Tompkins v. Stifel

• Court: District Court, District of Columbia
• Decided: February 14, 2019
• Docket: Civil Action No. 2018-1212
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

CHARLES H. TOMPKINS III,

Plaintiff,

v. Case No. 18-cv-1212 (CRC)

LIDA STIFEL,

Defendant.

MEMORANDUM OPINION AND ORDER

Plaintiff Charles Tompkins paid a law firm to represent him and nine of his cousins,

including defendant Lida Stifel, in protracted and ultimately unsuccessful litigation over a

contested family trust. But court orders don’t end all family disputes. After the trust case was

dismissed in February 2018, Tompkins filed this one, accusing Stifel of reneging on her share of

the litigation expenses and demanding contribution for the unpaid amounts. Stifel now moves to

dismiss Tompkins’s complaint on the ground that the amount in controversy in the case falls

below the $75,000 threshold for federal diversity jurisdiction. For the reasons explained below,

the Court will deny the motion.

I. Background

As required on a motion to dismiss, the Court draws this factual background from the

complaint, “assum[ing] the truth of all well-pleaded factual allegations.” Sissel v. U.S. Dep’t of

Health & Human Servs., 760 F.3d 1, 4 (D.C. Cir. 2014).

Tompkins and Stifel, along with eight of their cousins, were co-plaintiffs in a lengthy

legal battle against a family trust in the District of Columbia Superior Court. Compl. ¶¶ 5, 9, 21.

The cousins retained the law firm Katten Munchin Rosenmann LLP (“Katten”) at the start of the litigation in 2011. Id. ¶¶ 4–5. They agreed to be jointly and severally liable for the firm’s fees

and to timely pay all bills, which were typically delivered every month. Id. ¶¶ 13–14; see also

Compl., Ex 1. at 2 (Katten representation agreement). As an accommodation to the law firm, the

cousins agreed that Tompkins would pay Katten’s bills directly and that they would reimburse

him proportionately at a later, unspecified time. Compl. ¶ 15. Separately, Tompkins and Stifel

at some point discussed his paying her share of the trust-litigation expenses. Compl., Ex. 3 at

35–36 (demand letter). Tompkins claims that this side agreement, which is alluded to in an

attachment to the complaint but not in the complaint itself, was expressly conditioned on Stifel

not disclosing it to the other cousins. Id. But Stifel did reveal the private arrangement,

Tompkins alleges, hindering his efforts to collect from the others. Id.

As the trust litigation was winding down, Tompkins began the process of settling up with

his cousins. Id. As part of that process, in December 2017, Tompkins’s counsel sent a demand

letter notifying Stifel that “the time has come to pay your share of the outstanding legal fees

[Tompkins] has advanced on your behalf.” Id. at 35; Compl. ¶¶ 18–19. She refused. Compl.

¶ 20; Compl., Ex. 4 at 37 (Stifel e-mail response). A few months later in February 2018, the

Superior Court dismissed the cousins’ claims against the trust. Compl. ¶ 21. Tompkins then

brought this diversity action against Stifel. He asserts a single count of contribution and requests

that Stifel be ordered to pay her share of Katten’s legal bills. Altogether, Tompkins seeks

$294,996 in litigation expenses and around $55,000 in interest. Id. at 6.

Stifel has moved to dismiss Tompkins’s contribution claim for lack of subject matter

jurisdiction under Federal Rule of Civil Procedure 12(b)(1). She argues that Katten’s billing

records (which she attaches to her motion) show that the majority of Tompkins’s payments to the

firm fall outside the three-year District of Columbia statute of limitations for contribution

2 actions. With these fees being unrecoverable, Stifel argues, the Court must dismiss the

complaint because the remaining amount in controversy is less than the $75,000 jurisdictional

threshold under 28 U.S.C. § 1332.

II. Standard of Review

A defendant may move to dismiss a complaint for lack of subject matter jurisdiction

under Federal Rule of Civil Procedure 12(b)(1). When analyzing a motion to dismiss under that

rule, the Court “assume[s] the truth of all material factual allegations in the complaint, and

‘construe[s] the complaint liberally, granting plaintiff the benefit of all inferences that can be

derived from the facts alleged.’” Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir.

2011) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)). The Court may

consider materials outside the pleadings to assure itself of jurisdiction. Jerome Stevens Pharm.,

Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).

Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a

preponderance of the evidence. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992);

Shekoyan v. Sibley Int’l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). The Court has diversity

jurisdiction over disputes between citizens of different states where the amount in controversy

exceeds $75,000. 28 U.S.C. § 1332. The Court determines whether a complaint states a

sufficient amount in controversy at the time it is filed; subsequent events typically do not deprive

the Court of jurisdiction. Cuneo Law Grp., P.C. v. Joseph, 920 F. Supp. 2d 145, 150 (D.D.C.

2013) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289–90 (1938)). In

addition, the Court may dismiss a case for lack of jurisdiction based on an insufficient amount in

controversy only if it “appear[s] to a legal certainty that the claim is really for less than the

jurisdictional amount.” Bronner v. Duggan, 249 F. Supp. 3d 27, 37 (D.D.C. 2017) (quoting St.

3 Paul Mercury Indem. Co., 303 U.S. at 289). In short, “the Supreme Court’s yardstick demands

that courts be very confident that a party cannot recover the jurisdictional amount before

dismissing the case for want of jurisdiction.” Rosenboro v. Kim, 994 F.2d 13, 17 (D.C. Cir.

1993).

III. Analysis

Ms. Stifel’s motion presents one pure question of law and one disputed question of fact.

The legal question is whether a court may consider an affirmative defense—here, the running of

a statute of limitations—in assessing whether a plaintiff has satisfied the amount in controversy

threshold for diversity jurisdiction at the outset of a case. Although neither party mentions it, the

Circuits are divided on this question. Most have answered in the negative, reasoning that

affirmative defenses should be ignored because they can be waived. See, e.g., Perez v. Alta-

Dena Certified Dairy, LLC, 647 F. App’x 682, 684 (9th Cir. 2016) (“[E]ven if the applicable

statute of limitations ultimately precludes recovery for violations before May 2009 . . . that

potential defense does not reduce the amount in controversy for purposes of establishing federal

jurisdiction.”); McGee v. Sentinel Offender Servs., LLC, 719 F.3d 1236, 1241 (11th Cir. 2013)

(“When determining the amount in controversy, we do not consider whether some damages

claimed by the plaintiff might be precluded by a statute of limitations.”); see also Scherer v.

Equitable Life Assurance Soc’y of U.S., 347 F.3d 394, 397–98 (2d Cir. 2003); Kovacs v.

Chesley, 406 F.3d 393, 396 (6th Cir. 2005); Johns–Manville Sales Corp. v. Mitchell Enters.,

Inc., 417 F.2d 129, 131 (5th Cir. 1969).

At least one Court of Appeals and a handful of district courts have concluded otherwise.

See Lamb v. Amalgamated Labor Life Ins. Co., 602 F.2d 155, 159 (8th Cir. 1979) (dismissing

case for lack of diversity jurisdiction because tort claims were barred by the statute of

4 limitations); Richardson v. Servicemaster Glob. Holdings Inc., No. C 09-4044 SI, 2009 WL

4981149, at *2 (N.D. Cal. Dec. 15, 2009) (dismissing wage and hour case because only 3.5

months of plaintiff’s employment fell within statute of limitations and thus amount in

controversy fell below the jurisdictional requirement); Johnson v. Beneficial Loan Soc., 34 F.

Supp. 392, 395 (D. Del. 1940) (finding that plaintiffs’ complaint did not meet the jurisdictional

amount because unpaid profits claims were outside the statute of limitations). A fellow court in

this district has, in dicta, endorsed the minority view. See Gharib v. Wolf, 518 F. Supp. 2d 50,

55 nn.2–3 (D.D.C. 2007). But the D.C. Circuit has not spoken, so there is no controlling

authority for this Court to follow.

The contested factual question raised by Stifel’s motion is when did her alleged

contribution obligations arise. She contends they arose each time Tompkins paid Katten’s

monthly bills. MTD at 3–4. And because he made most of those payments more than three

years before he filed this suit, only $1,519.95 of her allegedly unpaid fees fall within the statute

of limitations. Id. at 4. Therefore, she argues, the complaint does not meet the $75,000 diversity

threshold. Id.

But Tompkins tells a different story. He claims he advanced the payment of Katten’s

monthly fees throughout the trust litigation on the promise that his cousins would pay him back

in the end. Opp’n at 5–10; Compl., Ex. 3 at 35. Additionally, his demand letter to Stifel

suggests that they agreed he would pay Stifel’s share of the legal bills so long as she did not

disclose the arrangement to their other cousins. Compl., Ex. 3 at 35–36. But disclose she did,

Tompkins says. Id. In his view, then, his contribution claim did not accrue until the trust

litigation concluded, or until Stifel broke her end of their side agreement, both of which

happened within three years of this suit. Who is correct cannot be determined based on the

5 present record, which consists of the complaint, its attachments, and—if the Court were to

consider them as Stifel asks, see MTD at 3—the Katten billing records. The complaint materials

are consistent with Tompkins’s account. And the billing records do not move the needle because

while they confirm the amounts the firm billed and the cousins were obligated to pay, they say

nothing about whatever understanding Tompkins and his cousins had regarding the timing of

their reimbursements. They are equally irrelevant to Tompkins and Stifel’s separate

arrangement. These understandings can only be divined through discovery. 1

The foregoing factual dispute over when Tompkins’s contribution claim accrued would

persist no matter how the Court might resolve the open legal question of whether affirmative

defenses can be considered in assessing diversity jurisdiction. In other words, even if the Court

were to adopt the minority view and consider Stifel’s statute of limitations defense, she would

still have to establish the defense before the Court could dismiss the case for lack of diversity

jurisdiction. And the outstanding factual dispute prevents her from doing so at this stage of the

case. The Court therefore sees no reason to decide the legal question, especially in the absence

of controlling authority, before it becomes necessary to do so.

Accordingly, the Court cannot find on the present record that the amount in controversy

is, to a legal certainty, less than $75,000. It must therefore deny Stifel’s motion to dismiss.

1 Sometimes a court will order limited jurisdictional discovery before ruling on a motion to dismiss under Rule 12(b)(1). See Williams v. Romarm, SA, 756 F.3d 777, 786 (D.C. Cir. 2014) (explaining that court may order jurisdictional discovery where plaintiff has “good faith belief that such discovery” will develop facts to support jurisdiction). The Court declines to do so here for two reasons. First, the parties have not asked for it. And second, the discovery needed to resolve Stifel’s 12(b)(1) motion goes to the nature of the agreements between Tompkins and his cousins, and Tompkins and Stifel—the very heart of Tompkins’ contribution claim.

6 Stifel is free, of course, to pursue the merits of her statute of limitations defense, an issue on

which the Court takes no position. 2

IV. Conclusion

For the foregoing reasons, it is hereby

ORDERED that [4] Defendant’s Motion to dismiss is DENIED.

SO ORDERED.

CHRISTOPHER R. COOPER United States District Judge

Date: February 14, 2019

2 The Court notes, however, that when a statute of limitation accrues for a contribution claim based upon a series of payments is not a settled question. Under D.C. law, a claim for contribution based upon a single payment, such as a tort judgment, accrues when the payment is made. Bair v. Bryant, 96 A.2d 508, 510 (D.C. 1953). But the parties have not provided on-point case law regarding when a claim for contribution based upon multiple payments made over a period of time would accrue. One parallel could be contribution claims for a series of loan payments, but courts appear divided on when such a claim accrues. Compare, e.g., Willis v. Willis, 1980 U.S. Dist. LEXIS 12487, at *51–53 (D.D.C. Jul. 23, 1980), aff’d on other grounds by 655 F.2d 1333 (D.C. Cir. 1981) (concluding that party “first possessed a claim for contribution with respect to obligations incurred on [loan] note” when “the note had been honored in full”), with, e.g., Carter v. Lechty, 72 F.2d 320, 322 (8th Cir. 1934) (reasoning that the right of contribution is based on an implied agreement between parties to pay their shares of all obligations as they come due). Moreover, there may be meaningful differences between a typical loan and the fee obligations at issue here, which did not have a fixed end date or amount due.