Summary
dismissing motion to confirm arbitration award for lack of jurisdiction where award, which established the amount in controversy, was $64,035.00
Summary of this case from Bates v. LaminackOpinion
CIVIL ACTION NO. 3:00-CV-2324-G.
March 16, 2001.
MEMORANDUM ORDER
I. INTRODUCTION
On August 18, 2000, the parties, Mannesmann Dematic Corp. ("Mannesmann" or "the plaintiff") and Phillips Getschow Co. ("Phillips" or "the defendant") arbitrated a contract dispute before the American Arbitration Association Construction Arbitration Tribunal in Dallas, Texas. See Motion to Confirm Arbitration Award ¶¶ 8, 9, located in Reply to Response to Motion to Confirm Arbitration Award and Response in Opposition to Motion to Dismiss for Lack of Subject Matter and Personal Jurisdiction ("Response"), Tab 2; Award of the Arbitrators, located in Response, Tab 1. On June 22, 1998, Phillips filed its demand for arbitration seeking $1,385,322 in damages, see Award of the Arbitrators ¶ 17 (under heading "Phillips Getschow's Claims"), Response, Tab 1; and on July 17, 1998 Mannesmann counterclaimed against Phillips for $828,269.81, see id., and Award of the Arbitrators ¶ 8 (under heading "Mannesman Demag's Counterclaim"), Response, Tab 1. The arbitration panel denied the parties' damages claims, but determined that both Mannesmann and Phillips were entitled to attorneys' fees for successfully defending against their respective opponents' claims. See Award of the Arbitrators ¶¶ 6-7 (under heading "Attorney's Fees"), Response, Tab 1. Specifically, the panel concluded that "[t]he net recovery of attorney's fees . . . is $64,035 payable by [Phillips] to [Mannesmann]." Award of the Arbitrators ¶ 8 (under heading "Attorney's Fees"), Response, Tab 1.
On October 20, 2000, Mannesmann moved this court, pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, for an order confirming the award of the arbitrators. See Motion to Confirm Arbitration Award at 1, Response, Tab 2. On November 16, 2000, Phillips filed the instant motion to dismiss for lack of subject matter and personal jurisdiction. See Response to Motion to Confirm Arbitration Award and Motion to Dismiss for Lack of Subject Matter and Personal Jurisdiction ("Motion to Dismiss") at 1. For the reasons discussed below, Phillips' motion is granted.
II. ANALYSIS The Amount in Controversy Does Not Meet the Diversity Jurisdiction Minimum
Mannesmann filed its motion to confirm the arbitration award in this court based on the court's purported diversity jurisdiction. See Motion to Confirm Arbitration Award ¶ 3. Diversity jurisdiction requires that the parties be completely diverse and that the amount in dispute exceed $75,000. 28 U.S.C. § 1332. In this case, Mannesmann asserts that the parties are diverse, alleging that Mannesmann is a Michigan corporation with its principal place of business in Pittsburgh, Pennsylvania, and that Phillips is an Illinois corporation with its principal office in the City of Joliet, Illinois. See id. ¶¶ 1-2. Turning to the amount in controversy requirement, Mannesman advances two arguments in support of its claim that the requirement has been satisfied here. First, the plaintiff urges that, because Phillips' principal claim against Mannesmann was for $1,385,322 and Mannesmann's counterclaim against Phillips was $828,269.81, the amount in controversy clearly exceeds the diversity jurisdictional amount. See Response at 5. Second, Mannesmann notes that, although the arbitration panel awarded only $64,035 in net attorneys' fees — an amount less than the jurisdictional requirement — this net amount actually represents the difference between the $112,061 and $48,026 awarded to Mannesmann and Phillips respectively for successfully defending against each others' claims. See id. at 7. Mannesmann insists that, because the award of $112,061 to Mannesmann satisfies the amount in controversy requirement, this court has proper subject matter jurisdiction in the case at bar. See id.
Phillips counters that the diversity jurisdictional amount has not been satisfied here because the arbitration award, on its face, awards a total of only $64,035. See Respondent's Reply to Movant's Response to Respondent's Motion to Dismiss for Lack of Jurisdiction ("Reply") at 5-6. The question presented, therefore, is whether the "amount in controversy" is either (1) the original amount sought in arbitration or the larger of the attorneys' fees awarded by the arbitration panel — as Mannesmann urges — or (2) the actual net attorneys' fees awarded — as Phillips maintains.
The Fifth Circuit Court of Appeals has yet to squarely address this issue. In the absence of any controlling Fifth Circuit authority, this court will adopt the sound approach taken by the Sixth and Eleventh Circuits in cases substantially similar to the one at bar. See Baltin v. Alaron Trading Corporation, 128 F.3d 1466, 1472-73 (11th Cir. 1997) (party who lost at arbitration moved to vacate; although the other party sought more than $69,000 [at a time when the minimum was $50,000], since the award was less than $37,000, court lacked jurisdiction), cert. denied, 525 U.S. 841 (1998); Ford v. Hamilton Investments, Inc., 29 F.3d 255, 260 (6th Cir. 1994) (losing party moved to vacate and prevailing party moved to confirm; although losing party had asserted counterclaims that exceeded jurisdictional minimum, actual award fell short of that threshold and therefore the court lacked jurisdiction); see also Goodman v. CIBC Oppenheimer Co., No. CV 00-9588-GAF, 2001 WL 135401, at *3 (C.D. Cal. Feb. 12, 2001) (following Baltin and Goodman and concluding, in an action to vacate the arbitration award, that where plaintiff had sought nearly $3 million in damages before an arbitration panel, but achieved an award of only $74,030.75, the amount in controversy requirement had not been satisfied).
Under the authority of these cases, Mannesmann's motion to confirm the arbitration award must be dismissed because the amount in controversy — the actual net attorneys' fees award of $64,035 — is less than $75,000.
III. CONCLUSION
For the foregoing reasons, Phillips' motion to dismiss is GRANTED. Accordingly, Mannesmann's motion to confirm the arbitration award is DISMISSED.