I. Construction Management, LLC v. M. Melnick & Co. Inc.

Background

I. Construction Management, LLC (ICM) sued M. Melnick & Co. Inc. (Melnick), Adam Melnick, and Federal Insurance Company, also known as Chubb, seeking payment connected to ICM’s subcontractor work on a construction project. ICM alleged that it performed $254,255 of work, received $174,500, and was owed a remaining balance of $79,755. ICM asserted contract-related claims against Melnick, claims under New York Lien Law Article 3-A against the Melnick Defendants, and claims involving a lien and payment bond against Chubb.

Motion and Arguments

The Melnick Defendants moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(1), arguing that the court lacked subject-matter jurisdiction because the amount in controversy did not exceed $75,000, as required for diversity jurisdiction under 28 U.S.C. § 1332. They relied on an invoice, a lien, and a demand letter that identified $69,255 as the amount owed by Melnick. They also argued that ICM had previously indicated that $10,500 would be billed to FXR Construction, Inc., another subcontractor on the project. The defendants further contended that ICM’s request for $100,000 in punitive damages was too conclusory to support jurisdiction.

ICM responded that it later learned FXR disputed responsibility for the $10,500 and took the position that Melnick owed that amount. ICM supported its explanation with declarations from Patrick Kennedy Jr., ICM’s managing member, and Dennis Vita, FXR’s president.

Court’s Analysis

The court explained that, on this type of jurisdictional motion, a plaintiff must show a reasonable probability that the amount-in-controversy requirement is met. The complaint is presumed to represent the amount sought in good faith, and the defendant must show to a legal certainty that the plaintiff cannot recover that amount or that the amount was asserted only to create federal jurisdiction.

The court found that ICM’s sworn declarations created a factual dispute about whether Melnick or FXR owed the additional $10,500. ICM’s earlier demands for $69,255 did not legally prevent it from later seeking $79,755 based on further developments. The court also found that the Melnick Defendants had not shown that ICM asserted the $79,755 claim in bad faith. The court did not decide whether ICM’s punitive-damages allegations independently supported federal jurisdiction.

Ruling

Judge John P. Cronan concluded that the Melnick Defendants had not shown to a legal certainty that ICM could not recover $79,755 or that ICM’s jurisdictional allegation was made in bad faith. The court therefore denied the Melnick Defendants’ motion to dismiss for lack of subject-matter jurisdiction and directed the Clerk of Court to close the motion on Docket Number 14. The opinion did not decide whether Melnick ultimately owed ICM any money or how much.