Schottenstein v. Capla
- P. Castel
- 1:22-cv-10883
- U.S. District Court · Southern District of New York
- 4
Schottenstein v. Capla: Judge Castel denied the defendants’ motion to dismiss, finding the plaintiffs adequately alleged more than $75,000 was at stake.
The ruling allows the claims of MD Douglas Schottenstein and Schottenstein Pain and Neuro, PLLC, doing business as NY Spine Medicine, to continue without dismissal for lack of subject-matter jurisdiction; it affects defendants Edward L. Capla and Yolanda Capla, whose motion was denied.
What happened
In Schottenstein v. Capla, Edward L. Capla and Yolanda Capla asked the court to dismiss the plaintiffs’ Third Amended Complaint. They argued that the case did not meet the requirement for federal diversity jurisdiction because the amount in dispute was not reasonably more than $75,000.
The court rejected that argument. It concluded that the plaintiffs had consistently alleged an amount exceeding $75,000, including allegations involving revenue of approximately $6 million per year and a claim seeking at least a 50% interest in revenue from the Regenokine treatment program. The defendants did not show that the plaintiffs legally could not recover more than $75,000.
Judge Castel denied the motion to dismiss for lack of subject-matter jurisdiction. The case therefore was not dismissed on that ground, and the Clerk was directed to terminate the motion.
The detailed version
- Schottenstein v. Capla · No. 1:22-cv-10883
- P. Castel
- June 3, 2025
Background
MD Douglas Schottenstein and Schottenstein Pain and Neuro, PLLC, doing business as NY Spine Medicine, sued Edward L. Capla and Yolanda Capla. The Third Amended Complaint relied solely on diversity jurisdiction, which allows a federal court to hear a dispute between citizens of different states when more than $75,000 is in controversy.
The plaintiffs’ claims included conversion and civil conspiracy to commit conversion. In an earlier order, the court denied the defendants’ motion to dismiss those claims but granted dismissal of the fraud and unjust-enrichment claims. The Third Amended Complaint sought at least a 50% interest in revenue from the defendants’ use of the Regenokine treatment program and damages greater than $75,000.
Motion and Analysis
The defendants moved under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal for lack of subject-matter jurisdiction. They argued that the plaintiffs had not alleged with reasonable probability that the amount in controversy exceeded $75,000.
The court explained that the amount in controversy is measured when the complaint is filed. The complaint’s stated amount is generally presumed to be a good-faith representation unless the opposing party shows to a legal certainty that the plaintiff cannot recover the required amount. Later events generally cannot eliminate jurisdiction that existed when the case began.
The court found that the plaintiffs had alleged amounts above the jurisdictional threshold from the beginning of the case. The initial complaint alleged that the parties each received annual distributions of approximately $6 million from their shared Regenokine practice and alleged that the defendants’ revenue later increased. The court concluded that the plaintiffs’ allegations were enough to satisfy the relatively low burden of alleging more than $75,000 in controversy.
The court also rejected the defendants’ reliance on the Class Action Fairness Act, which the court said was not at issue. It further held that the plaintiffs’ failure to provide a damages computation in their initial disclosures under Rule 26 did not eliminate subject-matter jurisdiction.
Disposition
Judge Castel denied the defendants’ motion to dismiss for lack of subject-matter jurisdiction. The Clerk was directed to terminate the motion.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.