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Feher v. Xto Energy, Inc.

United States District Court, S.D. Ohio, Eastern Division

July 26, 2018

BARBARA FEHER, et al., Plaintiffs,
v.
XTO ENERGY, INC., et al., Defendants.

          Vascura Magistrate Judge.

          OPINION AND ORDER

          GEORGE C. SMITH, JUDGE.

         Plaintiffs Barbara Feher and John Feher initiated this action against Defendants XTO Energy Inc. (“XTO”) and Ascent Resource - Utica, LLC (“Ascent”) on May 3, 2018, in the Belmont County Court of Common Pleas. Defendants removed the action to this Court on the basis of diversity jurisdiction. This matter is before the Court on Plaintiffs' Motion to Remand. (Doc. 4). Defendants filed a Response in Opposition (Doc. 7), and Plaintiffs filed a Reply (Doc. 9). This matter is ripe for review. For the reasons that follow, Plaintiffs' Motion to Remand is DENIED.

         I. BACKGROUND

         Plaintiffs are citizens of Ohio. Defendant XTO is a corporation that is incorporated in the state of Delaware, with its principal place of business in Fort Worth, Texas. Ascent is a corporation that is incorporated in the state of Oklahoma, with its principal place of business in Oklahoma City, Oklahoma.

         On May 3, 2018, Plaintiffs brought the instant action in the Belmont County Court of Common Pleas. In their Complaint, Plaintiffs allege breach of contract and related claims arising out of an oil and gas lease agreement executed on August 16, 2006. (Doc. 2, Compl. ¶ 4). Plaintiffs seek to recover “compensatory damages in an amount in excess of $25, 000.00, ” as well as “punitive damages in an amount in excess of $25, 000.00.” (Doc. 2, Compl. at ¶71). On June 6, 2018, Defendants removed this action on the basis of diversity jurisdiction. (Doc. 1). On June 20, 2018, Plaintiffs filed the Motion to Remand, asserting that “Federal jurisdiction is lacking because the defendants have failed to establish that the amount in controversy actually exceeds $75, 000.” (Doc. 4). Plaintiffs do not dispute that there is diversity of citizenship for the purposes of diversity jurisdiction.

         II. STANDARD OF REVIEW

         Generally, a defendant may remove a civil case brought in a state court to federal court if it could have been brought there originally. 28 U.S.C. § 1441(a); Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). A federal court has original “diversity” jurisdiction where the suit is between citizens of different states and the amount in controversy exceeds $75, 000.00, exclusive of costs and interests. 28 U.S.C. § 1332(a); Rogers, 239 F.3d at 871.

         “To remove a case from state court to federal court, a defendant must file in the federal forum a notice of removal ‘containing a short and plain statement of the grounds for removal.'” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 551 (2014) (quoting 28 U.S.C. § 1446(a)). When a plaintiff's complaint fails to contain a good-faith demand for monetary relief of a stated sum, the defendant's notice of removal may state the amount in controversy. Id. (citing 28 U.S.C. § 1446(c)(2)). The removing defendant's “short and plain” statement of the grounds for removal “need not contain evidentiary submissions.” Id.

         “The burden of persuasion for establishing diversity jurisdiction . . . remains on the party asserting it.” Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010) (citations omitted). When allegations of jurisdictional facts are challenged, “both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.” Dart Cherokee, 135 S.Ct. at 554; see also Hertz Corp, 559 U.S. at 96-97 (“When challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof”). “In gauging the amount in controversy, courts view the claims from the vantage point of the time of removal.” Everett v. Verizon Wireless, Inc., 460 F.3d 818, 822 (6th Cir. 2006).

         III. DISCUSSION

         Plaintiffs seek to remand this case arguing that Defendants have failed to meet their burden of proof in establishing the amount in controversy exceeds $75, 000. Defendants respond that they have established that the Fehers' compensatory damages, if successful, could total $33, 556.17, and they may recover twice that, or $67, 112.34, in punitive damages, for a total potential recovery of $100, 668.51.

         The Court finds that Defendants have satisfied their burden to demonstrate by a preponderance of the evidence that the amount in controversy exceeds $75, 000. As a threshold matter, Plaintiffs' request for an amount “in excess of $25, 000.00” (Doc. 2, Compl. ¶ 71), does not constitute a stated sum that the court can deem the amount in controversy. See Davis v. Kindred Nursing Centers East, L.L.C., No. 2:05-cv-1128, 2006 WL 508802, at *2 (S.D. Ohio Mar. 2, 2006) (Graham, J.) (“The amount in controversy is not measured by the low end of an open-ended claim, but rather by a reasonable reading of the value of the rights being litigated.” (citation omitted)). This Court must therefore consider the allegations and claims asserted in the Complaint together with the parties' evidentiary submissions. Dart Cherokee, 135 S.Ct. at 554 (holding that trial courts must consider parties' submissions of proof when the amount in controversy is challenged); Shupe v Asplundh Tree Expert Co., 556 Fed.Appx. 476, 478 (6th Cir. 2014) (“A court must conduct a fair reading of the allegations in the complaint to determine the amount in controversy.”) (internal quotation marks and citations omitted).

         Here, a “fair reading” of the Complaint, together with Defendants' evidentiary submission, leads to the conclusion that it is more likely than not that the amount in controversy exceeds $75, 000. Plaintiffs seek compensatory and punitive damages for Defendants alleged breach of contract, including deducting post-production costs from the royalty share on an oil and gas lease that Plaintiffs assert is not authorized under the lease agreement. Defendants submit the affidavit of Ryan Dewey, Revenue Accounting Supervisor for XTO, who states that “XTO's calculation of the Fehers' share of ‘revenue realized by XTO for all gas and the constituents thereof produced and marketed from the Leasehold' is net of approximately $33, 556.17 in costs related to ...


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