CSNK Working Capital Finance Corp. v. Next Creation Holdings
5:17-cv-00305
N.D. Cal.Nov 21, 2017Background
- Bay View acquired rights to accounts receivable from Shell under a factoring agreement and sued Next for unpaid amounts on goods Shell sold to Next.
- The full Shell–Next invoice totaled $93,542.30; Next issued a debit memo reducing Shell’s claim by $32,379.00 and asserted the remainder was resolved or not owed to Bay View.
- Bay View alleges it received none of the invoice proceeds and seeks to recover the invoice value from Next; it sued for breach of contract and related claims.
- In a summary-judgment filing, Bay View conceded for that motion only that the $32,379 debit memo is binding and asserted $61,630.30 plus interest was due; Bay View says that concession is limited and it will seek the full $93,542.30 if needed.
- Next moved to dismiss under Rule 12(b)(1), arguing diversity jurisdiction is lacking because the amount in controversy is below $75,000 given Bay View’s summary-judgment concession.
- The magistrate judge denied Next’s motion, finding Bay View’s claim to the full invoice amount colorable and not shown to be legally certain to be below the jurisdictional minimum.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has diversity jurisdiction under 28 U.S.C. § 1332 (>$75,000) | Bay View contends it is entitled to the full invoice ($93,542.30) and that its SJ concession was limited to that motion; jurisdictional amount is therefore met | Next argues Bay View’s SJ concession over the $32,379 debit memo means the amount in controversy is below $75,000, so federal court lacks jurisdiction | Court held jurisdiction exists: Bay View’s claim to the full invoice is colorable and it is not legally certain the claim is below $75,000, so dismissal is improper |
Key Cases Cited
- St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 238 (1938) (plaintiff’s claimed amount controls unless it is legally certain the claim is for less)
- Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781 (2d Cir. 1994) (actual post-credit balance may defeat jurisdiction when undisputed and legally certain)
- Czechowski v. Tandy Corp., 731 F. Supp. 406 (N.D. Cal. 1990) (punitive damages unavailable for breach of contract can show jurisdictional shortfall)
- Flournoy v. U.S. Aviation Underwriters, Inc., 206 F. Supp. 237 (W.D. Tex. 1962) (accounting errors that overvalue a claim can defeat jurisdiction)