Chapman v. Powermatic, Inc.

United States Court of Appeals,
Fifth Circuit.
No. 91–7164.
Adam Frederick CHAPMAN, Plaintiff–Appellant,
v.
POWERMATIC, INC., Defendant–Appellee.
Aug. 26, 1992.
Appeal from the United States District Court For the Northern District of Texas.
Before GOLDBERG, JONES, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Adam Frederick Chapman (Chapman), a student at Duncanville High School in Duncanville,
Texas, was injured when his right hand came into contact with a wood planer in the wood-working
shop of the high school. Shortly thereafter, on March 27, 1990, Chapman's attorney sent a letter to
Powermatic, Inc., (Powermatic), the manufacturer of the wood planer, advising Powermatic that it
was a potential defendant and that Chapman had incurred medical expenses in the amount of
$67,196.48. Additionally, in April 1990, Chapman provided the investigative service hired by
Powermatic with copies of Chapman's medical bills.1
On June 28, 1990, Chapman sued Powermatic in state court alleging numerous causes of
action.2 The petition was served on Powermatic on July 10, and Powermatic filed its answer on July
26. The petition revealed that there was complete diversity of citizenship between the two parties,
but it did not plead for a specific amount of damages. On August 17, 1990, Chapman answered the
first set of interrogatories that Powermatic had served on him in which Chapman stated that he had
1
Before Chapman sued Powermatic the investigative service interviewed Chapman, took
photographs of his injuries, obtained a copy of a report from his surgeon describing his injuries,
and obtained copies of witnesses' statements.
2
Chapman sued Powermatic under the theories of negligence, strict liability, breach of
warranty, and the Deceptive Trade Practices Act.
suffered damages in excess of $800,000. On August 27, Powermatic filed a notice of removal in the
United States District Court for the Northern District of Texas (the "USDC). In response, Chapman
moved to have the case remanded to state court contending that Powermatic did not timely remove
the case. The USDC denied Chapman's motion to remand holding that the "[d]efendant removed this
case within 30 days from the time it received answers to interrogatories stating that the amount in
controversy was over $50,000. This case was timely removed pursuant to 28 U.S.C. § 1446(b)."
The case proceeded to trial before a jury; and at the conclusion of the trial, the jury found that
Powermatic did not cause Chapman's injuries. The USDC entered a take nothing judgment on the
jury's verdict. Chapman appeals the USDC's denial of his motion to remand.
DISCUSSION
Both parties agree that the requirements for diversity jurisdiction exist in this case: the
"matter in controversy exceeds the sum or value of $50,000," and the parties are "citizens of different
states." 28 U.S.C. § 1332(a). What the parties do not agree on, however, and what Chapman's
appeal concerns, is whether Powermatic timely removed the case to federal court pursuant to 28
U.S.C. § 1446(b). Section 1446(b) provides in pertinent part that:
[the] notice of removal of a civil action or proceeding shall be filed within thirty days after the
receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting
forth the claim for relief upon which such action or proceeding is based....
If the case stated by the initial pleading is not removable, a notice of removal may be filed
within thirty days after receipt by the defendant, through service or otherwise, of a copy of
an amended pleading, motion, order, or other paper from which it may first be ascertained
that the case is one which is or has become removable....
In essence, when read as a whole, § 1446(b) provides a two-step test for determining whether a
defendant timely removed a case. The first paragraph provides that if the case stated by the initial
pleading is removable, then notice of removal must be filed within thirty days from the receipt of the
initial pleading by the defendant; and the second paragraph provides, if the case stated by the initial
pleading is not removable, then notice of removal must be filed within thirty days from the receipt of
an amended pleading, motion, order, or other paper from which the defendant can ascertain that the
case is removable.
A. Initial Pleading
Relying on the first paragraph of § 1446(b), Chapman contends that the district court erred
in not remanding the case to state court because Powermatic did not remove the case within thirty
days from its receipt of the initial pleading. To support his contention that the district court erred
Chapman argues that all pleadings fall into one of three categories: (1) removable, (2) nonremovable,
and (3) indeterminate as to removability. The initial pleading in this case was indeterminate as to
removability, Chapman contends, because it revealed that there was complete diversity of citizenship
between the parties, but it pled for an indeterminate amount of damages.3 When a pleading is
indeterminate as to removability, Chapman contends, a defendant is under a duty to exercise due
diligence in determining whether the case is in fact removable. Applying that duty of due diligence
to the facts of the present case, Chapman contends that Powermatic was required under the first
paragraph of § 1446(b) to remove the case within 30 days from its receipt of the initial pleading,
because the initial pleading revealed that there was complete diversity of citizenship between the
parties, and Powermatic knew or in the exercise of due diligence should have known that the amount
3
Chapman's initial petition stated that he had "suffered damages in excess of the minimum
jurisdictional limits of the court." A question exists whether there is a minimum jurisdictional
limit in Texas district court, which is where the suit was initially filed, although one commentator
has opined that the jurisdictional minimum is five hundred dollars. See W. Dorsaneo, 1
Tex.Lit.Guide § 2.01[3][b][ii] (1989); See also City of Mesquite v. Moore, 800 S.W.2d 617, 621
n. 1 (Tex.App.—Dallas 1990, no writ).
Texas Rule of Civil Procedure 47(b) states that "an original pleading ... shall
contain (b) in all claims for unliquidated damages only the statement that the damages
sought are within the jurisdictional limits of the court, ..."; See also La.Code
Civ.Proc.Ann.Art. 893(A)(1) ("No specific monetary amount of damages shall be included
in the allegations or prayer for relief of any original, amended, or incidental demand. The
prayer for relief shall be for such damages as are reasonable in the premises. If a specific
amount of damages is necessary to establish the jurisdiction of the court, the right to a jury
trial or for other purposes, a general allegation that the claim exceeds or is less than the
requisite amount is sufficient.") In our opinion, neither T.R.C.P. 47(b) nor La.Code
Civ.Proc.Ann. art. 893(A)(1) prohibit a plaintiff from alleging in his initial pleading that
the damages exceed the minimum jurisdictional amount of the federal court.
in controversy exceeded $50,000.4
We have found no circuit court opinions that address whether a defendant is under a duty to
exercise due diligence in determining the amount in controversy when the initial pleading does not
reveal such an amount, and the district court opinions addressing this question are in disagreement.5
In large part, Chapman bases his contention that Powermatic did not timely remove the case on the
district court opinion of Mielke v. Allstate Insurance Company, 472 F. Supp. 851 (E.D.Mich.1979).
In Mielke, the initial pleading of the plaintiff did not contain a specific demand for damages, however,
before the defendant had received the initial pleading, the plaintiff had sent the defendant copies of
medical bills and expenses that revealed that he was seeking damages in excess of the minimum
jurisdictional amount of the federal court. Additionally, the defendant admitted that it had actual
knowledge that the plaintiff was seeking damages in excess of the jurisdictional minimum. Forty-five
days after receiving the initial pleading, but only thirty days after receiving an amended pleading
revealing that the amount in controversy was in excess of five million dollars, the defendant removed
the case. After removal, the district court remanded the case to state court holding that removal of
the case was untimely because the defendant should have ascertained from the circumstance and the
initial pleading that the defendant was seeking damages in excess of the minimum jurisdictional
4
Powermatic tacitly concedes that it knew that the amount in controversy exceeded the
$50,000 minimum jurisdictional limit of the federal court when it received the initial pleading.
5
See e.g. Mielke v. Allstate Insur. Comp., 472 F. Supp. 851 (E.D.Mich.1979); Turner v.
Wilson Foods Corp., 711 F. Supp. 624, 626 (N.D.Ga.1989) (initial pleading was held to put the
defendant on notice that the amount in controversy exceeded $10,000 when the initial pleading
alleged severe burns, permanent scarring, pain and suffering, and lifelong medical expenses, but
did not specify an amount of damages); Richman v. Zimmer, Inc., 644 F. Supp. 540, 542
(S.D.Fla.1986) (initial pleading that alleged serious personal injuries was held to place the
defendant on notice that the case was removable, even though the plaintiff merely alleged that his
damages exceeded the state court's minimum jurisdictional amount); Lee v. Altamil Corp., 457
F. Supp. 979, 981 (M.D.Fla.1978) (initial pleading merely alleging that the plaintiff's damages
exceeded the state jurisdictional minimum of $2,500 was held to adequately place the defendant
on notice of the substantial damages involved); But see contra Rowe v. Marder, 750 F. Supp.
718, 721 (W.D.Pa.1990), aff'd 935 F.2d 1282 (3rd Cir.1991) (court held that "initial pleading"
did not begin the running of the thirty day time period for removal when it did not allege a specific
amount of damages, even though the defendant probably knew that the damages would exceed
$50,000).
amount. The court stated that "there is no reason to allow a defendant additional time if the presence
of grounds for removal are unambiguous in light of the defendant's knowledge and the claims made
in the initial complaint." Id. at 853.
We disagree with the opinion of the district court in Mielke, and conclude that for the
purposes of the first paragraph of § 1446(b), the thirty day time period in which a defendant must
remove a case starts to run from defendant's receipt of the initial pleading only when that pleading
affirmatively reveals on its face that the plaintiff is seeking damages in excess of the minimum
jurisdictional amount of the federal court.6 We adopt this rule because we conclude that it promotes
certainty and judicial efficiency by not requiring courts to inquire into what a particular defendant may
or may not subjectively know. The rule announced in Mielke, which Chapman proposes that we
adopt, in contrast, would needlessly inject uncertainty into a court's inquiry as to whether a defendant
has timely removed a case, and as a result would require courts to expend needlessly their resources
trying to determine what the defendant knew at the time it received the initial pleading and what the
defendant would have known had it exercised due diligence. Moreover, the rule in Mielke would
encourage defendants to remove prematurely cases in which the initial pleading does not affirmatively
reveal that the amount in controversy is in excess of $50,000 so as to be sure that they do not
accidentally waive their right to have the case tried in a federal court. We believe the better policy
is to focus the parties' and the court's attention on what the initial pleading sets forth, by adopting a
bright line rule requiring the plaintiff, if he wishes the thirty-day time period to run from the
defendant's receipt of the initial pleading, to place in the initial pleading a specific allegation that
damages are in excess of the federal jurisdictional amount.
6
Should a defendant choose to remove a case within thirty days from its receipt of an initial
pleading that does not reveal on its face that the plaintiff is seeking damages in excess of the
jurisdictional minimum, the federal court may either: (1) look to the petition for removal, (2)
make an independent appraisal of the amount of the claim, or suggest that the defendant is free to
do so, or (3) remand the action. Rollwitz v. Burlington Northern R.R., 507 F. Supp. 582, 585
(D.Mont.1981); Coleman v. Southern Norfolk, 734 F. Supp. 719 (E.D.La.1990); See also
Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3725 at 423,
426–27.
B. Other Paper
Chapman's second contention is that even if the initial pleading did not state a case that was
removable pursuant to the first paragraph of § 1446(b), Powermatic's removal was st ill untimely
pursuant to the second paragraph of § 1446(b). The medical bills and demand letter delivered by
Chapman to Powermatic before it was sued revealing that Chapman was seeking damages in excess
of $50,000, Chapman contends, were "other paper" within the meaning of the second paragraph of
§ 1446(b). Therefore, Chapman contends, Powermatic's receipt of that "other paper" (medical bills
and demand letter) before it was sued, revealing that the amount in controversy exceeded $50,000,
coupled with Powermatic's receipt of the initial pleading revealing complete diversity of citizenship
between the parties, triggered the thirty-day time limit of the second paragraph of § 1446(b). In other
words, Chapman contends that "other paper" for purposes of the second paragraph of § 1446(b) may
come prior to the defendant's receipt of the initial pleading. And if this occurs, Chapman contends,
that the thirty-day time period begins to run from the time that the defendant received the initial
pleading.
Chapman bases his contention on the opinion of the district court in Central Iowa
Agri–Systems v. Old Heritage Advertisers and Publishers, Inc., 727 F. Supp. 1304 (S.D. Iowa 1989).
In Central Iowa, the plaintiff's initial pleading did not allege a specific amount of damages, but the
plaintiff had sent the defendant a demand letter before he sued in which the plaintiff stated that he
conservatively estimated his damages to be in excess of $40,000.7 That pre-suit demand letter, the
court held, was an "other paper" for purposes of the second paragraph of § 1446(b) from which the
defendant could ascertain that the case was removable. Therefore, the court held that the defendant's
removal of the case was untimely because the defendant did not remove within thirty days from its
receipt of the initial pleading.
We decline to follow the district court's opi nion in Central Iowa and consequently reject
7
The minimum jurisdictional limit of the federal court applicable at this time was $10,000.
Chapman's contention, because we conclude that both are in conflict with the plain language of the
removal statute. The plain language of the second paragraph of § 1446(b) requires that if an "other
paper" is to start the thirty-day time period, a defendant must receive the "other paper" after receiving
the initial pleading.8 The second paragraph of § 1446(b) applies by its terms only "if the case stated
by the initial pleading is not removable...." 28 U.S.C. § 1446(b). More important, the second
paragraph of § 1446(b) requires that the defendant remove the case, if at all, within 30 days after
receipt of an "other paper" from which the defendant may first ascertain that the case is removable.
Logic dictates that a defendant can "first" ascertain whether a case is removable from an "other
paper" only after receipt of both the initial pleading and that "other paper"; and therefore the
thirty-day time period begins to run, not from the receipt of the initial pleading, but rather from the
receipt of the "other paper" revealing that the case is removable. Chapman would have us adopt a
rule which would be clearly inconsistent with the plain language of the second paragraph of §
1446(b), which states that "a notice of removal may be filed within thirty days after receipt by the
defendant ... [of an] other paper from which it may first be ascertained that the case is one which is
or has become removable...." By its plain terms the statute requires that if an "other paper" is to
trigger the thirty-day time period of the second paragraph of § 1446(b), the defendant must receive
the "other paper" only after it receives the initial pleading. Finally, we believe that our holding that
the "other paper" must be received after the filing of the initial pleading is supported by the recitation
in the second paragraph of § 1446(b) of the words "amended pleading, motion, order" before t he
words "or other paper," which clearly refer to actions normally and logically occurring after the filing
of the initial pleading. Clearly the answer to interrogatory which triggered the filing of the notice of
removal in this case is such an "other paper."
We find the plain language of the statute to be clear in this regard and as such we are bound
to follow it. "[I]n any case requiring statutory construction, the High Court has instructed us to
8
We express no opinion as to whether the medical bills and demand letter would otherwise be
adequate as "other paper" for purposes of the second paragraph of § 1446(b).
adhere to the plain language of the law unless "literal application of a statute will produce a result
demonstrably at odds with the intentions of its drafters.' " In re Meyerland Co., 960 F.2d 512, 516
(5th Cir.1992), (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S. Ct. 3245,
3250, 73 L. Ed. 2d 973 (1982)). We conclude that adhering to the plain language of the second
paragraph of § 1446(b) by requiring that an "other paper," in order to tri gger the thirty-day time
period, be received by a defendant only after that defendant has received the initial pleading does not
"produce a result demonstrably at odds with the intentions of its drafters," but, instead, produces a
result that is entirely consistent with the intentions of its drafters. Id.
In summation, we hold that Powermatic timely removed this case because: (1) the initial
pleading was not removable pursuant to the first paragraph of § 1446(b), since it did not reveal on
its face that the amount in controversy was in excess of $50,000; and (2) the medical bills and
demand letter received by Powermatic did not begin the running of the thirty-day time period of the
second paragraph of § 1446(b), since Powermatic received the medical bills and demand letter before
it received the initial pleading.
For the foregoing reasons, the judgment of the district court is AFFIRMED.