Removal: Ascertaining the Amount in Controversy

5.19.10    By admin    Tags

Normally, a defendant seeking to remove a case to federal court must file a notice of removal within 30 days of service of the complaint. However, if the case stated by the complaint is not removable, the period for removal becomes 30 days from the time the defendant receives an amended pleading, motion, order or other paper indicating that the case is removable. The recent case of Franklin American Mortgage Co. v. Eagle National Bank, 2010 WL 1628998 (M.D. Tenn. Apr. 21, 2010), clarifies what it means for a defendant to ascertain the removability of a case.

In that case, the amount in controversy was not stated anywhere in the complaint. After the defendant received a discovery response indicating that the amount in controversy exceeded the jurisdictional limit of $75,000, the defendant filed a notice of removal. The plaintiff moved to remand to state court, arguing that the defendant was “well aware” of the amount in controversy when the complaint was filed. As support for this argument, the plaintiff alleged that, six months before filing suit, it sent the defendant a demand letter reflecting the amount in controversy. Therefore, the plaintiff argued, the defendant knew the case was removable when it received the complaint and it should have filed a notice of removal within 30 days thereafter.

Judge Wiseman disagreed, holding that a defendant “has no obligation to conduct a search of what might be voluminous business records in order to verify the removability of a case.” According to the Court, the defendant was not able “to intelligently ascertain” that removal was appropriate until receiving the plaintiff’s discovery responses. Therefore, the notice of removal, which was filed within 30 days from receipt of those responses, was timely filed. As a practical matter, this case serves as a reminder to all who draft complaints to be sure to allege the amount in controversy-as failure to do so can inadvertently extend the defendant’s period for removal.



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  2. Rules of Service Important in Removal Actions
  3. Removal in the Sixth Circuit: Ask Questions Now, Remove Later

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