Brogan-Johnson v. Navient Solutions, Inc.
5:21-cv-00155
N.D.W. Va.Oct 6, 2021Background
- Plaintiff Rebecca L. Brogan-Johnson incurred student-loan debt consolidated with a stated 3% annual interest rate; Navient Solutions, Inc. became the loan servicer and sent billing statements that plaintiff alleges used a higher interest rate beginning in 2016.
- Plaintiff sued in Ohio County Circuit Court on January 17, 2017, asserting breach of contract and consumer-protection claims under the West Virginia Consumer Credit and Protection Act (WVCCPA).
- The original state-court complaint included a signed pre-removal stipulation limiting recovery to $75,000 or less.
- In August 2021 (over four years later) plaintiff obtained leave to amend the complaint to remove the $75,000 cap; Navient removed the case to federal court on September 1, 2021, invoking diversity jurisdiction.
- Plaintiff moved to remand, arguing removal was untimely under 28 U.S.C. § 1446(c)(1) and that she did not act in bad faith; Navient argued the stipulation was withdrawn in bad faith and the amount in controversy now exceeds $75,000.
- The district court held that (1) diversity and the amount-in-controversy requirements are now satisfied, but (2) removal was untimely absent a finding of plaintiff bad faith, and (3) the court found plaintiff acted in bad faith by reneging on the binding pre-removal stipulation, so remand was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal under 28 U.S.C. § 1446(c)(1) | Removal is untimely because it occurred more than one year after filing (2017→2021) | Removal is timely because the damage cap was withdrawn and amount in controversy now exceeds $75,000 | Removal was outside one-year rule, so timeliness depends on bad-faith exception |
| Bad-faith exception to one-year rule | Brogan-Johnson amended in good faith because continued post-complaint conduct by Navient increased damages; she reasonably alleged ongoing violations | Navient says withdrawing the binding stipulation constitutes forum manipulation and bad faith | Court found plaintiff acted in bad faith by reneging on a binding, pre-removal stipulation; exception applies, so removal is permitted |
| Effect of pre-removal stipulation limiting damages | The stipulation reflected plaintiff's intent and originally prevented removal; plaintiff argues ongoing harms later increased damages | Navient argues the stipulation was binding and withdrawing it was manipulative; removal proper once stipulation withdrawn in bad faith | Court treated the pre-removal stipulation as effective pre-amendment and concluded withdrawing it was bad faith |
| Amount in controversy | Plaintiff does not contest that damages now exceed $75,000 | Navient contends ongoing statutory damages and fees push the amount over the threshold | Court found amount-in-controversy and diversity satisfied as of removal date once stipulation withdrawn |
Key Cases Cited
- Strawn v. AT&T Mobility, 530 F.3d 293 (4th Cir. 2008) (burden on removing party to plead and, if challenged, prove federal jurisdiction)
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (when removal is challenged, defendant must prove jurisdictional facts by preponderance)
- Maryland Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255 (4th Cir. 2005) (removal jurisdiction construed strictly because of federalism concerns)
- Standard Fire Ins. Co. v. Knowles, 568 U.S. 588 (2013) (judicial stipulations are binding and not subject to later variation)
- McCoy v. Erie Ins. Co., 147 F. Supp. 2d 481 (S.D. W. Va. 2001) (a formal, binding pre-removal stipulation may prevent removal)
- Schwenk v. Cobra Mfg. Co., 322 F. Supp. 2d 676 (E.D. Va. 2004) (bad-faith removal found where counsel admitted intent to later amend ad damnum to exceed jurisdictional threshold)