United States District Court, N.D. California
ORDER RE: DEFENDANT'S MOTION TO DISMISS FOR LACK
OF SUBJECT MATTER JURISDICTION DKT. NO. 43
R. LLOYD UNITED STATES MAGISTRATE JUDGE
Next Creations Holding, LLC (“Next”) moves to
dismiss for lack of subject matter jurisdiction. Dkt. No. 43.
Next argues that federal diversity jurisdiction does not
exist because the amount in controversy does not exceed $75,
000. Plaintiff CSNK Working Capital Finance Corp, d/b/a Bay
View Funding (“Bay View”) opposes the motion.
Dkt. No. 46. The matter is deemed submitted without oral
argument. Civil L.R. 7-1(b). Upon consideration of the moving
and responding papers, and for the reasons set forth below,
the Court denies the motion.
parties consented to magistrate judge jurisdiction. Dkt. Nos.
View alleges that it executed a factoring agreement with a
non-party, Shell Home Fashions LLC (“Shell”),
acquiring the rights to some of Shell's accounts
receivable. Dkt. No. 1 ¶ 6. Shell then entered an
agreement to sell goods to Next. Id. ¶ 8. The
total value of the goods sold by Shell to Next was $93,
542.30. Id. Ex. D.
sold the goods purchased from Shell to Macy's Inc., which
alleged that some of the goods were defective. Id.
¶¶ 13-15. According to the complaint, Next
“issued a Debit memo in the amount of $32, 379.00 to
[Shell], and informed [Bay View] that [Next] would
commit” to pay the remainder of the Shell-Next invoice
($61, 163.30). Id. ¶ 16. Next allegedly never
paid Bay View, id. ¶ 20, and Bay View sued for
breach of contract and other claims.
View moved for summary judgment. Dkt. No. 38. In the summary
judgment motion, Bay View “accept[ed], for the purposes
of this motion only, that the Debit Memo for $32, 379.00
issued by SHELL to [Next] is binding. For purposes of this
motion, [BAY VIEW] asserts the remaining $61, 630.30 plus
interest at the legal rate is due and owing.” Dkt. No.
38 at 3:14-16. Next then moved to dismiss the case under
Federal Rule of Civil Procedure 12(b)(1). Dkt. No. 43.
argues that Bay View's concession as to the debit memo
proves that Bay View's claim is for less than the
jurisdictional minimum. Bay View asserts that it conceded the
validity of the debit memo only for the purpose of its
summary judgment motion. If the motion is unsuccessful, Bay
View says, it will seek the full $93, 542.30.
district courts have original jurisdiction over civil actions
where there is complete diversity between the parties, and
where the matter in controversy exceeds $75, 000, exclusive
of interest and costs. 28 U.S.C. § 1332. The test for
determining whether a plaintiff has met the jurisdictional
amount is found in St. Paul Mercury Indemnity Co. v. Red
Cab Co., 303 U.S. 238 (1938), where the Supreme Court
“The rule governing dismissal for want of jurisdiction
in cases brought in the federal court is that, unless the law
gives a different rule, the sum claimed by the plaintiff
controls if the claim is apparently made in good faith. It
must appear to a legal certainty that the claim is really for
less than the jurisdictional amount to justify dismissal. The
inability of plaintiff to recover an amount adequate to give
the court jurisdiction does not show his bad faith or oust
St. Paul, 303 U.S. at 288-89. In light of St.
Paul, a court will dismiss a case where, for example,
reaching the jurisdictional threshold depends on the
plaintiff obtaining punitive damages for breach of contract,
Czechowski v. Tandy Corp., 731 F.Supp. 406, 409-10
(N.D. Cal. 1990), or where an accounting error causes the
plaintiff to overvalue its claim, Flournoy v. U.S.
Aviation Underwriters, Inc., 206 F.Supp. 237, 238 (W.D.
Tex. 1962). “[T]he fact that the complaint discloses
the existence of a valid defense to the claim, ” does
not deprive the court of jurisdiction. St. Paul, 303
U.S. at 289.
Bay View claimed entitlement to more than $75, 000 in its
complaint. Bay View's claim to the full value of the
invoice seems to be at least “colorable for the purpose
of conferring jurisdiction[.]” St. Paul, 303
U.S. at 289-90. Therefore, unless it appears to a legal
certainty that the claim is really for less than the
jurisdictional minimum, the Court is not deprived of subject
directs the Court to Tongkook America, Inc. v. Shipton
Sportswear Co., 14 F.3d 781 (2d Cir. 1994), but the case
is distinguishable. In Tongkook an apparel company
(Shipton) agreed to purchase goods from ...