Felipe v. Target Corp.
572 F.Supp.2d 455, 2008 U.S. Dist. LEXIS 65603, 2008 WL 3915323 (2008)
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Rule of Law:
A federal court may exercise diversity jurisdiction over a removed case when there is a reasonable probability that the amount in controversy exceeds $75,000 and complete diversity of citizenship exists, which includes disregarding non-diverse defendants fraudulently joined because there is no possibility of recovery against them under state law.
Facts:
- On or about September 9, 2007, Thelma Felipe slipped and fell inside a store operated by Target Corporation.
- The store is located on premises owned by Kingsbridge.
- Felipe sustained severe injuries as a result of her fall.
- Felipe alleged that Target and Kingsbridge were negligent in their upkeep of the store.
- An "Operation and Easement Agreement" between Target and Kingsbridge stipulated that Kingsbridge's maintenance responsibilities were limited to "Common Areas" (defined as all areas within the exterior boundaries of the site, excluding where buildings are located).
Procedural Posture:
- Thelma Felipe filed a personal injury lawsuit against Target Corporation and Kingsbridge in the Supreme Court of the State of New York, County of Bronx, seeking unspecified damages exceeding the jurisdiction of lower courts.
- Counsel for Target Corporation sent a letter to Felipe's counsel, suggesting that Kingsbridge was not a proper defendant and offering a stipulation to cap damages at $75,000 to prevent removal to federal court.
- Felipe declined to execute the stipulation.
- Target Corporation removed the case to the United States District Court for the Southern District of New York, asserting diversity jurisdiction.
- Thelma Felipe filed a motion to remand the action back to state court, arguing that the federal court lacked diversity jurisdiction.
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Issue:
Does a federal district court have diversity jurisdiction over a removed personal injury case when the plaintiff's complaint does not specify damages but other evidence suggests the amount in controversy exceeds $75,000, and a non-diverse defendant is joined against whom the plaintiff cannot state a cause of action under state law?
Opinions:
Majority - Richard J. Holwell, District Judge
Yes, the federal district court has diversity jurisdiction because there is a reasonable probability that the amount in controversy exceeds $75,000 and there is complete diversity of citizenship, as Kingsbridge was fraudulently joined. The court found the amount in controversy requirement met because Felipe's complaint indicated damages exceeding lower state court limits, she declined to stipulate damages at or below $75,000, and her counsel conceded during a hearing that the damages would "most likely" exceed $75,000, satisfying the "reasonable probability" standard. For citizenship, Target is incorporated in Minnesota and, applying the "nerve center" test for large national corporations, its principal place of business is also in Minnesota, establishing diversity with Felipe, a New York resident. Kingsbridge, a New York corporation, was fraudulently joined because, under New York law, an out-of-possession property owner like Kingsbridge is not liable for injuries occurring inside the store (which is not a "Common Area") unless it retained control or was contractually obligated to perform interior maintenance and repairs. Felipe failed to demonstrate any such contractual obligation or control by Kingsbridge over the store's interior, showing there is no possibility of recovery against Kingsbridge. Therefore, Kingsbridge's joinder does not defeat complete diversity.
Analysis:
This case provides critical clarification on a defendant's ability to establish federal diversity jurisdiction in scenarios where a plaintiff's complaint is vague on damages or attempts to circumvent federal court by joining a non-diverse defendant. It confirms that courts can look beyond the complaint to extrinsic evidence, such as refusal to stipulate or counsel's admissions, to determine the amount in controversy. Furthermore, it reinforces the stringent standard for proving fraudulent joinder, requiring "clear and convincing evidence" that there is "no possibility" of recovery against the non-diverse party under applicable state law. This ruling serves to protect defendants' removal rights and prevent procedural maneuvers designed to defeat federal jurisdiction.
