United States District Court, D. New Mexico
JERRY ERWIN ASSOCIATES, INC., d/b/a JEA Senior Living, Plaintiff,
ESTATE OF LUCILLE ASHER, Deceased, by and through Personal Representative, KEVIN ZANGARA, Defendant.
J. Garcia Michelle A. Hernandez Modrall, Sperling, Roehl,
Harris & Sisk, P.A. Albuquerque, New Mexico Attorneys for
H. Wood Thomas Gordon Wood Law Office of James H. Wood, P.C.
Albuquerque, New Mexico Attorneys for the Defendant.
MEMORANDUM OPINION 
MATTER comes before the Court on: (i) the Plaintiff's
Motion to Compel Arbitration, filed January 8, 2016 (Doc.
2)(“Motion”); and (ii) the Defendant's Motion
to Dismiss Plaintiff's Complaint to Compel Arbitration
and Memorandum Brief in Support, filed February 4, 2016 (Doc.
15)(“Zangara's Motion”). The Court held a
hearing on March 29, 2016. The primary issues are: (i)
whether the Court has subject-matter jurisdiction in this
case because of the parties' diversity, despite the
existence of possible non-diverse parties in the underlying
state court action who are not before this Court; (ii)
whether decedent Lucille Asher's conservator had the
authority to bind Lucille Asher and her estate to the
Arbitration Agreement, Resident Admission Agreement at 3,
filed January 8, 2016 (Doc. 3-2)(“Arbitration
Agreement”); (iii) whether the Arbitration Agreement is
within the scope of the Federal Arbitration Act, 9 U.S.C.
§§ 1-16 (“FAA”); (iv) whether the
claims asserted are within the Arbitration Agreement's
scope; (v) whether Plaintiff Jerry Erwin Associates, Inc.
(“Erwin Associates”) has the power to enforce the
Arbitration Agreement, even though it is not a party to the
Arbitration Agreement; and (vi) whether the Arbitration
Agreement is unconscionable. The Court concludes that: (i)
the Court has subject-matter jurisdiction in this case,
because the parties before the Court are diverse, and the
Court should not “look through” to the state
court action to determine diversity; (ii) Lucille Asher's
conservator had the authority to bind her and her estate to
the Arbitration Agreement; (iii) the Arbitration Agreement is
within the FAA's scope; (iv) the claims asserted are
within the Arbitration Agreement's scope; (v) Erwin
Associates has the power to enforce the Arbitration
Agreement; and (vi) the relevant part of the Arbitration
Agreement is not unconscionable. Accordingly, the Court
grants the Plaintiff's Motion and denies Zangara's
2011, a state district court issued an order appointing a
Guardian of Person and a Conservator of the Estate for an
elderly woman named Lucille Asher (“L. Asher”).
See Order Appointing Guardian of Person and
Conservator of Estate of An Incapacitated Person at 3-4,
filed January 8, 2016 (Doc. 3-1)(“Guardianship
Order”). Specifically, the Guardianship Order appointed
William R. “Randy” Asher (“W.
Asher”), L. Asher's son, as Guardian of Person, and
Urbielewicz Murphree CPAs, P.C. (“Murphree CPAs”)
as Conservator of the Estate. See Guardianship Order
at 3-4. The Guardianship Order declares that “William
R. ‘Randy' Asher shall have the final and ultimate
authority to make all medical decisions for the incapacitated
person, including but not limited to making decisions
regarding where the incapacitated person should
reside.” Guardianship Order at 4.
Asher “decided to try to admit Lucille to North
Ridge” Alzheimer's Special Care Center
(“North Ridge”), a nursing home that Erwin
Associates manages and operates. Defendant's Response to
Plaintiff's Motion to Compel Arbitration at 3, filed
January 29, 2016 (Doc. 14)(“Response 1”);
Plaintiff's Memorandum of Law in Support of
Plaintiff's Motion to Compel Arbitration at 1, filed
January 8, 2016 (Doc. 3)(“Memorandum”). Erwin
Associates has a Management Services Agreement with
Albuquerque Care Group, LLC (“Albuquerque Care”),
a company that owns the nursing home. See Management
Services Agreement at 1, filed February 16, 2016 (Doc.
17-3)(“Management Agreement”). According to the
Management Agreement, Erwin Associates “will perform
all services necessary to provide and maintain quality care
and management for the Facility and the Residents . . .
including . . . [r]epresenting the Facility in all dealings
with regulatory authorities, creditors, Residents, Facility
Employees and other personnel and insurers.” Management
Agreement at 2.
Asher was admitted to North Ridge, and Murphree CPAs, but not
W. Asher, signed the Resident Admission Agreement.
See Arbitration Agreement at 3. The other party to
the Arbitration Agreement is “Albuquerque Care Group,
LL[C], doing business as North Ridge Alzheimer's Special
Care Center” and not Erwin Associates. Arbitration
Agreement at 1. In key part, the Arbitration Agreement reads:
Agreement to Resolve Disputes Through Arbitration:
The Facility, Resident, and the Resident's Representative
agree, as an important and integral part of this Agreement,
that any and all claims and disputes arising from or related
to this Agreement or to Resident's care, services, or
residency at the Facility shall be resolved by submission to
neutral, binding arbitration rather than a trial before a
judge or jury (except for the specific claims and disputes
set forth in the following paragraph). . . . This arbitration
clause binds all parties to this Agreement and their spouses,
heirs, representatives, executors, administrators,
successors, and assigns, as applicable.
Actions Not Subject to Arbitration:
The parties agree that any claim or dispute involving or
related to unlawful detainer (eviction) proceedings shall not
be subject to arbitration unless both parties agree to
arbitrate such proceedings. Furthermore, any action arising
out of or relating to this Agreement for which arbitration is
not allowed by law, or which the parties have agreed (herein
or otherwise) not to arbitrate, shall be brought in the
appropriate court before a judge rather than a jury.
Agreement at 3. W. Asher, and not Murphree CPAs, signed other
forms on L. Asher's behalf, including an Authorization
for Medication Assistance and a Notification of Rights and
Responsibilities with Incident Reporting. See
Arbitration Agreement at 10-11.
Asher died in 2012. See Memorandum at 4. Allegedly,
“Ms. Asher went to the emergency room . . . [and]
[f]ollowing abdominal surgery, she was diagnosed with
suspected perforated appendicitis resulting in an abscess and
a large area of infection.” Estate of Lucille
Asher, Deceased, by and through Personal Representative,
Kevin Zangara v. JEA Senior Living, Inc., d/b/a North Ridge
Alzheimer's Special Care Center, and Tamara Goodman, MD,
LLC, ¶ 13, at 3, D-820-CV-2015-00311 (Eighth
Judicial District Court, County of Taos, State of New
Mexico), in file at January 8, 2016 (Doc. 3-5)(“State
Court Complaint”). According to the State Court
Complaint, “Ms. Asher died . . . of septic shock due to
the abdominal infection.” State Court Complaint ¶
14, at 3. Allegedly, North Ridge was negligent “by
failing to timely and properly diagnose Ms. Asher's
appendicitis.” State Court Complaint ¶ 16, at 3.
According to the State Court Complaint, “North Ridge
was negligent in hiring unqualified staff and in granting
clinical privileges to and permitting the continued exercise
of clinical privileges by physicians North Ridge knew or
reasonably should have known were not qualified to exercise
clinical privileges with reasonable skill.” State Court
Complaint at 4.
Kevin Zangara was appointed L. Asher's Personal
Representative for the purpose of bringing a wrongful death
action against Erwin Associates. See Memorandum at
4. Zangara filed such an action in state district court.
See State Court Complaint ¶ 1, at 1.
Associates moves the Court to compel Zangara to arbitrate
claims that Zangara has asserted in state court against Erwin
Associates. See Memorandum at 1. Zangara moves to
dismiss the Plaintiff's Motion. See
Zangara's Motion at 1. The Court will summarize the
Erwin Associates' Motion and
Associates contends that the claims which Zangara asserts in
the state court action are subject to a binding arbitration
provision. See Memorandum at 4. Erwin Associates
further contends that the FAA governs the Arbitration
Agreement, because there is a valid written arbitration
agreement and the dispute is within the agreement's
scope. See Memorandum at 6. Erwin Associates asserts
that, because Murphree CPAs signed the Arbitration Agreement
on L. Asher's behalf, L. Asher and her estate are bound.
See Memorandum at 4. In the alternative, Erwin
Associates argues that L. Asher was “bound to arbitrate
as the intended beneficiary and third-party
beneficiary” of the Arbitration Agreement, because
“the resident is the person named in the agreement who
is admitted to the facility and is conferred certain rights
and benefits.” Memorandum at 9.
Erwin Associates asserts that the Defendant is
“estopped from denying the validity of the arbitration
provision.” Memorandum at 12. Specifically, Erwin
Associates argues that Murphree CPAs “made a promise to
JEA to be bound by the terms in the Admission Agreement,
including the arbitration provision. Thus, Erwin Associates
reasonably relied on . . . Murphree's promise to abide by
the terms of the arbitration provision.” Memorandum at
Erwin Associates contends that the “Defendant's
claims are clearly within the scope of the arbitration
provision.” Memorandum at 13. Erwin Associates notes
that the Arbitration Agreement says that “‘any
and all claims and disputes'” are subject to
arbitration, and that the Arbitration Agreement binds all
‘“spouses, heirs, representatives, executors,
administrators, successors, and assigns.'”
Memorandum at 13-14. Erwin Associates thus concludes that the
claims at issue are within the Arbitration Agreement's
scope. See Memorandum at 14. Regarding relief, Erwin
Associates requests the Court to grant the Motion and stay
the state court proceedings. See Memorandum at 14.
responds to the Motion and Memorandum. See Response
1 at 1. First, Zangara argues that Erwin Associates is not a
real party in interest to this suit. See Response 1
at 6. Zangara concludes that, because Erwin Associates is not
a real party in interest, Erwin Associates cannot enforce the
Arbitration Agreement. See Response 1 at 6.
Zangara contends that Erwin Associates “cannot enforce
the agreement because Erwin Associates is not an intended
beneficiary of the agreement.” Response 1 at 7.
According to Zangara, because Erwin Associates is not
mentioned anywhere in the agreement, one cannot say that the
parties intended for the agreement to benefit Erwin
Associates. See Response 1 at 9. For this reason,
Zangara concludes that Erwin Associates “has no right
to enforce the Agreement.” Response 1 at 9.
Zangara asserts that the Arbitration Agreement is both
substantively and procedurally unconscionable. See
Response 1 at 12. Regarding substantive unconscionability,
Zangara contends that, because the Arbitration Agreement
excludes claims from arbitration “involving or related
to eviction, the Agreement requires the arbitration of the
vast majority of claims that would be brought by the patient,
who is the weaker party, while excluding those disputes that
would exclusively be pursued by the nursing home.”
Response 1 at 12. Regarding procedural unconscionability,
Zangara asserts that, because “the Agreement was
offered . . . on a take-it-or-leave-it basis, ” and
because the Arbitration Agreement was mandatory, the
Arbitration Agreement is procedurally unconscionable.
See Response 1 at 13. Zangara adds that the nursing
home “had all the bargaining power.” Response 1
at 13. Zangara concludes that the Court should deny the
Motion. See Response 1 at 14.
Erwin Associates' Reply.
Associates replies to Zangara's Response. See
Reply in Support of Plaintiff's Motion to Compel
Arbitration, filed February 16, 2016 (Doc. 17)(“Reply
1”). Erwin Associates contends that it is a real party
in interest, noting that in the state court action,
“Defendant sued and served JEA. Defendant, now to avoid
arbitration, is claiming that JEA is not a real party in
interest.” Reply 1 at 3. Erwin Associates also contends
that it is a third-party beneficiary to the Arbitration
Agreement. See Reply 1 at 3. It notes that the
Arbitration Agreement binds the parties'
“representatives, ” “administrators,
” and “assigns.” Reply 1 at 5. Erwin
Associates asserts that it is “a representative of,
administrator, and assign of Albuquerque Care Group, LLC
pursuant to a Management Services Agreement.” Reply 1
Associates further argues that the Arbitration Agreement is
not unconscionable. See Reply 1 at 9. It argues that
“the United States District Court for the District of
New Mexico has held that a nursing home admission agreement
is not procedurally unconscionable just because it contains
an arbitration provision.” Reply 1 at 10 (citing
THI of New Mexico at Hobbs Ctr., LLC v. Spradlin,
893 F.Supp.2d 1172, 1185-86 (D.N.M. 2012)(Vazquez,
J.)(“Spradlin”)). Regarding substantive
unconscionability, Erwin Associates asserts that
[t]he Court in Spradlin also held that an
arbitration agreement in a nursing home admission contract
was not substantively unconscionable because the arbitration
provision divested the nursing home of its right to have its
claims decided in a court in the same manner as it divested
the resident's interest.
at 11 (citing Spradlin, 893 F.Supp.2d at 1186). JEA
contends that the Arbitration Agreement here is similar to
the one in Spradlin. See Reply 1 at 11.
moves to dismiss Erwin Associates' Motion. See
Zangara's Motion at 1. Zangara re-alleges that JEA is not
a real party in interest to, nor an intended third-party
beneficiary of, the Arbitration Agreement. See
Zangara's Motion at 7-8. He adds that the Arbitration
Agreement never mentions Erwin Associates, and that the only
party to the agreement -- other than L. Asher -- is
Albuquerque Care. See Zangara's Motion at 9.
next re-asserts that the Arbitration Agreement is both
substantively and procedurally unconscionable. See
Zangara's Motion at 13-14. Regarding substantive
unconscionability, he contends that “the Agreement
requires arbitration of the vast majority of claims that
would be brought by the patient, who is the weaker party,
while excluding those disputes that would exclusively be
pursued by the nursing home.” Zangara's Motion at
14. Zangara then re-asserts his procedural unconscionability
arguments. See Zangara's Motion at 14-16.
Zangara argues that the Court lacks subject-matter
jurisdiction over this case. See Zangara's
Motion at 16. He contends that Erwin Associates “fails
to meet its burden of proving the diverse citizenship of
each real party in interest.” Zangara's
Motion at 17 (emphasis in original). Specifically, he alleges
that “[t]he only named parties to the Agreement for
which Lucille Asher or her representatives could have
intended the Agreement to benefit are ABQ Care, LL[C], North
Ridge, or ABQ Care, LL[C] doing business as North
Ridge.” Zangara's Motion at 17. Zangara concludes
that because all of these entities are New Mexico citizens,
the Court has no diversity jurisdiction. See
Zangara's Motion at 17.
Erwin Associates' Response.
Associates responds to Zangara's Motion. See
Plaintiff's Response to Defendant's Motion to
Dismiss, filed February 22, 2016 (Doc. 19)(“Response
2”). Erwin Associates begins by arguing that the Court
has subject-matter jurisdiction over the case. See
Response 2 at 3. Erwin Associates alleges that “Ms.
Asher and the personal representative of her estate, were at
all relevant times New Mexico residents, [and] JEA is a
Washington corporation with its principal place of business
in Vancouver, Washington.” Response 2 at 3. Erwin
Associates thus concludes that the Court has diversity
jurisdiction. See Response 2 at 3.
Associates next argues that it is the real party in interest
to this case. See Response 2 at 4. Erwin Associates
re-alleges that Zangara sued Erwin Associates in state court,
but now, to avoid arbitration, Zangara asserts that Erwin
Associates is not a real party in interest. See
Response 2 at 4. Erwin Associates further contends that it
may enforce the Arbitration Agreement, because it is a
third-party beneficiary of the Arbitration Agreement,
re-alleging that the Arbitration Agreement binds Albuquerque
Care's “representatives, ”
“administrators, ” and “assigns.”
Response 2 at 8. Erwin Associates contends that it is a
representative, administrator, and assign of Albuquerque Care
pursuant to its Management Agreement with Albuquerque Care.
See Response 2 at 8.
Associates again argues that the Arbitration Agreement is not
unconscionable. See Response 2 at 15. Erwin
Associates re-asserts its argument that Spradlin
held that “a nursing home admission agreement is not
procedurally unconscionable just because it contains an
arbitration agreement.” Response 2 at 16 (citing
Spradlin, 893 F.Supp.2d at 1185-86). Erwin
Associates also re-alleges its arguments regarding
substantive unconscionability. See Response 2 at 17.
Erwin Associates concludes that the Court should deny
Zangara's Motion. See Response 2 at 18.
replies to Erwin Associates' Response. See
Defendant's Reply to Plaintiff's Response to
Defendant's Motion to Dismiss, filed March 14, 2016 (Doc.
21)(“Reply 2”). First, Zangara contends that
“the fact that [he] sued JEA in state court has no
bearing on JEA's status as a real party in
interest.” Reply 2 at 3. Zangara asserts that
“JEA has the burden of pleading facts sufficient to
establish that JEA is an intended third-party
beneficiary of the Agreement, ” and that Erwin
Associates has not done so. Reply 2 at 4 (emphasis in
original). Zangara continues that “JEA focuses its
argument . . . on the undisputed fact that Lucille Asher was
an intended third-party beneficiary of the Agreement”
and that “JEA seems to equate itself to Lucille Asher
as an intended third-party beneficiary of the
Agreement.” Reply 2 at 4.
then re-alleges his arguments regarding lack of
subject-matter jurisdiction and procedural unconscionability
before asserting that “Murphree had neither actual nor
implied authority to bind Lucille Asher to an agreement
regarding medical decisions or where Lucille Asher would
reside.” Reply 2 at 9. He notes that the Guardianship
Order says that W. Asher, not Murphree CPAs, has
“‘final and ultimate authority to make all
medical decisions . . . including, but not limited to, making
decisions regarding where [L. Asher] should
reside.'” Reply 2 at 9 (quoting Guardianship Order
at 4). Zangara then re-alleges his substantive
unconscionability arguments. See Reply 2 at 10-11.
Zangara concludes that the Court should grant the
Defendant's Motion. See Reply 2 at 12.
Court held a hearing on March 29, 2016. See Draft
Transcript of Motion Proceeding (taken March 29,
2016)(“Tr.”). Erwin Associates began by
announcing that the state district court had stayed the state
proceeding, and that Erwin Associates was no longer asking
the Court to stay the state proceedings. See Tr. at
5:21-25 (Hernandez). Erwin Associates then argued that it
could enforce the Arbitration Agreement, asserting that the
Arbitration Agreement binds the signers'
“administrators” and “assigns, ” and
that Erwin Associates is an administrator and an assign of
Albuquerque Care. Tr. at 8:7-18 (Hernandez).
procedural unconscionability, Erwin Associates argued that
unconscionability is an affirmative defense, and that Zangara
had not met his burden to establish such a defense.
See Tr. at 15:2-6 (Hernandez). Turning to
substantive unconscionability, Erwin Associates argued that
“the Tenth Circuit addressed an arbitration agreement
and exclusions regarding guardianship, collection, and
eviction claims and specifically stated that under the FAA,
you cannot treat arbitration agreements as inferior to
litigation.” Tr. at 15:23-16:3 (Hernandez).
began his argument. See Tr. at 16:19 (Wood). He
requested that, “if the Court is . . . not inclined to
decide the issue of the motion to compel arbitration as a
matter of unconscionability, specifically as it pertains to
procedural unconscionability, we'd request an evidentiary
hearing on that matter initially.” Tr. at 16:22-17:2
(Wood). The Court then asked if a New Mexico case existed in
which a court found procedural unconscionability, but not
substantive unconscionability. See Tr. at 20:8-13
(Court). Zangara responded that he had not seen such a case.
See Tr. at 20:14 (Wood). Zangara added, however,
that the cases “do establish that you can have both or
one. It doesn't require both. And then the case law is
clear on that because it's been decided as a matter of
substantive unconscionability on [more than] one
occasion.” Tr. at 21:16-19 (Wood). Zangara added that
“the FAA has explicitly allowed state law to govern the
matter of whether or not a contract was formed under the
equitable principle of unconscionability . . . so New Mexico
case law on matters of unconscionability is the controlling
law on this issue.” Tr. at 25:2-11 (Wood).
continued that the Arbitration Agreement
is signed by the conservator who as an initial matter really
doesn't even have the authority to bind Lucille Asher to
decisions regarding where she lives . . . but when we get to
the procedural unconscionability issue, I think it's
significant that William Asher was known to exist . . . [and]
was given two exhibits to sign . . . but was never given the
Tr. at 33:8-34:1 (Wood).
Associates responded to some of Zangara's arguments.
Regarding the request for an evidentiary hearing, Zangara
contended that the “defendant is in control of the
evidence that would be relevant here . . . . I don't see
why we need an evidentiary hearing for defense counsel to get
evidence from his own client with respect to any procedural
unconscionability.” Tr. at 41:13-24 (Hernandez). Erwin
Associates also expressly stated that it withdraws its
request for this Court to stay the state court proceedings.
See Tr. at 47:22-23 (Hernandez).
Court concluded the hearing by saying “the
substantive/procedural unconscionability, my initial reaction
is those are not going to prevent a granting of the
Plaintiff's motion.” Tr. at 51:3-5 (Court). The
Court added: “I also think that I have jurisdiction, at
least over the limited case that I have.” Tr. at 51:5-7
(Court). The Court also noted: “I guess the thing
I'm most concerned about is the fact that the agreement
is with Albuquerque [Care] and the party that's . . .
trying to enforce this arbitration agreement is not a
signatory to that agreement.” Tr. at 51:11-15 (Court).
REGARDING DIVERSITY JURISDICTION AND ARBITRATION
jurisdiction under 28 U.S.C. § 1332(a)(1) requires: (i)
complete diversity among the parties; and (ii) that
‘the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interest and costs.'”
Thompson v. Intel Corp., No. CIV 12-0620, 2012 WL
3860748, at *12 (D.N.M. Aug. 27, 2012)(Browning, J.)(citing
28 U.S.C. § 1332(a)). As the Court has previously
explained, “[t]he Supreme Court of the United States
has described this statutory diversity requirement as
‘complete diversity, ' and it is present only when
no party on one side of a dispute shares citizenship with any
party on the other side of a dispute.” McEntire v.
Kmart Corp., No. CIV 09-0567, 2010 WL 553443, at *3
(D.N.M. Feb. 9, 2010) (Browning, J.)(citing Strawbridge
v. Curtiss, 7 U.S. (3 Cranch) 267, 267-68 (1806),
overruled in part by Louisville & Nashville R.R. Co.
v. Mottley, 211 U.S. 149 (1908); McPhail v. Deere
& Co., 529 F.3d 947, 951 (10th Cir. 2008)). The
amount-in-controversy requirement is an “estimate of
the amount that will be put at issue in the course of the
litigation.” Valdez v. Metro. Prop. & Cas. Ins.
Co., No. CIV 11-0507, 2012 WL 1132374, at *15 (D.N.M.
March 19, 2012)(Browning, J.)(citing McPhail v. Deere
& Co., 529 F.3d at 956). See De La Rosa v.
Reliable, Inc., 113 F.Supp.3d 1135, 1150 (D.N.M.
2015)(Browning, J.); Ullman v. Safeway Ins. Co., 995
F.Supp.2d 1196, 1213-14 (D.N.M. 2013)(Browning, J.). The
Court will discuss the two requirements in turn.
Diversity of Citizenship.
diversity jurisdiction purposes, a person's domicile
determines citizenship. See Crowley v. Glaze, 710
F.2d 676, 678 (10th Cir. 1983). “A person's
domicile is defined as the place in which the party has a
residence in fact and an intent to remain indefinitely, as of
the time of the filing of the lawsuit.” McEntire v.
Kmart Corp., 2010 WL 553443, at *3 (citing Crowley
v. Glaze, 710 F.2d at 678). See Freeport-McMoRan,
Inc. v. KN Energy, Inc., 498 U.S. 426, 428
(1991)(“We have consistently held that if jurisdiction
exists at the time an action is commenced, such jurisdiction
may not be divested by subsequent events.”). If neither
a person's residence nor the location where the person
has an intent to remain can be established, the person's
domicile is that of his or her parents at the time of the
person's birth. See Gates v. Comm'r of Internal
Revenue, 199 F.2d 291, 294 (10th Cir. 1952)(“[T]he
law assigns to every child at its birth a domicile of origin.
The domicile of origin which the law attributes to an
individual is the domicile of his parents. It continues until
another domicile is lawfully acquired.”). Additionally,
“while residence and citizenship are not the same, a
person's place of residence is prima facie evidence of
his or her citizenship.” McEntire v. Kmart
Corp., 2010 WL 553443, at *3 (citing State Farm Mut.
Auto. Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th Cir.
1994)). A corporation, on the other hand, is “deemed to
be a citizen of any State by which it has been incorporated
and of the State where it has its principal place of
business.” Gadlin v. Sybron Int'l Corp.,
222 F.3d 797, 799 (10th Cir. 2000)(quoting 28 U.S.C. §
1332(c)(1)). See De La Rosa v. Reliable, Inc., 113
F.Supp.3d at 1151; Ullman v. Safeway Ins. Co., 995
F.Supp.2d at 1214.
Amount in Controversy.
statutory amount-in-controversy requirement, which presently
stands at $75, 000.00, must be satisfied as between a single
plaintiff and a single defendant for a federal district court
to have original jurisdiction over the dispute; “a
plaintiff cannot aggregate independent claims against
multiple defendants to satisfy the amount-in-controversy
requirement, ” nor can multiple plaintiffs aggregate
their claims against a single defendant to exceed the
threshold. Martinez v. Martinez, No. CIV 09-0281,
2010 WL 1608884, at *18 (D.N.M. March 30, 2010)(Browning,
J.). If multiple defendants are jointly liable, or jointly
and severally liable, on some of the claims, however, the
amounts of those claims may be aggregated to satisfy the
amount-in-controversy requirement as to all defendants
jointly liable for the claims. See Alberty v. W. Sur.
Co., 249 F.2d 537, 538 (10th Cir. 1957); Martinez v.
Martinez, 2010 WL 1608884, at *18. Similarly, multiple
plaintiffs may aggregate the amounts of their claims against
a single defendant if the claims are not “separate and
distinct.” Martin v. Franklin Capital Corp.,
251 F.3d 1284, 1292 (10th Cir. 2001)(Seymour, C.J.),
abrogated on other grounds by Dart Cherokee Basin
Operating Co. v. Owens, 135 S.Ct. 547, 554 (2014).
Multiple claims by the same plaintiff against the same
defendant may be aggregated, even if the claims are entirely
unrelated. See 14AA Charles A. Wright, Arthur R.
Miller, Edward H. Cooper, Vikram D. Amar, Richard D. Freer,
Helen Hershkoff, Joan E. Steinman, & Catherine T. Struve,
Federal Practice and Procedure, Jurisdiction §
3704, at 566-95 (4th ed. 2011). While the rules on
aggregation sound complicated, they are not in practice: if a
single plaintiff -- regardless whether he or she is the only
plaintiff who will share in the recovery -- can recover over
$75, 000.00 from a single defendant -- regardless whether the
defendant has jointly liable co-defendants -- then the court
has original jurisdiction over the dispute between that
plaintiff and that defendant. The court can then exercise
supplemental jurisdiction over other claims and parties that
“form part of the same case or controversy under
Article III, ” 28 U.S.C. § 1367(a), meaning that
they “derive from a common nucleus or operative fact,
” United Mine Workers of Am. v. Gibbs, 383
U.S. 715, 725 (1966).
of the amount-in-controversy requirement must be established
by a preponderance of the evidence. See McPhail v. Deere
& Co., 529 F.3d at 953. In the context of
establishing an amount-in-controversy, the defendant seeking
removal could appear to be bound by the plaintiff's
chosen amount of damages in the complaint, which would seem
to allow a plaintiff to avoid federal jurisdiction
“merely by declining to allege the jurisdictional
amount [in controversy].” McPhail v. Deere &
Co., 529 F.3d at 955. The United States Court of Appeals
for the Tenth Circuit's decision in McPhail v. Deere
& Co. has foreclosed such an option from a plaintiff
who wishes to remain in state court. McPhail v. Deere
& Co. holds that a defendant's burden in
establishing jurisdictional facts is met if the defendant
proves “jurisdictional facts that make it possible that
$75, 000 is in play.” 529 F.3d at 955.
Supreme Court recently clarified that a defendant seeking
removal to federal court need only include in the notice of
removal a plausible allegation that the amount in controversy
exceeds the jurisdictional threshold. See Dart Cherokee
Basin Operating Co. v. Owen, 135 S.Ct. at 554. The
district court should consider outside evidence, and find by
a preponderance of the evidence whether the amount in
controversy is satisfied “only when the plaintiff
contests, or the court questions, the defendant's
allegation.” Dart Cherokee Basin Operating Co. v.
Owen, 135 S.Ct. at 554. See De La Rosa v. Reliable,
Inc., 113 F.Supp.3d at 1152.
Diversity of Citizenship in Motions to Compel
context of FAA motions to compel arbitration, parties often
invoke a federal court's diversity jurisdiction, because
the FAA does not by itself create federal question
jurisdiction. “[T]he Act does nothing, being
‘something of an anomaly in the field of federal-court
jurisdiction' in bestowing no federal jurisdiction but
rather requiring an independent jurisdictional basis.”
Hall Street Associates, L.L.C. v. Mattel, Inc., 552
U.S. 576, 581-82 (2008)(quoting Moses H. Cone Memorial
Hospital v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32
common issue in the arbitration context is the situation in
which not all of the parties to a state court action are
present in a federal court action to compel arbitration of
the state lawsuit. Such a situation implicates the
Court's diversity jurisdiction. Although the Supreme
Court and the Tenth Circuit have not ruled on whether a
federal court should “look through” to the state
court complaint to determine diversity jurisdiction in an FAA
motion to compel arbitration, the Court concludes that that
it should not “look through” to the state court
complaint, but rather, should look only at the diversity of
the parties before the federal court.
Supreme Court has held that “a federal court may
‘look through' an [FAA motion to compel
arbitration] to determine whether it is predicated on an
action that ‘arises under' federal law.”
Vaden v. Discover Bank, 556 U.S. 49, 62
(2009)(“Vaden”). Importantly, this
ruling applies only to federal question jurisdiction, and not
diversity. See Vaden, 556 U.S. at 62. Although the
Tenth Circuit has not ruled on this issue, the United States
Court of Appeals for the Eighth Circuit has held that
“diversity of citizenship is determined in these cases
by the citizenship of the parties named in the proceedings
before the district court, plus any indispensable parties who
must be joined pursuant to Rule 19.” Northport
Health Serv's ofArkansas LLC v.
Rutherford, 605 F.3d 483, 491 (8th Cir.
Rutherford, the Eighth Circuit noted that “the
pre-Vaden circuit decisions were unanimous in