Accounting Firm Search Associates, Inc. v. Nelson
- Philip Halpern
- 7:20-cv-09371
- U.S. District Court · Southern District of New York
- 4
In Accounting Firm Search Associates v. Nelson, Judge Halpern remanded the removed case because Defendant did not prove the amount in controversy exceeded $75,000.
Accounting Firm Search Associates, Inc. and Dean Nelson. The action was returned to the Supreme Court of the State of New York, County of Dutchess, and the federal case was closed.
What happened
Accounting Firm Search Associates, Inc. sued Dean Nelson in New York state court. Nelson removed the case to federal court, claiming the parties were citizens of different states and that more than $75,000 was at stake.
The federal court found that the complaint did not specify the damages sought. Nelson relied mainly on counsel’s estimate that the claim might be worth $95,000, based on industry practices and Nelson’s reported salary. The court found that this hearsay and conjecture did not prove the required amount.
Judge Philip M. Halpern ruled that federal jurisdiction had not been established, held that removal was improper, and remanded the action to the state court. The Clerk was directed to send the order to that court and close the federal case.
The detailed version
- Accounting Firm Search Associates, Inc. v. Nelson · No. 7:20-cv-09371
- Philip Halpern
- Nov. 12, 2020
Background
Accounting Firm Search Associates, Inc. began the action against Dean Nelson in the Supreme Court of the State of New York, County of Dutchess. Nelson removed the action to the U.S. District Court for the Southern District of New York under the federal removal statutes and filed an answer.
Nelson asserted that federal diversity jurisdiction existed because, according to his notice of removal, the plaintiff was a citizen of New York, he was a citizen of Massachusetts, and the amount in controversy exceeded $75,000. The complaint did not state a specific damages amount. It alleged that the plaintiff sought commissions it would have earned absent Nelson’s alleged misrepresentations and stated only that the damages exceeded amounts that would otherwise fall within the courts’ jurisdiction.
Analysis
Federal diversity jurisdiction generally requires that the parties be citizens of different states and that more than $75,000 be in dispute. When the complaint does not clearly allege the amount in controversy, the removing party must establish by a preponderance of the evidence that the amount exceeds $75,000.
Nelson’s notice of removal stated that the amount was above $75,000 based on custom and practices in the accounting placement and recruitment industry. His counsel reasoned that the plaintiff’s commission was likely 20% of Nelson’s first-year salary at Marks Paneth, which would produce an estimated amount of $95,000 based on the salary alleged in the complaint. The court found that counsel’s hearsay and conjecture were insufficient proof. The court also reviewed the state-court docket and found no evidence establishing the amount in controversy.
Ruling
The court held that Nelson failed to meet his burden of establishing that the amount in controversy exceeded $75,000. It therefore held that removal from state court was improper and remanded the action to the state court from which it was removed. The Clerk was directed to send the order to the Supreme Court of the State of New York, County of Dutchess, and close the federal case. Judge Philip M. Halpern signed the order.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.