UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 01-20609
RAND MINTZER,
Plaintiff - Counter Defendant - Appellee,
versus
RICHARD M LESTER, individually and doing business as Law Offices of Richard M. Lester,
Defendant - Counter Claimant - Appellant.
Appeal from the United States District Court For the Southern District of Texas (No. H-00-CV-4383)
October 10, 2002 Before WIENER, EMILIO M. GARZA and PARKER, Circuit Judges.
PER CURIAM*:
The district court entered summary judgment against
Defendant-Appellant Richard M. Lester on his claim for unpaid
referral fees. On appeal, we conclude that the district court
* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. lacked subject matter jurisdiction and are therefore constrained
to reverse and remand with instructions to dismiss.
BACKGROUND
This is an attorney’s fees dispute. Richard Lester, a
California attorney, agreed to refer his Texas motorcycle
accident cases to Rand Mintzer, who practices in Houston. The
two memorialized their agreement by letter each time Lester
referred a client. One such letter provides that they would
divide the work between themselves and that any fee recovered
“shall be divided on a quantum meruit basis.” Each letter was
the same from one to the next.
At some point Lester claimed he was due referral fees under
one or more agreements that Mintzer was refusing to pay. On
November 24, 1997, Mintzer initiated a declaratory judgment
action in the federal district court in Galveston. Thereafter,
the Unauthorized Practice of Law Committee (“UPLC”) began an
investigation of Lester. Relying on the pendancy of the UPLC
proceeding, and concluding that “the outcome of the Committee’s
investigation may render this matter moot,” a magistrate judge
“abated” the proceeding pending further order. The judge asked
that he be notified upon the completion of the UPLC’s
investigation. The UPLC completed its investigation in June
2000, exonerating Lester.
On April 20, 2000, more than two months before the UPLC’s
-2- investigation was officially terminated, Lester filed suit
against Mintzer in Dallas County state district court. The
parties proceeded with discovery in that action. On March 19,
2001, it was transferred to Harris County.
Almost two years after the instant case had been abated, and
two months after the UPLC proceeding ended, Mintzer moved for
this case to be reopened and simultaneously for summary judgment.
Several months later, on December 4, Lester responded to the
motion to reopen and additionally moved for stay, citing the
pending state-court action. The district court scheduled the
motion to reopen for a hearing, after which it sua sponte
transferred the case to the Houston Division. In so doing, the
court did not rule on any of the pending motions. Upon receipt
of the case, the transferee court in Houston set it for a
scheduling conference. In the court’s notice it advised that it
“may rule on any pending motions at the conference.”
At the March 22, 2001 hearing, the district court (1)
granted Mintzer’s motion to reopen the case; (2) granted
Mintzer’s motion for summary judgment; and (3) denied Lester’s
motion for stay. It entered final judgment the same day. On
April 4, Lester filed a motion for relief under Rules 59 and 60,
cast as a “motion for reconsideration and alteration of
judgment.” The district court subsequently denied the motion
without explanation.
Lester made a timely appeal. He argues that the district
-3- court erred in granting summary judgment solely on the basis of
Lester’s failure to file a response, and that the Court abused
its discretion in denying his motion for reconsideration. He
also now asserts that the federal district court lacks subject
matter jurisdiction.
DISCUSSION
In his reply brief, Lester for the first time argues that
the court lacks subject matter jurisdiction. Whenever it appears
that our jurisdiction is in doubt--even when the question is
raised for the first time on appeal--we must satisfy ourselves of
our authority to act before proceeding further. See 14B CHARLES
ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 3739 (3d ed. 1998).
When jurisdiction is conferred on the basis of diversity of
citizenship, the amount in controversy must exceed $75,000. See
28 U.S.C. § 1332(a). To determine whether the jurisdictional
amount is met we look first to the face of plaintiff’s complaint.
See St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253
(5th Cir. 1998). If from that the amount in controversy is
uncertain we can look to summary judgment-like evidence, but only
to the extent such evidence sheds light on the amount in
controversy at the time suit was first brought. See id. at 1253-
54; see also State Farm Mutual Auto. Ins. Co. v. Powell, 87 F.3d
93, 97 (3d Cir. 1996)(holding that discovery is admissible to
prove the amount in controversy). Dismissal for want of
-4- jurisdiction is proper only if the court determines to a “legal
certainty” that the jurisdictional amount is not met. See St.
Paul, 134 F.3d at 1253.
In his complaint, Mintzer seeks a declaration that he owes
Lester nothing arising from the referral agreements.
“Alternatively, if the Court finds that Mintzer does owe fees to
Defendant in quantum merit, Mintzer seeks a declaration that he
be permitted to offset the amounts owed to Defendant by the
amount paid to Defendant on past cases in excess of quantum
merit.” Compl. ¶ 10 (emphasis added). Nowhere in his complaint
does Mintzer suggest the precise amount that is at stake, instead
only claiming that it exceeds $75,000. Similarly, Lester’s
answer-and-counterclaim makes no reference to the amount he
claims he is due under the referral agreements, although he did
stipulate to Mintzer’s contention that the amount in controversy
exceeds the jurisdictional amount. Of course the parties cannot
stipulate to jurisdiction. Because the pleadings in this case
are not helpful, we must consider other evidence that sheds light
on the amount in controversy at the time Mintzer filed his
complaint.
An affidavit submitted by Lester’s attorney states that
Lester is due approximately $26,000. The attorney reached this
conclusion during the course of discovery. Lester’s reply brief
also claims $26,000. Mintzer, in his surreply, does not contest
-5- the veracity of this amount or otherwise suggest that Lester
amended his claim to avoid federal jurisdiction. Instead,
Mintzer argues that his setoff--the amount he allegedly overpaid
Lester--is worth $176,000, and that therefore the jurisdictional
amount is met. Importantly, Mintzer is not seeking return of the
amount exceeding the value of Lester’s work.
We are constrained to conclude that the amount in
controversy does not exceed $75,000. Though the parties both
initially argued that the value of the litigation did exceed the
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UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 01-20609
RAND MINTZER,
Plaintiff - Counter Defendant - Appellee,
versus
RICHARD M LESTER, individually and doing business as Law Offices of Richard M. Lester,
Defendant - Counter Claimant - Appellant.
Appeal from the United States District Court For the Southern District of Texas (No. H-00-CV-4383)
October 10, 2002 Before WIENER, EMILIO M. GARZA and PARKER, Circuit Judges.
PER CURIAM*:
The district court entered summary judgment against
Defendant-Appellant Richard M. Lester on his claim for unpaid
referral fees. On appeal, we conclude that the district court
* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. lacked subject matter jurisdiction and are therefore constrained
to reverse and remand with instructions to dismiss.
BACKGROUND
This is an attorney’s fees dispute. Richard Lester, a
California attorney, agreed to refer his Texas motorcycle
accident cases to Rand Mintzer, who practices in Houston. The
two memorialized their agreement by letter each time Lester
referred a client. One such letter provides that they would
divide the work between themselves and that any fee recovered
“shall be divided on a quantum meruit basis.” Each letter was
the same from one to the next.
At some point Lester claimed he was due referral fees under
one or more agreements that Mintzer was refusing to pay. On
November 24, 1997, Mintzer initiated a declaratory judgment
action in the federal district court in Galveston. Thereafter,
the Unauthorized Practice of Law Committee (“UPLC”) began an
investigation of Lester. Relying on the pendancy of the UPLC
proceeding, and concluding that “the outcome of the Committee’s
investigation may render this matter moot,” a magistrate judge
“abated” the proceeding pending further order. The judge asked
that he be notified upon the completion of the UPLC’s
investigation. The UPLC completed its investigation in June
2000, exonerating Lester.
On April 20, 2000, more than two months before the UPLC’s
-2- investigation was officially terminated, Lester filed suit
against Mintzer in Dallas County state district court. The
parties proceeded with discovery in that action. On March 19,
2001, it was transferred to Harris County.
Almost two years after the instant case had been abated, and
two months after the UPLC proceeding ended, Mintzer moved for
this case to be reopened and simultaneously for summary judgment.
Several months later, on December 4, Lester responded to the
motion to reopen and additionally moved for stay, citing the
pending state-court action. The district court scheduled the
motion to reopen for a hearing, after which it sua sponte
transferred the case to the Houston Division. In so doing, the
court did not rule on any of the pending motions. Upon receipt
of the case, the transferee court in Houston set it for a
scheduling conference. In the court’s notice it advised that it
“may rule on any pending motions at the conference.”
At the March 22, 2001 hearing, the district court (1)
granted Mintzer’s motion to reopen the case; (2) granted
Mintzer’s motion for summary judgment; and (3) denied Lester’s
motion for stay. It entered final judgment the same day. On
April 4, Lester filed a motion for relief under Rules 59 and 60,
cast as a “motion for reconsideration and alteration of
judgment.” The district court subsequently denied the motion
without explanation.
Lester made a timely appeal. He argues that the district
-3- court erred in granting summary judgment solely on the basis of
Lester’s failure to file a response, and that the Court abused
its discretion in denying his motion for reconsideration. He
also now asserts that the federal district court lacks subject
matter jurisdiction.
DISCUSSION
In his reply brief, Lester for the first time argues that
the court lacks subject matter jurisdiction. Whenever it appears
that our jurisdiction is in doubt--even when the question is
raised for the first time on appeal--we must satisfy ourselves of
our authority to act before proceeding further. See 14B CHARLES
ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 3739 (3d ed. 1998).
When jurisdiction is conferred on the basis of diversity of
citizenship, the amount in controversy must exceed $75,000. See
28 U.S.C. § 1332(a). To determine whether the jurisdictional
amount is met we look first to the face of plaintiff’s complaint.
See St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253
(5th Cir. 1998). If from that the amount in controversy is
uncertain we can look to summary judgment-like evidence, but only
to the extent such evidence sheds light on the amount in
controversy at the time suit was first brought. See id. at 1253-
54; see also State Farm Mutual Auto. Ins. Co. v. Powell, 87 F.3d
93, 97 (3d Cir. 1996)(holding that discovery is admissible to
prove the amount in controversy). Dismissal for want of
-4- jurisdiction is proper only if the court determines to a “legal
certainty” that the jurisdictional amount is not met. See St.
Paul, 134 F.3d at 1253.
In his complaint, Mintzer seeks a declaration that he owes
Lester nothing arising from the referral agreements.
“Alternatively, if the Court finds that Mintzer does owe fees to
Defendant in quantum merit, Mintzer seeks a declaration that he
be permitted to offset the amounts owed to Defendant by the
amount paid to Defendant on past cases in excess of quantum
merit.” Compl. ¶ 10 (emphasis added). Nowhere in his complaint
does Mintzer suggest the precise amount that is at stake, instead
only claiming that it exceeds $75,000. Similarly, Lester’s
answer-and-counterclaim makes no reference to the amount he
claims he is due under the referral agreements, although he did
stipulate to Mintzer’s contention that the amount in controversy
exceeds the jurisdictional amount. Of course the parties cannot
stipulate to jurisdiction. Because the pleadings in this case
are not helpful, we must consider other evidence that sheds light
on the amount in controversy at the time Mintzer filed his
complaint.
An affidavit submitted by Lester’s attorney states that
Lester is due approximately $26,000. The attorney reached this
conclusion during the course of discovery. Lester’s reply brief
also claims $26,000. Mintzer, in his surreply, does not contest
-5- the veracity of this amount or otherwise suggest that Lester
amended his claim to avoid federal jurisdiction. Instead,
Mintzer argues that his setoff--the amount he allegedly overpaid
Lester--is worth $176,000, and that therefore the jurisdictional
amount is met. Importantly, Mintzer is not seeking return of the
amount exceeding the value of Lester’s work.
We are constrained to conclude that the amount in
controversy does not exceed $75,000. Though the parties both
initially argued that the value of the litigation did exceed the
jurisdictional amount, subsequent discovery reveals that Lester
all along was claiming only about $26,000 in damages. The
purported setoff is irrelevant. It is an affirmative defense,
not a claim for relief, see Giles v. Gen. Elec. Co., 245 F.3d
474, 494 n.36 (5th Cir. 2001), being that it is entirely
contingent on Lester sustaining his claim.1 An offset cannot
therefore be included in the amount in controversy. See Wolde-
Meskel v. Vocational Instruction Proj. Cmty. Servs., Inc., 166
F.3d 59, 63 & n.6 (2d Cir. 1999); see also Rosen v. Chrysler
Corp., 205 F.3d 918, 921-22 (6th Cir. 2000)(refusing to include
defendant’s setoff in determining the amount in controversy).
Depending on the substantive law of the state, attorney’s
1 See BLACK’S LAW DICTIONARY 430 (7th ed. 1999)(defining affirmative defense as an “assertion raising new facts and arguments that, if true, will defeat the plaintiff’s or prosecution’s claim, even if all allegations in the complaint are true.”)(emphasis added).
-6- fees may also be considered part of the amount in controversy.
See 14B WRIGHT, ET AL. § 3712. Both parties have asserted a claim
for fees, but there is no evidence whatsoever of the amount they
have incurred. Nor has either side discussed the issue in their
briefs. Irrespective of whether attorney’s fees would be
permitted, we cannot simply guesstimate their amount and add them
to the other damages to arrive at the amount in controversy.
Some kind of allegation or proof of the amount of fees incurred
is needed. Cf. Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340
(10th Cir. 1998). None here has been provided.
CONCLUSION
In light of the foregoing, we REVERSE and REMAND with
instructions to dismiss.2
2 As we did at oral argument, we admonish the parties for tying up the courts with this vexatious litigation. It is a waste of our limited judicial resources and does not reflect well on either side.
-7-