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Seasons Homeowners Association Inc. v. Richmond American Homes of Nevada, Inc.

United States District Court, D. Nevada

June 18, 2014

THE SEASONS HOMEOWNERS ASSOCIATION INC., a Nevada nonprofit corporation; and DOE HOMEOWNERS 1 through 1000, Plaintiffs,
v.
RICHMOND AMERICAN HOMES OF NEVADA, INC., a foreign corporation doing business in Nevada; RED ROCK MECHANICAL, LLC, a Nevada company; ASPEN MANUFACTURING HOLDINGS, INC., a foreign corporation doing business in Nevada; DOE INDIVIDUALS 1-200; and ROE BUSINESSES or GOVERNMENTAL ENTITIES 1-200, Defendants. RICHARD STANTON, individually, and on behalf of those similarly situated; ZAYDA BUSTOS, individually and on behalf of those similarly situated; ANTHONY and DEVRON TURNER individually and on behalf of those similarly situated; DOE HOMEOWNERS 1-1, 000, Plaintiffs,
v.
RICHMOND AMERICAN HOMES OF NEVADA, INC., a foreign corporation doing business in Nevada; SUNRISE MECHANICAL, INC., a Nevada corporation; ASPEN MANUFACTURING HOLDINGS, INC., f/k/a ASPEN MANUFACTURING, INC. a foreign corporation doing business in Nevada; doe individuals 1-200; AND roe business OR governmental entities 1-200, Defendants.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR REMAND DKT. ##6, 7, 13.

ANDREW P. GORDON, District Judge.

In these consolidated construction defect cases, Plaintiffs Seasons Homeowners' Association ("SHA") and Richard Stanton, et al., move for remand following Defendants Richmond American's ("Richmond") and Aspen Manufacturing's ("Aspen") removal to this Court. At issue are two cases, started and later consolidated in state court: Seasons HOA v. Richmond American Homes of Nevada (filed February 11, 2013, see Dkt. #6-1 at 2-3), and Stanton v. Richmond American Homes of Nevada (filed on October 7, 2013, see Dkt. #6-5 at 2-4). Both cases were filed as class actions: Stanton under Rule 23, and Seasons under NRS 116.3102(1)(d) as applied under Beazer Homes Holding Corp. v. Eighth Judicial Dist. Court ex rel Cnty. of Clark, 215 P.3d 697 (Nev. 2009). The state court entered a minute order consolidating the cases on February 7, 2014 ( see Dkt. #6-1 at 3), and on March 14, 2014 filed a consolidation order that included findings of fact and conclusions of law. (Dkt. #1-4 at 2.) Primarily at issue regarding remand is whether either the minute order or the consolidation order operated to merge the two actions into one for trial.

On March 21, 2014, Defendants filed their Petition for Removal to this Court, alleging diversity jurisdiction under 28 U.S.C. § 1332(d)(2)(A). That statute provides that the district courts shall have original jurisdiction over class actions[1] in which any member of a plaintiff class is a citizen of a different state from any defendant and the matter in controversy exceeds the sum or value of $5, 000, 000 exclusive of interest and costs. On April 4, 2012, Plaintiffs filed a Motion to Remand to State Court.[2] (Dkt.#6.) That same day, Richmond moved to certify an interlocutory appeal to the Nevada Supreme Court and to stay this case pending resolution of that certification. (Dkt. ##7, 13.) Because I am remanding this case to state court, Richmond's motions are denied as moot.

DISCUSSION

"Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979)). "The strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. "Procedural defects in the removal of an action may be waived by the failure to make a timely objection before the case proceeds to the merits. However, defects going to the subject matter jurisdiction of the court cannot be waived and may be raised at any time." Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1065 (9th Cir. 1979) (citations omitted). Remand is proper if the court lacks subject matter jurisdiction. 28 U.S.C. § 1447(c); See also Aguon-Schulte v. Guam Election Comm'n, 469 F.3d 1236, 1240 (9th Cir.2006) ("remand may be ordered either for lack of subject matter jurisdiction or for "any defect" in the removal procedure").

Where, as in this case, the complaint alleges only an amount in controversy in excess of $10, 000, the removing party bears the burden of establishing that the jurisdictional amount is satisfied at the time of removal based on competent facts outside the face of the pleadings. Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 689 (9th Cir. 2006); Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992) ("If it is unclear what amount of damages the plaintiff has sought, as is true here with regard to Gaus's claim, ... then the defendant bears the burden of actually proving the facts to support jurisdiction, including the jurisdictional amount."). Broad allegations that the jurisdictional amount is met, "although attempting to recite some magical incantation, ' neither overcome[] the strong presumption' against removal jurisdiction, nor satisf[y][the defendant]'s burden of setting forth, in the removal petition itself, the underlying facts supporting its assertion that the amount in controversy exceeds" $5, 000, 000. 443 F.3d at 689 (quoting Gaus, 980 F.2d at 567); see also Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.1997) ("[R]emoval cannot be based simply upon conclusory allegations where the ad damnum is silent.") (internal quotations and citation omitted). "[T]he court may insist that the jurisdictional facts be established or the case be dismissed, and for that purpose the court may demand that the party alleging jurisdiction justify his allegations by a preponderance of evidence." Gaus, 980 F.2d at 567.

Here, Aspen's Petition for Removal alleges only that "the matters in controversy allegedly exceed $5, 000, 000 based on Plaintiffs' alleged damages, exclusive of interests and costs...." (Dkt. #1 at 2:21-23.) Aspen's Statement Regarding Removal asserts that the amount in controversy exceeds the $5, 000, 000 jurisdictional amount threshold because "[g]iven the number of residences at issue in the instant action (692), and the anticipated Plaintiff cost of repair, the preponderance of the evidence shows that the amount in controversy far exceeds [$5, 000, 000]." (Dkt. #9 at 3:22-26.) Further, Aspen states that while "[n]either of the cases alone were perceived sufficient to meet the amount in controversy requirements, ... once consolidated on March 14, 2014, the amount in controversy requirement was met." ( Id. at 4:12-14.) Finally, in their respective Oppositions to the Motion to Remand, both Defendants allege that the cost of repair per Richmond home is $7, 183.91 (Richmond American's Response, Dkt. #16 at 9), and the cost per Aspen home is $8, 045.97 (Aspen's Response, Dkt. #17 at 7). Aspen also contends that $6, 676, 247 in attorney's fees was awarded in a recent similar case. (Dkt. #17 at 7.) Moreover, Richmond estimates, without providing any evidentiary support, that Plaintiffs' claimed expert fees will be in excess of $1, 000 per home. (Dkt. #16 at 10.)

(1) The Court lacks subject matter jurisdiction because Defendants cannot demonstrate they have met the Class Action Fairness Act's ("CAFA") aggregated jurisdictional amount threshold of $5 million under 28 U.S.C. § 1332(d)(2). ( Id. at 7-8.)

Two provisions under 28 U.S.C. § 1332(d) guide analysis of individual claims aggregation for the purposes of determining whether the $5, 000, 000 jurisdictional amount requirement is met: §§ 1332(d)(6) and (d)(11). Subsection (d)(6) provides that in any class action, the claims of the individual members within that class shall be aggregated to determine whether the amount in controversy exceeds the $5, 000, 000 jurisdictional requirement. Subsection (d)(11) addresses "mass actions, " allowing for aggregation of the amount in controversy for 100 or more persons proposed to be tried jointly. Because Defendants have not sought removal under the "mass action" provisions, however, I must first determine whether aggregation under subsection (d)(6) may be calculated by aggregating the claims in both actions because the state court merged the two actions into one. As discussed below, the state court did not merge the two class actions into one, so neither action standing alone meets the jurisdictional amount requirement.

(a) Whether the state court consolidation merged the respective Plaintiffs' claims such that the respective amounts in controversy may be aggregated to meet the $5 million jurisdictional requirement.

Plaintiffs assert that Defendants cannot aggregate the amounts in controversy in the consolidated cases. Essentially, they argue that 28 U.S.C. § 1332(d)(2) allows for the aggregation of individual claims within a single class or the same ostensible class, but does not provide for the aggregation of separate claims that, while related, do not feature overlapping populations. (Dkt. #6 at 8.) Defendant Richmond counters that "[t]he term "consolidation" is used in different senses. One use is where several actions are combined into one, lose their separate identities and become a single action; another is where several actions are tried together but each retains its separate character.'" (Dkt. #16 at 7 (citing Randall v. Salvation Army, 100 Nev. 466, 470, 686 P.2d 241, 243 (1984)).) Defendant Aspen points out that in Plaintiffs' state court motion to consolidate, they specifically stated that "the Stanton case should be consolidated into this case for all purposes, including the disposition of motions, discovery and trial. " (Dkt. #17 at 6 (citing Dkt. #17-3 at 7) (emphasis in original).)

As an initial matter, only the provisions under 28 U.S.C. § 1332(d)(11) that speak to "mass actions" allow for aggregation of the amount in controversy relating to 100 or more persons proposed to be tried jointly. Defendants did not seek removal under the mass action provisions, and there is no similar provision allowing for aggregation of amounts in controversy found elsewhere under subsection 1332(d). 28 U.S.C. § 1332(d)(2)(6) does provide that in any class action the claims of the individual members within that class shall be aggregated, but this is unlike the situation here where the two cases feature distinctive classes related only by the nature of the alleged harm. It also bears noting Plaintiffs assert that while the consolidation order was granted to promote judicial economy and to serve the interests of efficiency and justice, "it was not clearly joined" for trial. (Dkt. #6 at 20); see also Consolidation Minute Order (Dkt. #6-1 at 3); and electronically Filed Order Granting Consolidation (Dkt. #1-4 at 2).

Under Nevada law,

The term "consolidation" is used in different senses. One use is where several actions are combined into one, lose their separate identities and become a single action; another is where several actions are tried together but each retains its separate character. Herstein v. Kemker, 19 Tenn.App. 681, 94 S.W.2d 76 (1936). An order consolidating actions does not necessarily work a merger of the issues and render the litigants parties to each other's suits. See Mikulich v. ...

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