United States District Court, D. Arizona
A. Teilborg Senior United States District Judge
before the Court is Plaintiff Leucadia Air, LLC's Motion
to Remand to State Court (Doc. 25). Defendant Bombardier
Aerospace Corporation filed a Response, (Doc. 27), on
December 18, 2018, and Plaintiff replied on December 26,
2018, (Doc. 28). For the reasons that follow, the Court
grants the Motion.
September 24, 2018, Plaintiff filed a Complaint in Maricopa
County Superior Court seeking a declaratory judgment and
alleging breach of contract, breach of warranty, and breach
of the covenant of good faith and fair dealing. (Doc. 1-1 at
4-7). This case was removed to federal court pursuant to 28
U.S.C. § 1441 on the grounds of diversity jurisdiction
alone. (See Doc. 1 at 2). Plaintiff moves to remand
this action to state court. (Doc. 25). Plaintiff rests its
Motion to Remand solely on the basis that the amount in
controversy does not exceed the statutory requirement for
diversity jurisdiction. (Id. at 1).
removal statute provides in pertinent part: “[A]ny
civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may
be removed by the defendant . . . to the district court of
the United States for the district and division embracing the
place where such action is pending.” 28 U.S.C. §
1441(a). However, there is a “‘strong
presumption' against removal jurisdiction” and
“the defendant always has the burden of establishing
that removal is proper.” Gaus v. Miles, Inc.,
980 F.2d 564, 566 (9th Cir. 1992) (citations omitted).
Furthermore, a case removed from state court must be remanded
“[i]f at any time before final judgment it appears that
the district court lacks subject matter
jurisdiction[.]” 28 U.S.C. § 1447(c).
courts shall have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interests and costs, and is between .
. . citizens of different States[.]” 28 U.S.C. §
1332(a)(1). Notably, the removing defendant bears the burden
of establishing, by the preponderance of the evidence, that
the amount in controversy exceeds $75, 000. See Abrego
Abrego v. Dow Chem. Co., 443 F.3d 676, 683 (9th Cir.
2006). “[T]he amount in controversy is measured by the
value of the object of the litigation.” Cohn v.
Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002)
(quoting Hunt v. Wash. State Apple Advert.
Comm'n, 432 U.S. 333, 347 (1977)). Additionally, the
amount in controversy may include expected future losses.
See Hunt, 432 U.S. at 348. Mere belief in expected
future losses, however, “hardly constitutes proof
‘by a preponderance of the evidence.'”
Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1117
(9th Cir. 2004) (quoting Matheson v. Progressive
Specialty Ins. Co., 319 F.3d 1090, 1090-91 (9th Cir.
parties do not dispute that the diversity of citizenship
requirement for federal subject matter jurisdiction based on
section 1332(a) has been satisfied. (See Docs. 25 at
2; 27 at 2). Because Plaintiff is a citizen of Nevada and
potentially a citizen of Arizona, and Defendant is a citizen
of Delaware and Kansas, (see Docs. 16 at 2; 25 at
2), the Court finds that the parties are “citizens of
different states” pursuant to section 1332(a).
parties agree that the amount in controversy includes
approximately $21, 556 in actual warranty work and $5, 166 in
services and operating costs. (Docs. 25 at 2; 27 at 3).
However, Defendant contends that its potential financial
exposure under the warranty will amount to $72, 506 if the
Court grants declaratory judgment to Plaintiff. (Docs. 16 at
3; 16-4 at 2). In total, Defendant contends that the amount
in controversy reaches $97, 988, exceeding the $75, 000
requirement. (Doc. 16 at 3).
Defendant estimates its potential financial exposure on
calculations so faulty as to render it mere belief. On its
own, “belief” cannot “establish that it
is ‘more likely than not' that the amount in
controversy exceeds” $75, 000. Valdez, 372
F.3d at 1117 (quoting Sanchez v. Monumental Life Ins.
Co., 102 F.3d 398, 404 (9th Cir. 1996)). Defendant
reaches its estimate of future loss by “averag[ing] the
amount incurred” under the warranty for the first
twenty-three months of the contract and then extrapolating
the average monthly cost over the remaining thirty-seven
months. (Doc. 16 at 4). However, Defendant miscalculated the
average, unmooring any subsequent extrapolation from a sound
average is the “sum of the scores divided by the number
of scores.” Howard M. Reid, Introduction to Statistics:
Fundamental Concepts and Procedures of Data Analysis 35
(2013). Here, “scores” are the total monthly
costs incurred under the contract. It is undisputed that
during the first twenty-three months of the contract, the
entire amount alleged to be covered by the warranty equals
$21, 556. (Docs. 25 at 2; 27 at 3). Defendant errs by
dividing the total cost incurred by the number of months in
which those costs arose rather than the number of months the
contract had run. (See Doc. 27 at 4; Doc 16-4). A
sum predicated on inaccurate calculations is supported only
by mere belief, and belief alone cannot establish the amount
in controversy. See Valdez, 372 F.3d at 1117.
contends that Defendant's “methodology for
calculating ‘expected future losses' . . . is [too]
remote and speculative” to satisfy the evidentiary
standard. (Doc. 28 at 2). However, the Court need not reach
this issue because Defendant's formula-using the correct
average monthly cost-returns an amount below $75, 000. The
average monthly cost for the first twenty-three months of the
contract is $937.22, which, when extrapolated over the
remainder of the contract, yields $34, 677.14. (Doc. 27 at 4).
Together, the estimate of future costs under this formula and
the undisputed amount in controversy equals $61, 399.14, an
amount less than the statutory requirement.