Removal: Amount in Controversy in Declaratory Judgment Actions

5.21.10    By admin    Tags ,

A defendant seeking removal on the basis of diversity jurisdiction has the burden of proving that the amount in controversy exceeds the $75,000 jurisdictional threshold. So, what does a defendant do when the sole claim is one for a declaratory judgment, and the complaint alleges no dollar amount in controversy? The defendants in a recent case from the Eastern District of Tennessee, Burkhart v. Starr Crest Owners Association, Inc., 2010 WL 1687078 (E.D. Tenn. Apr. 26, 2010), probably asked themselves the same question.

The plaintiffs in Burkhart sought a declaratory judgment on the interpretation of a subdivision’s covenants and restrictions. The Court explained that, where a party seeks a declaratory judgment, the amount in controversy is not necessarily the money judgment sought or recovered, but rather the value of the consequences which may result from the litigation. In this context, the Court held, defendants have the burden of establishing that a “substantial likelihood” or “reasonable probability” exists that the true amount in controversy, i.e., the “object of the litigation,” exceeds the $75,000 jurisdictional threshold.

In Burkhart, the defendants did not meet that burden. When they filed their notice of removal, they “place[d] the value of the controversy in excess of $75,000,” but “did not provide . . . any facts to substantiate [that] value.” Further, the defendants failed to respond to the plaintiffs’ motion to remand, which disputed that the amount in controversy exceeded $75,000. Finding no support for the defendants’ statement of the amount in controversy, the Court found that the dollar value of the complaint, if any, was completely unknown and could not be assigned a monetary value. Consequently, the Court held that the amount in controversy was too speculative and immeasurable to satisfy the jurisdictional amount.


Related content

  1. Removal: Ascertaining the Amount in Controversy
  2. Diversity Jurisdiction and Fraudulent Joinder
  3. Removal in the Sixth Circuit: Ask Questions Now, Remove Later

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