United States District Court, S.D. Texas, Houston Division
P. ELLISON UNITED STATES DISTRICT JUDGE.
George Holland and Melissa Holland (“Plaintiffs”)
allege breach of contract, duress, misrepresentation and
fraud claims against Defendant CitiMortgage, Inc.
(“Defendant”). Plaintiffs have filed a Motion to
Remand (Doc. No. 9), and Defendant has filed a Motion to
Dismiss (Doc. No. 13). Lastly, Plaintiffs have filed a Motion
for Leave to File an Amended Petition (Doc. No. 18).
holds a mortgage on Plaintiffs' real property in Conroe,
Texas. (Doc. No. 13 at 4.) In 2008, Plaintiffs defaulted on
their mortgage, and subsequently attempted to file four
bankruptcies, all of which were dismissed. (Doc. No. 13 at
4-6.) The reason for the failure of the bankruptcies is
disputed. This lawsuit arises out Defendant's alleged
conduct with respect to Plaintiffs' four bankruptcy
petitions. Plaintiffs also complain of Defendant's
actions regarding a loan modification plan on Plaintiffs'
originally filed this action on April 19, 2016, in Montgomery
County District Court. (Doc. No. 9 at 1.) The case was then,
apparently, transferred to the Montgomery County Court at Law
No. 2 because of amount in controversy requirements.
(Id.) On May 3, 2016, Defendant filed a notice of
removal to federal court, but the case was remanded.
(Id.) On November 11, 2016, Defendants removed the
case to federal court for a second time. (Doc. No. 1.)
argue that removal is improper because their claimed damages
do not meet the $75, 000 amount in controversy requirement
needed to sustain diversity jurisdiction under 28 U.S.C.
§1332(b). The parties do not dispute that complete
diversity of citizenship exists in this case. Thus, if
Plaintiffs have claimed damages in excess of $75, 000,
federal jurisdiction is proper and the motion to remand
should be denied.
have requested $45, 000 in compensatory damages and $15, 000
in attorneys' fees. Additionally, they have requested
punitive damages of more than $15, 000. (Doc. Nos. 1-4 at
2-3; 1-2 at 14.) Plaintiffs argue that punitive damages and
attorneys' fees are not included in the amount in
controversy consideration. The Court disagrees.
Fifth Circuit has held that the amount in controversy may
include punitive damages if they are recoverable as a matter
of state law. St. Paul Reinsurance Co. v. Greenberg,
134 F.3d 1250, 1253 (5th Cir. 1998); Celestine v.
TransWood, Inc., 467 F.App'x 317, 319 (5th Cir.
2012) (unpublished). In Texas, claims for breach of contract
do not support an award of punitive damages. Jim Walter
Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986)
(“This can only be characterized as a breach of
contract, and breach of contract cannot support recovery of
exemplary damages.”). But fraud and misrepresentation
claims can, in certain situations, support an award of
punitive damages. “Under the Texas Civil Practice and
Remedies Code, a plaintiff is entitled to recover exemplary
damages if he proves, by clear and convincing evidence, that
the defendant acted fraudulently, maliciously, or with gross
negligence.” Manon v. Tejas Toyota,
Inc., 162 S.W.3d 743, 757 (Tex. App. 2005)
(citing Tex. Civ. Prac. & Rem.Code Ann. §
41.003; KPH Consolidation, Inc. v. Romero, 102
S.W.3d 135, 144 (Tex.App.-Houston [14th Dist.] 2003, pet.
cases in the Fifth Circuit have found that the amount in
controversy may include attorneys' fees. White v. FCI
USA, Inc., 319 F.3d 672, 675 (5th Cir. 2003); Tomdra
Investments, L.L.C. v. CoStar Realty Info., Inc., 735
F.Supp.2d 528, 532 (N.D. Tex. 2010) Salomon v. Wells
Fargo Bank, N.A., No. EP-10-CV-106-KC, 2010 WL 2545593,
at *5 (W.D. Tex. June 21, 2010). Accordingly, the Court finds
that it may consider Plaintiffs' requests for
attorneys' fees and punitive damages when calculating the
amount in controversy.
seek $15, 000 in attorneys' fees, bringing the total
amount in controversy to $60, 000. But Plaintiffs do not
request a specific amount of punitive damages. (Doc. No. 1-4
at 3, “Plaintiffs are also seeking punitive
damages.”) “[W]hen a complaint does not allege a
specific amount of damages, the party invoking federal
jurisdiction must prove by a preponderance of the evidence
that the amount in controversy exceeds the jurisdictional
amount.” St. Paul Reinsurance Co., 134 F.3d at
1253. Defendant shows that in response to its Request for
Admission, Plaintiffs denied that they were seeking less than
$15, 000 in punitive damages. (Doc. No. 1-2 at 14.)
Accordingly, the Court finds that when Plaintiffs' claim
for compensatory damages is combined with their claims for
attorneys' fees and punitive damages, it is more probable
than not that the amount in controversy exceeds $75, 000.
White v. FCI USA, Inc., 319 F.3d 672, 675 (5th Cir.
2003) (affirming the district court's conclusion that it
was “‘more probable than not' that the
lengthy list of compensatory and punitive damages sought by
White, when combined with attorney's fees, would exceed
the parties in this case meet the diversity of citizenship
requirement, and the Plaintiffs have pled damages in excess
of $75, 000, federal jurisdiction is proper under 28 U.S.C.
§1332(b). Plaintiffs' Motion to Remand is denied.
for Leave to Amend
have filed a motion for leave to amend their complaint.
Plaintiffs seek to “more clearly set forth the facts
surrounding the payment of Plaintiffs in the bankruptcies,
the modification requests and the failure of Defendants in
regards to the fraud and . . . negligence claims.”
(Doc. No. 18 at 2.) Plaintiffs also seek to add a claim for
gross negligence. (Id.) Federal Rule of Civil
Procedure 15(a) governs petitions for leave to ...