Whitaker v. Heinrich Schepers GMBH & Co. KG

Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and
Goodwyn, JJ., and Lacy, S.J.
SHERMAN WHITAKER
v. Record No. 071197 OPINION BY SENIOR JUSTICE
ELIZABETH B. LACY
June 6, 2008
HEINRICH SCHEPERS GMBH & CO. KG
FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH
James A. Cales, Jr., Judge
In this appeal we consider whether the trial court abused
its discretion in denying the plaintiff’s motion to amend his
ad damnum clause.
FACTS and PROCEEDINGS
On August 14, 2002, Sherman E. Whitaker was injured while
working as a longshoreman on a boat docked in Portsmouth,
Virginia and owned by Heinrich Schepers GMBH & Co. KG, a
German corporation (Heinrich). On January 30, 2004, Whitaker
filed a motion for judgment in the Circuit Court of the City
of Portsmouth alleging Heinrich’s negligence caused Whitaker’s
injuries and seeking damages of $74,000. In answers to
interrogatories filed on April 26, 2004, Whitaker stated that
his damages exceeded $74,000, but he did not seek to amend the
ad damnum clause of his motion for judgment. Whitaker
supplemented these answers on October 14, 2004, again
indicating that his damages exceeded $74,000.
In November 2004, Heinrich asked Whitaker to stipulate
that his damage claim was limited to $74,000. Whitaker
declined to make the requested stipulation. On December 14,
2004, Heinrich filed a notice of removal in the United States
District Court for the Eastern District of Virginia based on
diversity and because “the amount in controversy now exceeds
$75,000.” See 28 U.S.C. § 1332(a) (2000). Whitaker filed a
motion to remand the case to the state court asserting that
Heinrich’s notice of removal was untimely. Whitaker argued
that the April 26 interrogatory answers put Heinrich on notice
that the damage claim exceeded $74,000 and therefore, under 28
U.S.C. § 1446(b) (2000) Heinrich was required to file its
notice of removal within 30 days of that date. Prior to any
hearing on either party’s motion, Heinrich agreed to a consent
order remanding the case to the state court.
In December 2005, Whitaker filed a motion to amend his ad
damnum clause to $2.5 million. The trial court denied that
motion and Whitaker’s motion for reconsideration. Whitaker
sought to amend the ad damnum clause again in June 2006, and
the trial court again denied that motion, finding that the
original motion for judgment seeking damages of only $74,000
was filed in bad faith because it deliberately pled “damages
below the jurisdictional amount with the intention of evading
federal jurisdiction” and that Heinrich would be prejudiced by
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this bad faith action. The trial court granted Whitaker leave
to file a petition for interlocutory appeal pursuant to Code
§ 8.01-670.1. This Court declined to grant the interlocutory
appeal and dismissed the petition for appeal by order entered
on January 9, 2007. Whitaker v. Heinrich Schepers GMBH & Co.
KG, Record No. 061672 (January 9, 2007).
On February 22, 2007, Whitaker filed another motion to
increase the ad damnum clause to $5,000,000, which motion was
again denied by the trial court on the ground previously
stated. Whitaker then chose to have the matter tried by the
court rather than by a jury. After Whitaker presented his
evidence, Heinrich asked that summary judgment be entered in
Whitaker’s favor and that damages be awarded in the amount
requested in the ad damnum clause, $74,000. In response,
Whitaker argued that his evidence established damages in
excess of $74,000, and requested that the court either grant
his renewed request to amend the ad damnum clause, or enter
judgment for an amount “that would fairly and reasonably
compensate Mr. Whitaker for his injuries.” The trial court
denied Heinrich’s summary judgment motion and Whitaker’s
motions, but entered judgment in favor of Whitaker for
$74,000. Whitaker timely appealed to this Court.
DISCUSSION
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In deciding whether to grant the amendment of a pleading
to increase the amount sought in the ad damnum clause, “a
circuit court must consider whether the defendant will be
prejudiced” by allowing the amendment, and “whether such
prejudice will affect the defendant’s ability to have a fair
trial.” Peterson v. Castano, 260 Va. 299, 303, 534 S.E.2d
736, 738 (2000). In addition, the circuit court must consider
“the plaintiff’s right to be compensated fully for any damages
caused by the defendant’s acts or omissions.” Id. This
decision rests within the discretion of the circuit court and
our review on appeal is limited to whether the circuit court
abused its discretion. Id.
Whitaker argues that the factual premise upon which the
trial court relied in determining prejudice was erroneous and,
thus, the trial court abused its discretion in denying the
motion to amend the ad damnum clause. Whitaker also argues
that Heinrich would not have been prejudiced by the amendment
to the ad damnum clause in December 2005 because Heinrich had
been aware of the increased damage claim since April 26 or
October 14, 2004, no discovery had been taken, the discovery
deadline was March 24, 2006, the period afforded for expert
designation had not expired, and trial was set for April 26,
2006. Therefore, Whitaker asserts that allowing him to amend
his ad damnum clause would not have prejudiced Heinrich’s
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ability to have a fair trial and that refusing the motion
denied Whitaker the ability to be fully compensated for his
losses.
Because the denial of a motion to amend is based on a
finding of prejudice to the defendant, we begin by reviewing
the prejudice the trial court found in this case. The trial
court determined that the “[d]efendant would be prejudiced
from plaintiff’s bad faith conduct in deliberately pleading
damages below the jurisdictional amount with the intention of
evading federal jurisdiction by virtue of the pleading.” 1
Stated another way, the trial court found that Heinrich was
prejudiced because Whitaker intentionally declined to increase
the ad damnum clause until after Heinrich’s right to remove
the case to federal court “evaporated.”
Under 28 U.S.C. § 1446(b), a litigant may remove a case
to federal court if there is diversity of citizenship between
the litigants and the amount in controversy exceeds $75,000.
See 28 U.S.C. § 1332(a). Notice of removal must be filed
within 30 days of the filing of the original pleading or any
“other paper” indicating that the amount sought in damages
exceeds $75,000. 28 U.S.C. § 1446(b). The case is removed to
1
Although the trial court stated that Whitaker’s counsel
engaged in bad faith conduct, neither Heinrich nor the trial
court, sua sponte, suggested that sanctions for such conduct
should be imposed under Code § 8.01-271.1.
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federal court upon filing the notice of removal but may be
remanded to the state court if the conditions for removal are
not met. 28 U.S.C. § 1446(d). In construing this provision,
federal courts have not limited the amount in controversy to
the amount requested in the plaintiff’s ad damnum clause. The
amount in controversy for purposes of removing a case to
federal court can be determined from the “totality of the
circumstances,” including answers to interrogatories. See
Schwenk v. Cobra Mfg. Co., 322 F. Supp. 2d 676, 678 (E.D. Va.
2004); Lien v. H.E.R.C. Prods., Inc., 8 F. Supp. 2d 531, 534
(E.D. Va. 1998); see also Van Gosen v. Arcadian Motor
Carriers, 825 F. Supp. 981, 982 (D. Kan. 1993) (answers to
interrogatories can constitute an “other paper” under 28
U.S.C. § 1446(b) giving notice that a state court action has
become removable); accord Smith v. International Harvester,
621 F. Supp. 1005, 1006-08 (D. Nev. 1985).
In this case, Whitaker sent Heinrich answers to
interrogatories on April 26, 2004, which indicated that his
damages were likely to exceed $75,000. Specifically, Whitaker
stated that he had incurred lost wages of $57,031.11 and
future lost wages of $452,364.12. The interrogatory answers
also indicated that his injuries would require continued
treatment and future surgery. In supplemental answers served
on Heinrich on October 14, 2004, Whitaker stated that his
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claimed future and past medical expenses totaled $119,070.32.
Although Heinrich received “other papers” indicating the
damages claimed exceeded $75,000, it did not file a notice of
removal with the federal court until December 14, 2004, well
beyond the 30-day limitations period available to him under 28
U.S.C. § 1446(b). Furthermore, Heinrich’s counsel signed an
agreed consent order remanding the case to the Circuit Court
of the City of Portsmouth and stated to that court and to this
Court in oral argument that, although he had notice of the
increased damage claim, he failed to timely file the notice of
removal in federal court.
This record demonstrates that Whitaker’s actions did not
cause Heinrich’s right to remove the case to federal court to
“evaporate” as stated by the trial court. Rather, Heinrich’s
inability to remove the case to the federal court resulted
from its failure to timely file a notice of removal.
Therefore, the trial court’s finding of prejudice was based on
an incorrect factual premise and denying Whitaker’s motion to
amend the ad damnum clause on this basis was an abuse of
discretion. 2 Nothing in this record indicates any other
2
In resolving this issue we need not consider whether
precluding the ability to remove a case to federal court would
constitute prejudice to the defendant under Peterson, 260 Va.
at 303, 534 S.E.2d at 738.
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prejudice that Heinrich would have suffered if Whitaker’s
motion to amend the ad damnum clause had been granted.
Accordingly, the judgment of the trial court must be
reversed and the case remanded for further proceedings. 3 The
further proceedings, however, will be limited to the issue of
damages, as the trial court’s decision on liability has not
been challenged by either party.
Reversed in part and remanded.
3
In light of our decision we need not consider Whitaker’s
remaining claim that the denial of his motion to amend denied
his right to have the amount of damage determined by a jury.
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