37 F.4th 1053
5th Cir.2022Background
- In 2005 Michael Durbois took a home-equity loan on a Texas house; Deutsche Bank is the loan trustee.
- In March 2019 Deutsche Bank initiated a non-judicial foreclosure; Durbois sued in Texas state court on Dec. 2, 2019 alleging TDCA violations, breach of duty of cooperation, fraud, and negligent misrepresentation.
- Durbois’s state-court pleadings and a declaration expressly stipulated he sought total damages not to exceed $74,500.
- Deutsche Bank removed to federal court, arguing removal was proper because Durbois’s suit automatically stayed the non-judicial foreclosure and therefore put the house’s $427,662 value in controversy.
- The district court denied Durbois’s motion to remand; the district court later entered final judgment for Deutsche Bank. Durbois appealed only the denial of remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amount-in-controversy exceeded $75,000 because the automatic stay put the property value in dispute | Durbois: the suit seeks only monetary damages ≤ $74,500; the automatic stay is collateral and does not make the property the object of the suit | Deutsche Bank: the automatic stay arising from the suit halts the non-judicial foreclosure, so the house’s full value is the object in controversy and exceeds $75,000 | The stay is collateral; the object of the suit is Durbois’s money damages (≤ $74,500), so Deutsche Bank did not carry its preponderance burden to show > $75,000 |
| Whether Deutsche Bank met its burden under 28 U.S.C. § 1446(c)(2)(B) to show the amount in controversy exceeds the statutory threshold | Durbois: §1446 defers to the sum demanded in the initial pleading unless an exception applies; here that sum is ≤ $74,500 | Deutsche Bank: exception applies because the notice may assert amount in controversy where the pleading leads to dispute over nonmonetary relief or state practice prevents specifying sums | Court: even assuming §1446(c)(2)(A)(i) applies, Deutsche Bank failed to prove by preponderance that the property’s value was the litigation’s object; removal thus improper |
| Whether Durbois’s pre-removal stipulation limiting recovery to ≤ $74,500 is binding and forecloses federal jurisdiction | Durbois: his pleading and declaration constitute a binding stipulation limiting recovery to under $75,000 to avoid federal jurisdiction | Deutsche Bank: argued stipulation insufficient or made in bad faith under Tex. R. Civ. P. 47 (forfeited in district court) | Court: stipulation is binding; parties may admit facts bearing on jurisdiction and plaintiff may limit his recovery; stipulation precludes federal jurisdiction |
Key Cases Cited
- Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81 (interpreting §1446(c) and burden of proof for amount-in-controversy allegations)
- Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333 (amount in controversy measured by value of the object of the litigation)
- McPhail v. Deere & Co., 529 F.3d 947 (10th Cir. 2008) (amount in controversy is estimate of what will be put at issue)
- Farkas v. GMAC Mortg., LLC, 737 F.3d 338 (5th Cir. 2013) (amount in controversy measured by value of the object)
- New England Mortg. Sec. Co. v. Gay, 145 U.S. 123 (collateral effects of suit or judgment not counted toward amount in controversy)
- Healy v. Ratta, 292 U.S. 263 (collateral or incidental objects do not determine amount in controversy)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (plaintiff may avoid removal by suing for less than the jurisdictional amount)
- Standard Fire Ins. Co. v. Knowles, 568 U.S. 588 (stipulations limiting recovery below jurisdictional threshold can be binding)
- De Aguilar v. Boeing Co., 47 F.3d 1404 (5th Cir. 1995) (prior interpretation of Tex. R. Civ. P. 47; discussed in relation to post-amendment text)