Hornsby v. Hornsby's Stores, Inc.
Hornsby v. Hornsby's Stores, Inc.
Opinion of the Court
MEMORANDUM OPINION AND ORDER
Defendants Hornsby’s Stores, Inc. (“Store”), Century Wholesale Co. (“Century”), and Pubco Corp. (“Pubco”) removed this suit to federal court, asserting both diversity and federal question jurisdiction. Plaintiffs Arthur F. Hornsby and Kathleen Hornsby (collectively, “Hornsby”) now petition to remand to the state court. For the reasons set forth below, we grant Horns-by’s petition.
We need not delve deeply into the facts underlying Hornsby’s action in order to decide the petition to remand. Hornsby alleges that the Store defaulted on a lease agreement, and seeks damages for the period from January 1, 1990 to April 30, 1990 in the amount of $44,640.71 “plus reasonable attorney’s fees, court costs and interest.” Complaint, Count 1, at 2.
Defendants base their removal to federal court on diversity and federal question grounds, and we shall address each basis in turn.
Hornsby more or less concedes that attorneys’ fees may be included in fixing the jurisdictional amount, properly citing to Ross v. Inter-Ocean Ins. Co., 693 F.2d 659, 661 (7th Cir. 1982) (“where a litigant has a right, based on contract, statute, or other legal authority, to an award of attorney’s fees if he prevails in the litigation, a reasonable estimate of those fees may be included in determining whether the jurisdictional minimum is satisfied”) (citation omitted); see also Sarnoff v. American Home Prods. Corp., 798 F.2d 1075, 1078 (7th Cir.
Defendants speculate that Hornsby’s attorney’s fees will exceed $3,000 — a figure “both modest and reasonable, especially in light of this Court’s award of $7,639.32 in attorneys’ fees for Plaintiff’s prosecution of the prior action.” Response Memorandum, at 9 (footnote omitted). We need not estimate the attorneys’ fees, however, since Hornsby attaches to the Reply Memorandum a copy of the retainer agreement signed by plaintiffs to cover legal expenses in this litigation. The “total fee” for legal services in this matter is $2000. Retainer Agreement, at 1. This sum will be added to the $44,640.71 explicitly sought by Hornsby for purposes of determining the jurisdictional amount.
The interest issue, as the authors of one treatise have suggested in a slightly different context, is a bit more complicated.
Interest is also sometimes included “when it can be considered a penalty and therefore a damage element.” 14A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3712, at 181-82 & n. 22 (citing cases). This is arguably the case here. See Lease Agreement, §§ 14(B), (D) (providing for interest in the event of late payment or default).
If we assume that interest should be added to the jurisdictional amount, and, further, use the interest figure supplied by defendants ($3000),
Defendants’ federal question basis for removal must also fall. The argument is that because Hornsby’s Counts II and III
In short, the requisite jurisdictional amount for a diversity action is not present in this case, nor, after granting Century and Pubco’s motion to dismiss Counts II and III, is there a federal question to be adjudicated. Accordingly, Hornsby’s petition for remand to the Grundy County (Illinois) Circuit Court is granted. It is so ordered.
. Hornsby’s complaint sets forth three counts. In addition to Count I, Count II alleges a fraudulent transfer of assets between the Store and Century, made with intent to defraud Hornsby. Count III asserts a similarly fraudulent transfer of assets between the Store and Pubco. Each of the three counts is directed at a particular defendant — the Store in Count I, Century in Count II, and Pubco in Count III.
. Initially, defendants’ offhand contention that Hornsby’s petition to remand should be dismissed as untimely is clearly erroneous. A somewhat more careful reading of 28 U.S.C. § 1447(c) (1988) than defendants mustered quickly clarifies the issue. While a motion to remand "on the basis of any defect in removal procedure must be made within 30 days" after the notice of removal is filed, remand is proper if “at any time before final judgment” it becomes apparent that the federal district court lacks subject matter jurisdiction. Id. (emphasis added); cf. 28 U.S.C.A. § 1447(c) (West Supp. 1990) (commentary on 1988 revision). An example of a "mere defect” in removal procedure is removing the case after the time allowed in 28 U.S.C. § 1446(a). 28 U.S.C.A. § 1447(c) (commentary on 1988 revision). If, however, “the defect goes to subject matter jurisdiction, as where a case was removed on the basis of diversity of citizenship and it turns out that complete diversity is lacking, there is no time limit on the motion to remand.” Id. This is not a new rule. Id.
. "Costs” are also excluded by § 1332(a). Neither party raises this issue here, but for completeness we note that costs are routinely excluded from the jurisdictional amount. Two reasons are generally given to explain the rule regarding costs: "First, costs are matters of reimbursement and are not part of the matter in controversy. Second, the amount of the costs will remain uncertain until the action itself is completed and therefore is an inappropriate element for inclusion in the jurisdictional amount.” 14A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3712, at 175.
. Hornsby suggests that this figure is actually $2400, which we think somewhat more accurate.
Reference
- Full Case Name
- Arthur F. HORNSBY and Kathleen Hornsby v. HORNSBY'S STORES, INC. Century Wholesale Company, Inc. and Pubco Corporation
- Status
- Published