MCDONALD v. AUTOMONEY, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

VICKIE MCDONALD, FENTRESS )

BROWN, TRISTA RHINEHART, and )

KAREN BANKS, )

)

Plaintiffs, )

)

v. ) 1:21CV114

)

AUTOMONEY, INC., and AUTOMONEY )

NORTH, LLC, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

This matter comes before the court on a Motion to Remand,

(Doc. 12), filed by Plaintiffs Vickie McDonald, Fentress Brown,

Trista Rhinehart, and Karen Banks (“Plaintiffs”), and a Motion

to Transfer, (Doc. 15), filed by Defendants AutoMoney, Inc., and

AutoMoney North, LLC (“Defendants”). For the reasons that

follow, Plaintiffs’ Motion to Remand should be granted because

Defendants have failed to show by a preponderance of the

evidence that the amount in controversy exceeds $75,000. In

light of that, Defendants’ Motion to Transfer should be denied

without prejudice.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs are North Carolina citizens who had automobile

title loans. (Complaint (“Compl.”) (Doc. 5) ¶¶ 1, 14.)

Defendants are companies “engaged in the automobile title loan

business in North Carolina.” (Id. ¶ 2.) The Complaint alleges

that “Defendants, via the internet, cellular telephone and other

media and communication methods solicited, marketed, advertised,

offered, accepted, discussed, negotiated, facilitated, collected

on, threatened enforcement of, and foreclosed upon automobile

title loans with Plaintiffs and other North Carolina citizens.”

(Id. ¶ 3.)

Plaintiffs brought their Complaint against Defendants in

Richmond County Superior Court alleging Defendants violated the

North Carolina Consumer Finance Act, N.C. Gen. Stat. § 53-165,

et seq., engaged in unfair and deceptive trade practices in

violation of N.C. Gen. Stat. § 75-1.1, and, in the alternative,

engaged in conduct that constituted usury in violation of N.C.

Gen. Stat. § 24-1.1, et seq. (Id. ¶¶ 20-37.) Defendants removed

the action to this court based on an assertion of diversity

jurisdiction, alleging that Plaintiffs are citizens and

residents of North Carolina, that Defendants are entities

organized under the laws of South Carolina and whose members and

shareholders are all residents of South Carolina, and that the

amount in controversy exceeds $75,000. (Notice of Removal

(Doc. 1) ¶¶ 3-4.)

Plaintiffs filed a Motion for Remand, (Doc. 12), and a

brief in support, (Pls.’ Br. in Supp. of Mot. to Remand (“Pls.’

Br.”) (Doc. 13)), requesting this court remand the matter to

North Carolina state court because Defendants have not met their

burden of showing the amount in controversy exceeds $75,000.

Defendants responded, (Mem. in Opp’n to Pls.’ Mot. for Remand

(“Defs.’ Resp.”) (Doc. 19)), and Plaintiffs replied, (Doc. 22).

Additionally, Defendants filed a Motion to Transfer, (Doc.

15), arguing that three of the four Plaintiffs signed forum

selection clauses that require the action be brought in the

District of South Carolina, and that the District of South

Carolina is a more convenient forum. Defendants filed a brief in

support of their motion, (Doc. 16), to which Plaintiffs

responded, (Doc. 20), and Defendants replied, (Doc. 23).

II. STANDARD OF REVIEW

The district courts of the United States have original

jurisdiction over civil actions where the amount 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). Under 28 U.S.C. § 1441(a), a defendant may

remove “any civil action brought in a State court of which the

district courts of the United States have original

jurisdiction[.]” 28 U.S.C. § 1441(a).

“The burden of establishing federal jurisdiction is placed

upon the party seeking removal. Because removal jurisdiction

raises significant federalism concerns, [district courts] must

strictly construe removal jurisdiction. If federal jurisdiction

is doubtful, a remand is necessary.” Mulcahey v. Columbia

Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (internal

citations omitted); see also Palisades Collections LLC v.

Shorts, 552 F.3d 327, 336 (4th Cir. 2008) (recognizing the “duty

to construe removal jurisdiction strictly and resolve doubts in

favor of remand”). The parties in this case agree that there is

diversity of citizenship. (Compare Pls.’ Br. (Doc. 13) at 7 with

Notice of Removal (Doc. 1) ¶ 3.) Thus, the question before this

court is whether Defendants have sufficiently shown the amount

in controversy exceeds $75,000.

III. ANALYSIS

To determine whether the amount in controversy exceeds

$75,000, this court begins with the general proposition that the

amount in controversy is “the sum demanded in good faith in the

initial pleading.” 28 U.S.C. § 1446(c)(2). If the amount in

controversy is unclear on the face of the initial pleading,

including where “the State practice either does not permit

demand for a specific sum or permits recovery of damages in

excess of the amount demanded[,]” the defendant may assert the

amount in controversy in the Notice of Removal. Id. That amount

“should be accepted when not contested by the plaintiff or

questioned by the court.” Dart Cherokee Basin Operating Co. v.

Owens, 574 U.S. 81, 82 (2014). However, if the plaintiff

contests the defendant’s assertion of the amount in controversy,

“both sides submit proof and the court decides, by a

preponderance of the evidence, whether the amount-in-controversy

requirement has been satisfied.” Id. at 88 (citing

§ 1446(c)(2)(B)).

The defendant “‘bears the burden of demonstrating that

removal jurisdiction is proper.’ When a plaintiff’s complaint

leaves the amount of damages unspecified, the defendant must

provide evidence to ‘show . . . what the stakes of litigation

. . . are given the plaintiff’s actual demands.’” Scott v.

Cricket Commc’ns, LLC, 865 F.3d 189, 194 (4th Cir. 2017)

(internal citations omitted) (alteration in original) (first

quoting Strawn v. AT & T Mobility LLC, 530 F.3d 293, 297 (4th

Cir. 2008), then quoting Brill v. Countrywide Home Loans, Inc.,

427 F.3d 446, 449 (7th Cir. 2005)). “The removability of a case

depends upon the state of the pleadings and the record at the

time of the application for removal.” Francis v. Allstate Ins.

Co., 709 F.3d 362, 367 (4th Cir. 2013) (internal quotation marks

omitted) (quoting Alabama Great S. Ry. Co. v. Thompson, 200 U.S.

206, 216 (1906)).

Here, Defendants must show “it is more likely than not that

‘a fact finder might legally conclude that’ damages will exceed

the jurisdictional amount.” Scott, 865 F.3d at 196 (quoting Kopp

v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002)). Thus, Defendants

“must provide enough facts to allow [this] court to determine –

not speculate – that it is more likely than not that the . . .

action belongs in federal court. Id. at 197 (citation omitted).

The Complaint does not give a specific amount in

controversy but provides that “[e]ach Plaintiff stipulates that

she is not seeking, will not seek and will not accept damages in

excess of $75,000.00.” (Compl. (Doc. 5) at 9.) Plaintiffs

Fentress Brown and Karen Banks also attached to their brief

individual declarations affirming their stipulations that they

will neither seek nor accept damages in excess of $75,000. (Doc.

13-4 ¶ 16; Doc. 13-7 ¶ 11.) Plaintiffs contend that by the

stipulation in the Complaint and their individual declarations,

no individual Plaintiff seeks damages in excess of $75,000.

(Pls.’ Br. (Doc. 13) at 16-17.) On the other hand, Defendants

contend that because North Carolina law does not limit

Plaintiffs to the amount in the Complaint, Plaintiffs are not

bound by the amount pleaded in their prayer for relief. (Defs.’

Resp. (Doc. 19) at 21-24.)

To ensure a party is not using a stipulation to avoid

removal, courts may look at whether the stipulation is binding

and whether the stipulation specifies that the plaintiff will

not only not seek but also “will not accept more than $75,000 if

the court awards it.” Aikens v. Microsoft Corp., 159 F. App’x

471, 476 (4th Cir. 2005) (unpublished).

Here, Plaintiffs did not specify in their Complaint the

exact sum of damages sought. However, they did include a

stipulation in their Complaint stating they would neither seek

nor accept damages exceeding $75,000. (Compl. (Doc. 5) at 9.)

Plaintiffs additionally included individual declarations with

their Motion for Remand stating that they were not presently

seeking, nor would they seek in the future, damages in excess of

$75,000. (Doc. 13-4 ¶ 16; Doc. 13-7 ¶ 11.)

Another court in this district has dealt with this same

fact pattern and determined that the stipulation in the

Complaint coupled with individual declarations was sufficient to

defeat federal jurisdiction. See Kellar v. 1st Cap. Fin. of

S. Carolina, Inc., 1:20CV402, at 5 (M.D.N.C. Mar. 30, 2021)

(Mem. Order). In Kellar, the plaintiffs sought to recover

compensatory and treble damages for the defendant’s alleged

violations of the North Carolina Consumer Finance Act, which

they alleged constituted unfair and deceptive trade practices in

violation of N.C. Gen. Stat. § 75-1.1, and in the alternative,

sought damages for violations of the North Carolina usury

statutes, N.C. Gen. Stat. § 24-1.1. Id. at 2. The plaintiffs in

Kellar included a stipulation in their complaint that they would

neither seek nor accept damages in excess of $75,000. Id. The

plaintiffs also attached declarations affirming their

stipulation. Id. at 3. Based on these facts, the court in Kellar

held that the “declarations – with the inclusion of affirmative

language that they will not accept over $75,000 – is sufficient

to defeat federal jurisdiction.” Id. at 5.

Like the plaintiffs in Kellar, Plaintiffs stipulated that

they would neither seek nor accept damages over $75,000. (Compl.

(Doc. 5) at 9.) Plaintiffs affirmed this stipulation through

declarations. (Docs. 13-4, 13-7.) Defendants argue that neither

Plaintiffs’ declarations nor the stipulation in the Complaint is

sufficient to defeat the jurisdictional threshold. (Defs.’ Resp.

(Doc. 19) at 21.) Specifically, Defendants argue that because

the declarations were filed after the Complaint, they are

irrelevant in light of Supreme Court precedent, and further

argue that the stipulation is non-binding. (Id. at 21-22.) Even

assuming the declarations bear no weight in assessing whether

the jurisdictional threshold is met, none of the cases cited by

Defendants are applicable to the facts of this case. Defendants

first cite Dash v. FirstPlus Home Loan Trust 1996-2 to support

their argument that Plaintiffs’ stipulation does not support

remand. Unlike this case, in Dash there was no stipulation in

the complaint that the plaintiffs would not accept a sum over

$75,000. Dash, 248 F. Supp. 2d 489, 495-96 (M.D.N.C. 2003)

(denying motion to remand where the complaint alleged that the

plaintiffs did not seek damages in excess of $75,000; however,

the complaint alleged damages of at least $95,423.71 sought).

Similarly, in the other case cited by Defendants, the plaintiffs

did not specifically allege they would not accept over $75,000.

Cannon v. AutoMoney, Inc., Case No. 1:19-cv-00877, 2020 WL

3105183, at *3 (M.D.N.C. May 12, 2020) (“[T]he Complaint

specifically provides that ‘[e]ach Plaintiff alleges as to their

individual claim that the matter in controver[s]y does not

exceed the sum or value of $75,000.00, exclusive of interest and

costs.’” (alteration in original)), report and recommendation

adopted, No. 1:19-CV-877, 2020 WL 3104352 (M.D.N.C. June 11,

2020). For these reasons, this court finds that the stipulation

that Plaintiffs “will not seek and will not accept damages in

excess of $75,000.00,” (Compl. (Doc. 5) at 9 (emphasis added)),

is sufficient to defeat federal jurisdiction.1 Accordingly, this

court will grant Plaintiffs’ Motion to Remand, (Doc. 12).

Because this court will grant Plaintiffs’ Motion to Remand, this

court will deny Defendants’ Motion to Transfer, (Doc. 15).

CONCLUSION

For the foregoing reasons,

IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Remand,

(Doc. 12), is GRANTED and that this case is hereby REMANDED for

further proceedings in the Superior Court of Richmond County,

North Carolina.

1 Defendants further argue that “the addition of costs in

the form of attorneys’ fees would push the amount in controversy

to well over the $75,000.00 jurisdictional threshold.” (Defs.’

Resp. (Doc. 19) at 24.) While “[a]n award of attorneys’ fees can

be considered in determining the jurisdictional amount[,]. . .

the mere fact that [attorneys’ fees] are at issue is

insufficient . . . [to] propel the recovery over the $75,000

jurisdictional threshold.” Blettner v. Masick, No. 1:15CV474,

2015 WL 7575924, at *2 (M.D.N.C. Nov. 25, 2015) (internal

citations omitted). That Plaintiffs’ counsel would expend almost

400 hours on this case is nothing more than speculation by

Defendants, which is insufficient to establish jurisdiction. See

id. (See also (Doc. 19) at 26-27.) Defendants have filed

declarations of attorney’s fees of Plaintiffs’ counsel in other

related cases in an attempt to establish federal jurisdiction.

(Doc. 24.) None of those documents reflect that Plaintiffs’

counsel expended anywhere near 400 hours of work. (Docs. 24-1,

24-2, 24-3.) This court therefore finds that Defendants have not

met their burden of showing that the amount in controversy

exceeds $75,000.

IT IS FURTHER ORDERED that the Clerk of Court is directed

to send a certified copy of this Memorandum Opinion and Order to

the Clerk of Superior Court in Richmond County.

IT IS FURTHER ORDERED that Defendants’ Motion to Transfer,

(Doc. 15), is DENIED WITHOUT PREJUDICE.

This the 30th day of November, 2021.

*

Wy Uirm L. Blunt.

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