The R.J. Armstrong Living Trust v. Holmes

• Court: District Court, D. Nevada
• Decided: March 11, 2025
• Docket: 3:22-cv-00375
• Status: Unknown

Opinion

2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 THE R.J. ARMSTRONG LIVING TRUST Case No. 3:22-cv-00375-ART-CSD 5 and DAVID C. ARMSTRONG, ORDER RE: BRIEFING SUBJECT- 6 Plaintiffs, MATTER JURISDICTION v. 7 SUSAN HELEN ARMSTRONG 8 HOLMES,

9 Defendant.

10 11 The R.J. Armstrong Living Trust (“Trust”) and trustee David C. Armstrong 12 (together “Plaintiffs”) sued Defendant Susan Helen Armstrong Holmes in state 13 court for breach of the non-disparagement clause in a contract. Ms. Holmes 14 countersued for breach for not releasing money bargained for in the contract. The 15 Court orders the parties to brief the Court by March 21, 2025, on whether this 16 Court may exercise subject-matter jurisdiction to hear this case. 17 I. Background 18 In this case, the original complaint alleged only a breach of a non- 19 disparagement clause and a redundant breach of the covenant of good faith and 20 fair dealing based on the same conduct. (ECF No. 1-3.) The allegedly breached 21 provision allowed “injunctive relief and reimbursement of attorneys’ fees and 22 costs” as the sole remedy for this provision. (Id. at 21.) The latest amended 23 complaint alleges only state law claims and damages exceeding $25,000, 24 injunctive relief, compensatory damages, and general damages. (ECF No. 104.) 25 The Notice of Removal filed by Defendant stated that the amount in 26 controversy was met by the Plaintiffs’ allegation of damages exceeding $25,000 27 and the Defendant’s allegation of damages of $650,000. (ECF No. 9 at 3.) 28 // 1 II. Standard of Review 2 Federal courts “have an independent obligation to determine whether 3 subject-matter jurisdiction exists, even in the absence of a challenge from any 4 party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). “The objection that a 5 federal court lacks subject-matter jurisdiction . . . may be raised by a party, or 6 by a court on its own initiative, at any stage in the litigation.” Id. at 506. “If a 7 court lacks subject matter jurisdiction, it is obligated to dismiss the case, 8 regardless of how long the litigation has been ongoing.” Rainero v. Archon Corp., 9 844 F.3d 832, 841 (9th Cir. 2016). The “strong presumption against removal 10 jurisdiction means that . . . the court resolves all ambiguity in favor of remand to 11 state court.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) 12 (internal citation omitted). 13 III. Analysis 14 Federal courts may exercise diversity jurisdiction where “the amount in 15 controversy exceeds $75,000 exclusive of interest and costs.” Geographic 16 Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 17 2010). The amount in controversy is the “amount at stake in the underlying 18 litigation.” Gonzales v. CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 19 2016) (citing Theis Research, Inc. v. Brown & Bain, 400 F.3d 659, 662 (9th Cir. 20 2005)). 21 Courts in the Ninth Circuit have consistently held that counterclaims may 22 not be aggregated to satisfy the amount in controversy requirement. See, e.g., 23 Mesa Indus., Inc. v. Eaglebrook Prod., Inc., 980 F. Supp. 323, 325–26 (D. Ariz. 24 1997) (“The great weight of the authority . . . [holds] that the amount of a 25 counterclaim may not be considered in determining the amount in controversy.”); 26 Breckenridge Prop. Fund 2016, LLC v. Gonzalez, No. 17-CV-03915-JCS, 2017 WL 27 3381155 at *3 (N.D. Cal. Aug. 7, 2017) (“The amount in controversy is evaluated 28 only with reference to the complaint and does not take into account 1 |} counterclaims.”); Erdel v. Metalinx Material Mgmt., Inc., No. SA-CV-16:06181- 2 || BRO-SSX, 2017 WL 3049561 (C.D. Cal. Jan. 9, 2017) (“[A] counterclaim cannot 3 || form the basis for federal jurisdiction.”); Hand v. Bukstel, No. SA-CV-12:907- 4 || JVSR-NBX, 2012 WL 12965942 at *3 (C.D. Cal. July 23, 2012) (“damages sought 5 || in compulsory counterclaims cannot be aggregated with the amount sought in 6 || the plaintiffs complaint in order to satisfy the amount in controversy”); Franklin 7 || uv. Car Fin. Servs., Inc., No. 09-CV-1361-LAB-AJB, 2009 WL 3762687, at *2 (S.D. 8 || Cal. Nov. 9, 2009). 9 The one Ninth Circuit case suggesting that counterclaims may be 10 || aggregated to meet the amount in controversy, Fenton v. Freedman, was first filed 11 || in federal court and did not require applying the strict presumption against 12 || removal jurisdiction. 748 F.2d 1358 (9th Cir. 1984); see AdvanStaff, Inc. v. JC 13 || Auto Enter. Cal, LLB, No. 2:22-CV-00008-ART-DJA, 2022 WL 22825664 at *3 (D. 14 || Nev. Oct. 28, 2022). 15 Defendant’s removal appears to be based on aggregating the value of the 16 || counterclaim with that of the complaint to meet the amount in controversy. (See 17 || ECF No. 9 at 3.) Plaintiffs sought-after relief, enjoining Defendant from 18 || disparaging the Plaintiff and attorneys’ fees, does not appear to be worth more 19 || than $75,000. 20 IV. Conclusion 21 Accordingly, the Court orders the parties to address, by March 21, 2025, 22 || whether this Court may exercise subject-matter jurisdiction over this case. 23 || Parties may each file one brief, not to exceed six pages. They may not respond or 24 || reply to the other’s brief. 25 DATED THIS 11th day of March 2025. 26 en 27 4 / ANNE R. TRAUM 28 UNITED STATES DISTRICT JUDGE