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Harr v. Hayes

Court of Appeals of Indiana

July 3, 2018

William R. Harr and Finster Courier, Inc. d/b/a Elite Express, Appellants-Defendants/Cross-Appellees,
v.
Julian Hayes and Tracey Hayes, Appellees-Plaintiffs/Cross-Appellants.

          Appeal from the Marion Superior Court The Honorable John F. Hanley, Judge Trial Court Cause No. 49D11-1510-CT-35449

          ATTORNEYS FOR APPELLANTS Larry L. Barnard Grant A. Liston Carson Boxberger LLP Fort Wayne, Indiana

          ATTORNEYS FOR APPELLEES Nathaniel Lee Jennifer Lee Lee Cossell & Crowley, LLP Indianapolis, Indiana

          Robb, Judge.

         Case Summary and Issues

         [¶1] Following an accident between two semi-tractor trailers, a lawsuit commenced between the two drivers, Julian Hayes ("Hayes") and William R. Harr, and Harr's employer, Finster Courier, Inc., d/b/a/ Elite Express (collectively, "Defendants"). The Defendants attempted to remove the case to federal court contending the parties were citizens of different states and that the amount in controversy exceeded $75, 000. Hayes objected to removal, arguing such action was premature and that the amount in controversy did not exceed $75, 000. The district court determined it lacked subject matter jurisdiction and remanded the case to state court. Following a jury verdict in state court of $187, 500 in favor of Hayes, the Defendants filed a motion to correct error and asked the trial court to modify the judgment to $75, 000 based on the doctrines of judicial estoppel, waiver, and judicial admission. The trial court denied the Defendants' motion and the Defendants now appeal, raising the sole issue of whether the trial court erred in denying their motion to correct error. Hayes cross-appeals, arguing the appeal is frivolous and requesting attorneys' fees. Concluding the trial court did not err in denying the Defendants' motion to correct error and that Hayes is not entitled to attorneys' fees, we affirm.

         Facts and Procedural History

         [¶2] On July 23, 2015, two semi-tractor trailers collided on Interstate 465 causing injury to one of the drivers, Julian Hayes. On October 26, 2015, Hayes filed suit in the Marion Superior Court against the other driver, William Harr, and Harr's employer, Finster Courier, Inc., d/b/a/ Elite Express.[1] Almost immediately, Defendants filed a notice of removal alleging diversity of citizenship under 28 U.S.C. § 1332. 28 U.S.C. § 1332 provides, in relevant part:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between--
(1) citizens of different States . . . .

         [¶3] The Defendants alleged that the district court possessed diversity jurisdiction because "the amount in controversy exceeds the sum or value of Seventy-Five Thousand Dollars ($75, 000), exclusive of interest and costs," and that Harr is a citizen of Pennsylvania, Finster is incorporated in New Jersey, and Hayes is a citizen of Indiana. Appellees' Appendix, Volume II at 5-6. Upon the Defendants' motion, the case was removed to the United States District Court for the Southern District of Indiana, Indianapolis Division. On December 16, 2015, Hayes filed a motion to remand, arguing removal was "pre-mature in not having conducted discovery to investigate the amount of this claim or even inquire as to Plaintiff's demand." Appellants' Corrected Appendix, Volume II at 52. Hayes alleged that the district court lacked subject matter jurisdiction:

3. Plaintiff further provides that diversity jurisdiction is not met in this matter because the amount in controversy does not exceed Seventy-Five Thousand Dollars ($75, 000.00).
* * *
6. On December 16, 2015, Plaintiff submitted his first demand to Defendants in the amount of Seventy-Two Thousand, Five Hundred Dollars ($72, 500.00). [Exhibit "I"].
7. Therefore, even if the citizenship of the parties is diverse, the requirements of diversity jurisdiction under 28 U.S.C. §1441 are not met because the amount in controversy does not exceed Seventy-Five Thousand Dollars ($75, 000.00).

Id. at 52-53.

         [¶4] At the time of removal, Hayes had been released to return to work full time but was receiving ongoing medical treatment and had accumulated around $3, 500 in medical bills. His workers compensation claim was still being processed. The same day Hayes filed the motion to remand, he also submitted a settlement demand for $72, 500. In response, the Defendants sent a letter stating that they would agree to remand the case if Hayes would "provide[] assurance that he would not execute on any potential judgment over $75, 000," and included a proposed covenant not to execute. Id. at 77. Hayes responded that "WE [sic] cannot agree to any agreement without payment. Are you offering the $75, 000? If so, send a check." Id.

         [¶5] On December 29, Defendants objected to remanding the case, arguing the amount in controversy was clearly over $75, 000 because Hayes refused to sign the proposed covenant. Id. at 78. On January 20, 2016, the district court granted Hayes' motion to remand, determining that it lacked subject matter jurisdiction because it is the removing party's burden to establish by a preponderance of the evidence that each requirement of 28 U.S.C. § 1332 has been met and "Defendants have made no effort whatsoever to explain why they had a good faith belief, at the time of removal, that the amount in controversy exceeded $75, 000." Id. at 78-79.

         [¶6] With the case back in Marion Superior Court, Defendants filed a motion to limit entry of judgment. The basis of the Defendants' motion was the district court's grant of Hayes' motion to remand in which Hayes asserted the district court lacked subject matter jurisdiction "because the amount in controversy does not exceed $75, 000." Id. at 46. Defendants therefore argued that, "Under the doctrine of judicial estoppel, any judgment entered in favor of the Plaintiffs in this case must be limited to $75, 000.00." Id. at 47. Defendants included in their motion to limit entry of judgment what they purported to be a "true and exact copy of the [district] Court's Order . . . marked as Exhibit 'C.'" Id. However, Defendants' Exhibit C omitted page 5 of the district court's order in which the district court discussed the Defendants' failure to meet their burden of proof regarding each requirement of 28 U.S.C. § 1332.

         [¶7] On July 31, 2017, Hayes moved to strike the Defendants' motion to limit damages. Hayes cited the omitted page of the district court's order and argued "the [district] Court order clearly demonstrates that the Defendants failed to meet their burden to demonstrate all of the elements necessary for federal court jurisdiction." Id. at 64. In a supplemental response to the Defendants' motion to limit entry of judgment, Hayes stated that since the removal action, a physician had determined that Hayes had an 8% permanent impairment and that his medical expenses totaled over $21, 000. These facts, coupled with Hayes' "ongoing and incomplete" treatment, Hayes argued, caused the current value of the case to be "substantially higher today than at the time this lawsuit was filed." Id. at 87. Therefore, while Hayes "would have gladly accepted $72, 500.00" at the time of removal, "the value has increased and the Defendant[s] owe more than the original amount in controversy." Id. at 88.

         [¶8] A jury trial was conducted on August 8 and 9, 2017. The jury returned a verdict for Hayes in the amount of $187, 500 and the trial court subsequently denied Defendants' motion to limit entry of judgment to $75, 000 and Defendants' motion to correct error regarding the same. In so doing, the trial court explained:

This Court remains troubled by the notion that a party may represent to the U.S. District Court that the amount in controversy in a case is less than the jurisdictional requirement, and then, once remanded, that it exceeds that amount. However, neither party has pointed to any precedent which expressly prohibits such a practice. The parties submitted this matter to a jury in this Court for determination. The jury, as the trier of fact, determined that the Plaintiffs' damages totaled One Hundred Eight-Seven [sic] Thousand Five Hundred and 00/100 Dollars

($187, 500.00). The Court finds that the jury's verdict should not be disturbed.

Order at 4.

         [¶9] Defendants now appeal and Hayes cross-appeals for an award of attorneys' fees, costs, and post-judgment interest, alleging that Defendants filed the underlying "frivolous appeal, which is meritless and . . . filed in bad faith, for purposes of harassment, and delay." Response Brief of Appellee at 25.

         Discussion and Decision

         I. Defendants' ...


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