Hannah v. Mullins
2:20-cv-00617
| S.D.W. Va | Feb 23, 2021Background
- In June 2017 Hannah (W.Va.) invested about $80,000 to acquire a claimed 30% interest in Mullins Family Funeral Home (MFFH), which operates in Kentucky; Hannah alleges he was a "silent partner."
- MFFH’s articles of organization were filed in Kentucky in June 2017; defendants later filed annual reports listing Joseph Mullins as sole member.
- Hannah sued in Mingo County (Aug. 19, 2020) asserting breach of contract, fiduciary duty, conversion, unjust enrichment, declaratory relief (partnership status), and other claims; the complaint included a stipulation that the amount in controversy was under $75,000.
- Defendants removed to federal court (Sept. 18, 2020) invoking diversity jurisdiction and arguing the amount in controversy exceeds $75,000 (citing buyout offers and value of declaratory relief); Hannah moved to remand, challenging only the amount in controversy.
- The court ordered a show-cause re complete diversity; parties submitted competing evidence (Mullins affidavit and KY filings vs. Hannah’s checks, tax filing, and affidavit claiming 30% ownership).
- Court ruled Feb. 23, 2021: remand denied — amount in controversy satisfied and Hannah is not a member of the Kentucky LLC, so complete diversity exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Amount in controversy (>$75,000) | Hannah: complaint stipulates < $75k; he seeks oversight and dividends, not return of $80k, and rejected buyout offers | Defendants: declaratory relief (ownership) + retrospective/prospective distributions and settlement offers ($85k, $110k) make the stake worth > $75k; plaintiff’s stipulation is not a binding pre-removal cap | Held: amount in controversy met — declaratory relief valuing Hannah’s share (and aggregated claims) exceeds $75k; stipulation insufficient because not a signed, sum-certain pre-removal stipulation |
| Effectiveness of complaint’s stipulation limiting damages | Hannah: the complaint’s stipulation that controversy < $75k should prevent removal | Defendants: the stipulation is not a binding pre-removal stipulation (not signed / not contemporaneous as required by McCoy) | Held: stipulation does not bar removal; court follows rule requiring a formal, signed pre-removal stipulation to limit amount in controversy |
| Complete diversity — is MFFH a citizen of WV because Hannah is a member? | Hannah: his agreement and tax filing show he holds a 30% ownership/membership interest, so MFFH has a West Virginia citizen-member | Defendants: MFFH is a Kentucky LLC and Mullins is sole member per affidavits and KY annual reports; Hannah was a silent investor/assignee, not a member | Held: Hannah is not a member under Kentucky LLC statutes (no operating agreement or written member consent); MFFH is a Kentucky LLC with Mullins as sole member; complete diversity exists |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts are courts of limited jurisdiction)
- Mulcahey v. Columbia Organic Chem. Co., 29 F.3d 148 (removal jurisdiction strictly construed)
- Francis v. Allstate Ins. Co., 709 F.3d 362 (burden to prove amount in controversy by preponderance)
- De Aguilar v. Boeing Co., 11 F.3d 55 (removing defendant must prove jurisdictional amount when complaint lacks sum certain)
- Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333 (value of object of litigation for injunctive/declaratory relief)
- JTH Tax, Inc. v. Frashier, 624 F.3d 635 (aggregation of legal and equitable claims for amount in controversy)
- McCoy v. Erie Ins. Co., 147 F. Supp. 2d 481 (requirement for a truly binding, signed pre-removal stipulation to defeat removal)
- Dixon v. Edwards, 290 F.3d 699 (test for amount in controversy is pecuniary result of judgment)