Adeniji v. Online Taxes Inc.
- Colleen McMahon
- 1:19-cv-09884
- U.S. District Court · Southern District of New York
- 5
In Adeniji v. Online Taxes, Inc., Judge McMahon dismissed the case without prejudice because the alleged $15,000 loss did not meet the federal diversity-jurisdiction threshold.
Oluyesi Adeniji's federal lawsuit against Online Taxes, Inc. was dismissed without prejudice; the ruling left the stated claims available for refiling in state court.
What happened
In Adeniji v. Online Taxes, Inc., Oluyesi Adeniji sued the tax-software company without a lawyer. He alleged that a software glitch caused problems with his 2016 tax return, leaving him owing $15,000 in state and federal taxes, and he sought $15,000 in damages.
The court explained that diversity jurisdiction requires parties from different states and a claim worth more than $75,000. Although Adeniji alleged that he was a New York citizen and that Online Taxes, Inc. was a Missouri citizen, he sought only $15,000.
Judge Colleen McMahon dismissed the action without prejudice for lack of subject-matter jurisdiction and declined to allow an amended complaint because the defect could not be corrected. The court also denied fee-free status for any appeal, finding that an appeal would not be taken in good faith.
The detailed version
- Adeniji v. Online Taxes Inc. · No. 1:19-cv-09884
- Colleen McMahon
- Dec. 23, 2019
Background
Oluyesi Adeniji appeared without a lawyer and brought the action under the court's diversity jurisdiction. He alleged that he used Online Taxes, Inc.'s tax-preparation software to file his 2016 tax returns after the Internal Revenue Service recommended the software. According to the complaint, the software improperly stored his unemployment income and part of his earned wages, which allegedly caused an audit. Adeniji alleged that he then owed $15,000 in taxes to state and federal governments because of a software “glitch.” He sought $15,000 in damages and asked the company to use its professional liability insurance to cover the tax liabilities and to assist him because of its alleged negligence.
The court had previously allowed Adeniji to proceed without paying filing fees. In reviewing a fee-free complaint, the court must dismiss claims that are frivolous, malicious, inadequately pleaded, seek money from an immune defendant, or fall outside the court's subject-matter jurisdiction. The court also must interpret filings by an unrepresented party generously, while still requiring enough facts to make a claim plausible.
Jurisdictional analysis
Federal diversity jurisdiction over state-law claims requires complete diversity of citizenship and an amount in controversy exceeding $75,000. Adeniji alleged that he was a citizen of New York and that Online Taxes, Inc. was incorporated in Missouri and had its principal place of business there. The court did not identify a problem with those citizenship allegations. Instead, it held that the complaint did not allege facts showing a legally recoverable amount exceeding $75,000. Adeniji sought $15,000 to cover a $15,000 tax debt, so the complaint itself showed that the jurisdictional amount was not met.
Disposition
The court dismissed the action for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3). The dismissal was without prejudice, and the court stated that the action could be refiled in state court. The court declined to grant leave to amend because it concluded that the complaint's jurisdictional defect could not be cured by amendment. It also certified that any appeal would not be taken in good faith and denied fee-free status for purposes of an appeal.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.