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Rogers Electric Service Corp. v. CVS Pharmacy, Inc.

United States District Court, N.D. Georgia, Atlanta Division

September 19, 2017

ROGERS ELECTRIC SERVICE CORPORATION, d/b/a Rogers Electric, Plaintiff,
v.
CVS PHARMACY, INC., Defendant.

          OPINION AND ORDER

          WILLIAM S. DUFFEY, JR., UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Rogers Electric Service Corporation's (“Plaintiff”) Motion for Leave to File Motion to Remand [12] and Motion to Stay Discovery and All Deadlines Pending Ruling on Remand [13] (“Motion to Stay”).

         I. BACKGROUND

         Plaintiff alleges that, since August 1, 2006, it has provided “electrical and lighting maintenance and repair services” to “literally hundreds” of Defendant CVS Pharmacy, Inc.'s (“Defendant”) retail locations throughout the United States. (Compl. ¶ 6). In 2014, the parties entered into their Master Service Agreement (“2014 Agreement”), effective April 1, 2014, through March 31, 2017. (Compl. ¶ 7). The 2014 Agreement authorized Defendant “to audit any and all business and operations practices and procedures of [Plaintiff] as they pertain to this Agreement, including, but not limited to, billing practices and procedures.” (Compl. ¶ 8). The 2014 Agreement also granted Defendant “the right to verify/audit that all service levels agreed to in this Agreement are being met via use of an outside audit company.” (Compl. ¶ 8).

         In 2015, the parties entered into their Purchase and Service Agreement (“2015 Agreement”), effective March 1, 2015, through December 31, 2017. (Compl. ¶ 9). The 2015 Agreement included the same auditing provisions as the 2014 Agreement, and “supersede[d]” the 2014 Agreement “in its entirety.” (Compl. ¶¶ 9-10).

         On February 6, 2016, Defendant notified Plaintiff that, under the 2015 Agreement, it intended to audit Plaintiff within the next 90 business days. ([1.1] at 42). Defendant stated that Connolly LLC, an outside auditing firm, would conduct the audit. ([1.1] at 42). Plaintiff “sought assurances from [Defendant] that the audit would be restricted to the time period covered by the 2015 [Agreement] and that Connolly would not be permitted to audit [Plaintiff's] billing practices and procedures as only [Defendant] is permitted to do so under the 2015 [Agreement].” (Compl. ¶ 13). Defendant declined to provide these assurances, “ceased providing any new work to [Plaintiff], ” and constructively terminated its relationship with Plaintiff. (Compl. ¶¶ 14-15).

         On March 29, 2017, Plaintiff filed its Complaint ([1.1] at 4-11) in the Superior Court of Gwinnett County, Georgia. Count 1 asserts a breach of contract claim, for which Plaintiff seeks $22, 892.61 in damages, on the grounds that Defendant failed to pay Plaintiff “for work performed and materials supplied.” (Compl. ¶ 27). Count 2 seeks a declaratory judgment that Defendant is not entitled to audit Plaintiff under the 2014 and 2015 Agreements or, alternatively, that “any audit conducted pursuant to the 2015 [Agreement] may only include services and billings from March 31, 2015 through the present and that any audit relating to billing practices and procedures may only be conducted by [Defendant] and not any outside third-party audit company.” (Compl. at 8).

         On May 1, 2017, Defendant filed its Notice of Removal [1] (the “Notice”) to this Court on the basis of diversity jurisdiction. The Notice alleges that the parties are citizens of different states and that the combined value of Plaintiff's requests for damages and declaratory relief exceeds $75, 000. On May 23, 2017, Defendant filed its Answer and Counterclaim [3], asserting counterclaims for breach of contract and specific performance on the grounds that Plaintiff failed to submit to an audit required under the 2014 and 2015 Agreements. On June 13, 2017, Plaintiff filed its Answer [4], asserting that the Court lacks subject matter jurisdiction because the amount in controversy does not exceed $75, 000. On June 22, 2017, Plaintiff again asserted, in the parties' Joint Preliminary Report and Discovery Plan [6], that the Court lacks subject matter jurisdiction over this action. On June 27, 2017, the Court approved the parties' Joint Preliminary Report and Discovery Plan, and ordered Plaintiff to file, on or before July 14, 2017, its motion to remand this action to state court. ([8]). On August 9, 2017, Plaintiff filed its Motion for Leave to File Motion to Remand, attaching its proposed motion to remand and supporting memorandum of law.[1] On August 14, 2017, Plaintiff filed its Motion to Stay, seeking to stay this action “pending the Court's determination whether this case must be remanded to the Superior Court of Gwinnett County, Georgia whether pursuant to Plaintiff's prior motions or sua sponte.” ([13] at 1). Defendant opposes Plaintiff's motions, arguing that “[t]he basis for the Court's diversity jurisdiction in this matter is set forth in detail in Defendant's Notice of Removal.” ([14] at 5).

         II. DISCUSSION

         A. Legal Standard

         Federal courts “have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 501 (2006). The Eleventh Circuit consistently has held that “a court should inquire into whether it has subject matter jurisdiction at the earliest possible stage in the proceedings. Indeed, it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999). “In light of the federalism and separation of powers concerns implicated by diversity jurisdiction, federal courts are obligated to strictly construe the statutory grant of diversity jurisdiction [and] to scrupulously confine their own jurisdiction to the precise limits which the statute has defined.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1268 (11th Cir. 2000). “[T]here is a presumption against the exercise of federal jurisdiction, such that all uncertainties as to removal jurisdiction are to be resolved in favor of remand.” Russell Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1050 (11th Cir. 2001); see City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012) “[A]ll doubts about jurisdiction should be resolved in favor of remand to state court.”); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994) (“[U]ncertainties are resolved in favor of remand.”). “An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” 28 U.S.C. § 1447(d).

         Defendant asserts that the Court has diversity jurisdiction under 28 U.S.C. § 1332. Diversity jurisdiction exists where the amount in controversy exceeds $75, 000 and the suit is between citizens of different states. 28 U.S.C § 1332(a). “The existence of federal jurisdiction is tested at the time of removal, ” Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290, 1294-95 (11th Cir. 2008), and the burden of establishing diversity jurisdiction “rests with the defendant seeking removal, ” Scimone v. Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013); City of Vestavia Hills v. Gen. Fidelity Ins. Co., 676 F.3d 1310, 1313 n.1 (11th Cir. 2012) (“The removing party bears the burden of proof regarding the existence of federal subject matter jurisdiction.”).

         B. Analysis

         Where, as here, “jurisdiction is premised on the diversity of the parties, the court is obligated to assure itself that the case involves the requisite amount in controversy.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1261 (11th Cir. 2000). Plaintiff's Complaint includes a breach of contract claim, for which Plaintiff seeks $22, 892.61 in damages, and a request for declaratory judgment that Defendant is not entitled to audit Plaintiff under the 2014 and 2015 Agreements. “[T]he value of the damages claim[] must be aggregated with that of the declaratory judgment claim to determine the total amount in controversy for § 1332 purposes.” Hardy v. Jim Walter Homes, Inc., No. 06-CV-0687, 2007 WL 1889896, at *4 (S.D. Ala. June 28, 2007). “[T]he value of the requested [declaratory] relief is the monetary value of the benefit that would flow to the plaintiff if the [declaration] were granted.” Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1268 (11th Cir. 2000). Defendant is required to prove, by a preponderance of the evidence, that the combined value of Plaintiff's requests for damages and declaratory relief exceed $75, 000. See Hardy, Inc., 2007 WL ...


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