SE Property Holdings, LLC v. Harrell et al, No. 2:2022cv00297 - Document 13 (M.D. Ala. 2023)
Court Description: OPINION AND ORDER: it is ORDERED and DECLARED that the court has diversity jurisdiction pursuant to 28 U.S.C. 1332. Signed by Honorable Judge Myron H. Thompson on 3/27/2023. (cwl, )
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SE Property Holdings, LLC v. Harrell et al Doc. 13 IN THE DISTRICT COURT OF THE UNITED STATES FOR THE MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION SE PROPERTY HOLDINGS, LLC, ) ) Plaintiff, ) ) v. ) ) RICHARD HARRELL and ) DELAINE HARRELL, ) ) Defendants. ) CIVIL ACTION NO. 2:22cv297-MHT (WO) OPINION AND ORDER Plaintiff SE Property Holdings, LLC (“SEPH”) filed this case Harrell against asserting defendants Richard a that claim and the Delaine Harrells fraudulently transferred a piece of real property in violation of the Alabama Uniform Fraudulent Transfer Act (“AUFTA”), Ala. Code § 8-9A-4(a). This case is before the court for a determination of whether the court has diversity jurisdiction under 28 U.S.C. § 1332--specifically whether the amount-in-controversy requirement is met. The court held a hearing on the matter sua sponte Dockets.Justia.com because the complaint did not contain sufficient allegations for the court to determine the amount in controversy in the litigation, and because the answer asserted that jurisdiction over controversy hearing, the does the court the case not court subject-matter because exceed ordered briefing and evidence. lacks the $ 75,000. the parties amount in After the to submit After considering the briefs and evidentiary submissions, the court concludes that it has subject-matter jurisdiction over this case. “Where jurisdiction is based on a claim for indeterminate damages, ... the party seeking to invoke federal jurisdiction bears the burden of proving by a preponderance of the evidence that the claim on which it is basing minimum.” Motors, Federated LLC, (citations Harrells jurisdiction 329 Mutual F.3d omitted). fraudulently meets 805, Here, the jurisdictional Ins. Co. 807 (11th SEPH transferred v. Cir. contends a McKinnon piece 2003) that of the real property to their sons for insufficient consideration 2 and then had the sons transfer it back in the form of a tenancy that cannot be obtained by creditors, all in order to defraud SEPH of the money the Harrells owe it. As relief, SEPH seeks an award for the value of the property fraudulently conveyed, compensatory and punitive damages, a levy upon the property, and other unspecified damages and equitable Complaint (Doc. 2) at 6. “the amount in relief. See The complaint asserts that controversy exceeds $ 75,000.00, exclusive of interest and costs,” id. at 1, but does not specify the value of the property. As evidence of the value of the subject property, SEPH has now submitted a 2014 appraisal of the property that found $ 68,100. during the the market value of the property to be SEPH contends that this appraisal took place relevant time period because the first challenged transfer, from the Harrells to their sons, took place in 2012. The Harrells do not take issue with SEPH’s contention about the relevant time period, and the court finds that the appraisal was done within 3 the relevant time frame. The evidence shows that the appraisal was completed for Alabama Ag Credit when the property was used as collateral for a mortgage, and it does not appear to have been produced for the purposes of litigation, so the court does not doubt it accuracy. SEPH also submits evidence showing that the tax assessor for Lowndes County assessed the property as worth $ 57,100 in 2012. The Harrells do not challenge the appraisal or the assessment. The court credits the appraisal and the tax assessment and finds that the value of the property at issue was approximately $ 57,100 to $ 68,100 during the relevant time. Obviously, then, the property value alone is not sufficient diversity to reach the jurisdiction. over-$ 75,000 To bridge threshold that points to its request for punitive damages. correctly points jurisdictional out, amount “[w]hen in gap, in SEPH As SEPH determining controversy for the diversity cases, punitive damages must be considered, ... unless 4 it is apparent to a legal certainty that such cannot be recovered.” Holley Equipment Co. v. Credit Alliance Corp., 821 F.2d 1531, 1535 (11th Cir. 1987) (citations omitted). observed The Eleventh Circuit Court of Appeals has that punitive damages may be available fraudulent-transfer cases under AUFTA. Development, Inc. v. Morrison, 991 in See SuVicMon F.3d 1213, 1220 (11th Cir. 2021) (citing SE Property Holdings, LLC v. Judkins, No. 1:17-CV-00413-TM-B, 2019 WL 177981, at *8-9 (S.D. Ala. Jan. 11, 2019), aff'd, 822 F. App'x 929 (11th Cir. 2020)). complaint, the Based on the allegations of the court cannot conclude “to a legal certainty” that SEPH cannot recover punitive damages. Holley Equip. Co., 821 F.2d at 1535. As to the amount of punitive damages that might be available, SEPH points to an Eleventh Circuit decision in an AUFTA case upholding a punitive-damages award of $ 300,000 on a property worth § 795,000 for a ratio of 0.37:1. See SE Prop. Holdings, LLC v. Judkins, 822 F. App'x 929, 937 (11th Cir. 2020). 5 In that opinion, the court further noted that it had upheld punitive damages awards with ratios much higher than 1:1. cases). Id. (citing Should SEPH receive a punitive-damages award comparable to the one awarded in Judkins, it would exceed the $ 75,000 jurisdictional threshold, even if the property were valued at the low end of the range discussed above. In their response, the Harrells argue that SEPH has not submitted evidence from which the court could find them entitled affidavits to that punitive go to the transfers were fraudulent. before the horse. amount is damages, merits and they submit of whether the They are putting the cart “When the issue of jurisdictional intertwined with the merits of the case, ‘courts should be careful not to decide the merits, under the guise of determining jurisdiction, without the ordinary incidents of a trial.’” Sales Corp. v. Mitchell Enterprises, 6 Johns-Manville Inc., 417 F.2d 129, 131 (5th Cir. 1969) (citations omitted).* Accordingly, the court will not base its jurisdictional decision on evidence tending to show that the defendants did not engage in fraud. While this is close case, considering the value of the property at issue together with the potential for even modest punitive damages, the court finds that the amount in controversy more likely than not exceeds $ 75,000. *** Accordingly, it is ORDERED and DECLARED that the court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. DONE, this the 27th day of March, 2023. /s/ Myron H. Thompson UNITED STATES DISTRICT JUDGE * In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit Court of Appeals adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. 7
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