Summary
remanding because the amount in controversy was insufficient for federal jurisdiction, but rejecting the argument that the case should be remanded based upon the TIA
Summary of this case from Normand v. Cox Communications, LLCOpinion
Civil Action No. 04-0285, Section: I/3.
June 28, 2004
ORDER AND REASONS
Plaintiff, the School Board of the Parish of St. Charles, acting on its own behalf and as the collection agent for the St. Charles Parish Council ("the School Board"), has filed a motion to remand this action to the Twenty-ninth Judicial District Court for the Parish of St. Charles, State of Louisiana. For the reasons that follow, the motion is GRANTED.
Rec. Doc. No. 4.
Relevant Facts and Procedural History
On December 30, 2003, plaintiff, a political subdivision of the State of Louisiana, filed this action in state court seeking to collect taxes from defendant, Jesta Towers, Inc. ("Jesta"), pursuant to LSA-R.S. 47:337.27. Jesta, a Florida corporation, is the owner and operator of communication towers which respond to the needs of wireless service providers. In its petition, plaintiff seeks to collect any taxes due by defendant, as well as penalties, interest, audit costs, and attorney's fees. Plaintiff also seeks to inspect the defendant's books and records in order to determine the amount of any taxes due. Plaintiff does not pray for a specific monetary amount in its petition.On February 2, 2004, Jesta removed this action alleging that this court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332, diversity of citizenship. Defendant contends that plaintiff and defendant are citizens of different states and that the amount in controversy exceeds $75,000, exclusive of interest and costs. Plaintiff moves for remand pursuant to 28 U.S.C. § 1447(c).
28 U.S.C. § 1447(c) dictates that, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded."
Analysis
Plaintiff initially seeks remand pursuant to the Tax Injunction Act, 28 U.S.C. § 1341, which provides that "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." The instant action is to collect taxed and not to enjoin their collection. The U.S. Supreme Court in Jefferson County, Alabama v. Acker, 527 U.S. 423, 119 S.Ct. 2069, 144 L.Ed.2d 408 (1999), determined that actions to collect taxes do not fall within the purview of the Tax Injunction Act. It stated:
[W]e hold that the Tax Injunction Act, as indicated by its terms and purpose, does not bar collection suits, nor does it prevent taxpayers from urging defenses in such suits that the tax for which collection is sought is invalid.527 U.S. at 435, 119 S.Ct. at 2077.
See also Louisiana Land and Exploration Co. v. Pilot Petroleum Corp., 900 F.2d 816, 818 (5th Cir. 1990) ("The Tax Injunction Act does not bar federal court jurisdiction . . . because this suit was filed to collect a state tax, rather than enjoin, suspend or restrain the collection of taxes.").
Plaintiff next disputes that the amount in controversy exceeds $75,000, a requirement of diversity jurisdiction. It suggests that while it cannot pinpoint the exact amount it seeks without an examination of the defendant's books and records, its estimate based upon the examination of a similar company owning similar towers is that the amount in controversy is approximately $22,000. Plaintiff acknowledges that the defendant only owes sales and use taxes to St. Charles Parish for business conducted in St. Charles Parish, but it insists that an examination of certain of the defendant's books and records is necessary to determine what transactions are taxable.
Rec. Doc. No. 4, attachment.
Defendant counters that because plaintiff seeks to examine its books and records containing information relating to its business operations in Florida, Mississippi, and Louisiana parishes other than St. Charles, the amount in controversy should be assessed on its entire volume of business conducted since 2002. According to defendant, such amount would far exceed $75,000.
Defendant has attached the affidavit of Ken Staton, Jesta's president, to its opposition memorandum. Staton indicates that during the years 2002 and 2003, Jesta's company wide business activities exceeded $12.5 million and, if that entire amount was taxable at the five percent rate claimed by St. Charles Parish, the amount of taxes due would be $625,000. In addition, Staton notes that there is a specific controversy with respect to whether a $10 million transaction involving Jesta's purchase of a telecommunications tower is subject to sales and use tax by St. Charles Parish. If the $10 million transaction is taxable, the principal amount of the tax due would allegedly be $500,000.
Rec. Doc. No. 8, attachment. The Court notes that Staton's affidavit does not state which portion of the approximate $10 million amount could be taxable by St. Charles Parish. Staton's affidavit also states that "[s]hould Plaintiff seek to impose taxes" on the $10 million dollars, the jurisdictional amount would be satisfied. The uncertain language used by Stanton in his affidavit does not sufficiently support Jesta's position.
In Manguno v. Prudential Property and Casualty Ins. Co., 276 F.3d 720 (5th Cir. 2002), the Fifth Circuit reviewed the proper procedure to be followed in the district court when the existence of jurisdictional amount is challenged after removal:
A party may remove an action from state court to federal court if the action is one over which the federal court possess subject matter jurisdiction. See 28 U.S.C. § 1441(a).
The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995); Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir. 1993) (per curiam); Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). To determine whether jurisdiction is present for removal, we consider the claims in the state court petition as they existed at the time of removal. Cavillini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand
* * * *
We ordinarily consult the state court petition to determine the amount in controversy. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) . . . [W]here, as here, the petition does not include a specific monetary demand, [the removing party] must establish by a preponderance of the evidence that the amount in controversy exceeds $75,000. See De Aguilar, 47 F.3d at 1412 (5th Cir. 1995). This requirement is met if (1) it is apparent from the face of the petition that the claims are likely to exceed $75,000, or, alternatively, (2) the defendant sets forth 'summary judgment type evidence' of facts in controversy that support a finding of the requisite amount. See Simon v. Wal-Mart Stores, Inc., 193 F.3d 848, 850 (5th Cir. 1999); Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995); see also Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999). If a state statute provides for attorney's fees, such fees are included as part of the amount in controversy. Foret v. Southern Farm Bureau Life Ins. Co., 918 F.2d 534, 537 (5th Cir. 1999); see also 14A C. Wright and A. Miller, Federal Practice Procedure § 3712, at 176 (2d ed. 1985).276 F.3d at 723 (emphasis added).
Having reviewed the defendant's "summary judgement type evidence," which consisted of Stanton's affidavit, the Court finds that Jesta, the removing party, has failed to establish by a preponderance of evidence that the amount in controversy exceeds $75,000. Any ambiguities are construed against removal.
In a telephone conference, Jesta's counsel argued that this finding conflicts with the decisions of other district court judges in the Eastern District of Louisiana. Specifically, Jesta implied that the court in School Board of the Parish of St. Charles v. Quala Systems, Inc., 159 F. Supp.2d 295 (E.D. La. 2001) reached a contrary result. In Quala, a case wherein this same plaintiff sought to remand a lawsuit for the collection of taxes, the district court noted that "[n]either side contests the completely diverse nature of the parties or that the jurisdictional amount is satisfied." Id. at 296 (emphasis added).
Jesta's counsel also insists that City of New Orleans v. AT T Wireless PCS, 2003 WL 21305327 (E.D. La. 2003), is indistinguishable from the present dispute. As in this case, the district court reviewed the "summary judgment type" evidence adduced by the removing party consisting of the declaration of the defendant's assistant tax director. The affidavit contained information that the defendant's Louisiana affiliate remitted sales taxes of $204,717 to the City of New Orleans during the years in question, i.e., 2002 and 2003. If the affiliate's sale of cell phone and cell phone related products were subject to tax, the district court found that the amount in controversy would be $110,564, excluding interest, penalties or attorney's fees. The district court concluded that the removing party submitted evidence sufficient to establish jurisdictional amount.
In contrast to the affidavit that the defendant submitted inCity of New Orleans v. AT T, Jesta's "summary judgment type evidence", i.e., Staton's affidavit, does not establish that the amount in controversy exceeds $75,000. No specific amount reflective of Jesta's transactions in St. Charles Parish subsequent to 2002 is included in the affidavit and it is not reasonable to assume that ALL of its business transactions in three states would be subject to taxation by St. Charles. Absent some realistic reference to the amount of business which St. Charles Parish might reasonably argue is subject to its sales and use tax, the Court cannot find that Jesta has met its burden of establishing subject matter jurisdiction.
Accordingly,
IT IS ORDERED that the motion of plaintiff, the School Board of St. Charles, acting in its own behalf and as collecting agent for the St. Charles Parish Council, to remand is hereby GRANTED. IT IS FURTHER ORDERED that this action is hereby REMANDED to the Twenty-ninth Judicial District Court for the Parish of St. Charles, State of Louisiana.