eviction case removed from Illinois state court, a judge in the Northern District of Illinois

discussed the applicability of various value in possession calculation methods, and determined that

90 Scott-Burr Stores Corp. v. Wilcox, 194 F.2d 989, 990 (5th Cir. 1952).

91 Dosdall v. Fraser, 246 F.Supp. 311, 314 (D. Mont. 1965) (“the conclusion seems inescapable that the

amount in controversy is the rental value for the term of the lease.”); Range Oil Supply Co. v. Chicago, Rock Island

and Pac. R.R. Co., 248 F.2d 477, 478–79 (8th Cir. 1957) (affirming district court order that determined the amount in

controversy as “[t]he value of the exclusive use of this land, for what may well be an indeterminable length of time,

… although such value may be incapable of precise measurement”). But see Rubel-Jones Agency, Inc. v. Jones, 165

F.Supp. 652, 656 (W.D. Mo. 1958) (“The value of future installments of rent may not be considered in ascertaining

the amount in controversy.”).

92 Ezon v. Cornwall Equities, Ltd., 540 F.Supp. 885, 889 (S.D. Tex. 1982). The court did not determine a

precise formula for determining rental value as value in possession.

93 Id. At least one federal court judge has expressed concern about this method, reasoning that “[i]f the term

of the lease is ten years, the court is hard-pressed to make sense of a formula that calls for the application of an arbitrary

one year cut-off for determining the amount in controversy. Bem I, L.L.C. v. Anthropologie, Inc., No 98 C 358, 1999

WL 1212643, at *5, n.7 (N.D. Ill. Dec. 14, 1999).

94 Id. at *6. See also Mutual First, Inc. v. O’Charleys of Gulfport, Inc., 721 F.Supp. 281 (S.D. Ala. 1989)

(holding that there are several methods to calculate the amount in controversy in an eviction proceeding and that

looking only at the alleged amount of rent in arrears is sufficient).

15

the rent arrears method was most suitable in that case.95 Illinois’s Forcible Entry Detainer Statute

primarily “provides a summary method of determining the right to possession of property in a

dispute between a landlord and a tenant” but “[n]evertheless, a claim for rent may be joined in the

complaint and judgment may be entered for the amount of rent due.”96 The defendant “argue[d]

that the amount in controversy should be determined with respect to the amount the Tenant would

owe for the entire term of the Lease, including amounts potentially owed if Tenant were to exercise

options to renew the lease.”97 The court declined to apply the term of the lease/future rents method

of calculation because “the provision of the Lease which recites both Tenant’s obligations for

future rents in the event of a breach and Landlord’s obligation to mitigate damages is a liquidated

damages clause.”98 The court reasoned that because “the purpose of the Illinois statute is to provide

summary proceedings with a quick resolution on the issue of possession only, to which a claim for

past rent due may be joined … the court is unwilling to calculate the value of possession based on

a liquidated damages in the form of accelerated rent payments.”99

2. Analysis

Plaintiff and Defendant both cite to the marginal change calculation method outlined in

Levet and Wright but they both misapply this calculation method.100 Plaintiff’s argument that the

95 Bem, 1999 WL 1212643, at *4–6.

96 Id. at *4 (citations omitted).

97 Id. at *5.

98 Id.

99 Id. The court noted that “it has serious reservations about the validity of” the term of the lease/future rent

payments method because “essentially, any forcible entry and detainer action involving a commercial lease would be

removable to federal court” and would defeat the purpose of the Illinois statute in quickly resolving the issue of

possession in a summary eviction proceeding. Id. at *5, n. 7.

100 Rec. Doc. 5-2 at 7; Rec. Doc. 6 at 2–4.

16

amount in controversy is zero because it is not seeking any back rent appears to reflect the rent

arrears calculation method the Bem court followed.101 Plaintiff’s alternative argument that the

expired lease’s rent of $2,500 a year would require at least 30 years to exceed $75,000 is also a

misapplication, as it does not consider the new higher rent amounts it negotiated with Defendant.102

Defendant argues that in its lease renewal negotiations with Plaintiff, Defendant’s rent proposal

of $5,000 per year for 20 years amounts to $100,000 and Plaintiff’s counter proposal of $6,000 per

year for 20 years amounts to $180,000.103 However, this is a misapplication of the marginal change

method in Levet because it does not consider the difference between the rent under the expired

lease and these proposed rent amounts. As Levet noted, the plaintiff in that case “is entitled to at

least the amount of monthly rent currently due under the lease, whether or not it terminates the

Lease and obtains possession of the leased premises.”104 The Surface Lease between Plaintiff and

Defendant here does not contain a rent abatement provision that would allow Defendant to pay no

rent based on certain conditions, so Defendant would still owe rent as long as it continues to

possess Plaintiff’s property after the lease’s expiration.105 Thus, Defendant’s argument is actually

101 Rec. Doc. 5-2 at 7–8. See Bem, 1999 WL 1212643, at *6.

102 Rec. Doc. 5-2 at 7–8; Rec. Doc. 6-2.

103 Rec. Doc. 6 at 3.

104 Levet, 2003 WL 21715010, at * 3.

105 See Rec. Doc. 1-2. Compare MCC Mortg. LP v. Office Depot, Inc., 685 F. Supp.2d 939, 944–45 (D. Minn.

2010) (finding that because Office Depot was paying zero dollars in rent due to a rent abatement provision in the lease,

the eviction of Office Depot would likely lead to MCC re-leasing the property for $10,000 a month in a multi-year

lease to meet the $75,000 amount in controversy); Wright, 2013 WL 1559323, at *3 (finding that the amount in

controversy requirement was met because the defendant was paying zero dollars in rent due to the lack of a lease

agreement between the plaintiff and the defendant but the defendant would pay monthly rent of $1,800 for twenty

years per the parties’ lease negotiations).

17

reflective of the second method discussed above, the rental value for the length of the lease/future

rent payments method.106

The Court finds that the marginal change approach is the method best suited for calculating

value in possession in this case. The rent arrears approach would guarantee that no eviction case

may be removed to federal court since Louisiana law does not allow a plaintiff to pursue rent

arrears in an eviction case.107 On the other hand, the rental value for the term of the lease approach

would almost guarantee that every commercial eviction case would be removable to federal court,

as one federal court has commented.108 The marginal change approach is an appropriate method

to balance the extremes of the rent arrears and the rental value for the term of the lease/future rent

payments approaches in calculating the value of possession in an eviction action.

The total rent Plaintiff collected from Defendant under the Surface Lease was $2,000 per

year for the first ten years and $2,500 per year for the next ten years under the renewal.109 In total,

this amounts to $45,000 over the 20-year period of the Surface Lease. In the lease negotiations

between the parties, Plaintiff proposed annual rent of $6,000 with a 5-year term and “an option to

renew the lease for 3 additional 5-year terms, with the rent adjusted according to the Consumer

Price Index (‘CPI’) on the 5th, 10th, [and] 15th anniversar[ies].”110 Under Plaintiff’s proposed terms,

106 Scott-Burr Stores Corp., 194 F.2d at 990.

107 Levet, 2003 WL 21715010, at *2. Compare Bem, 1999 WL 1212643, at *5 (the Illinois Forcible Detainer

Statute allowed a Plaintiff to seek past rent owed as damages in a summary eviction proceeding).

108 Bem, 1999 WL 1212643, at *5, n.7.

109 Rec. Doc. 1-2 at 20.

110 Rec. Doc. 6-2 at 4. Defendant proposed annual rent of $5,000 for two 10-year terms. Id. at 3. However,

in the Fifth Circuit, “‘[t]he value to the plaintiff of the right to be enforced or protected determines the amount in

controversy.’” Garcia, 351 F.3d at 639 (citation omitted). Therefore, the Court considers Plaintiff’s proposed rental

terms as a measure of the value to Plaintiff of the right it seeks to enforce.

18

it is certain that the rent for the first five years is $30,000. Assuming that the rent remains at $6,000

at the 5", 10", and 15 anniversaries, the total rent over twenty years would be $120,000. The

difference between $120,000 under Plaintiff's proposed lease renewal and the $45,000 in rent

Plaintiff has collected for twenty years under the Surface Lease is $75,000. Although the CPI in

the future is unknown, the Court can make the reasonable inference that the CPI will be above zero

and that any CPI above zero on either the 5, 10", or 15 anniversaries will result in the annual

rent exceeding $6,000 and thus the amount in controversy exceeding $75,000. Therefore, the

amount in controversy requirement is met for the Court to exercise diversity jurisdiction under 28

U.S.C. § 1332(a).

V. Conclusion

For the reasons discussed above, the Court concludes that Defendant has established that

the Court has jurisdiction over this matter under 28 U.S.C. § 1332(a).

Accordingly,

IT IS HEREBY ORDERED that Plaintiff Harry Bourg Corporation’s “Motion to

Remand”! is DENIED.

NEW ORLEANS, LOUISIANA, this 16th day of November, 2023.

NANNETTE JQUIVETTE BROWN or

CHIEF JUDGE

UNITED STATES DISTRICT COURT

"Il Rec. Doc. 5.

19