Cheng v. Cash

Background

Sheng-Wen Cheng, proceeding without a lawyer and incarcerated at the Federal Medical Center in Rochester, Minnesota, sued Lukas Cash. Cheng invoked diversity jurisdiction, which allows a federal court to hear certain state-law disputes between citizens of different states when the amount in controversy exceeds $75,000. The complaint asserted state-law claims including fraudulent inducement, fraudulent concealment, negligent misrepresentation, breach of implied contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, breach of fiduciary duty, gross negligence, conversion, unjust enrichment, tortious interference, and intentional and negligent infliction of emotional distress.

The court had previously allowed Cheng to proceed without paying filing fees in advance. Cheng stated that he was a New York resident before his incarceration, that Cash was a Massachusetts resident, and that the amount in controversy was $50,000.

Jurisdictional analysis

Federal courts have limited subject-matter jurisdiction, meaning they may hear only the types of cases authorized by federal law. For diversity jurisdiction, the parties must be citizens of different states and the amount in controversy must exceed $75,000. The court explained that an incarcerated person generally keeps the state citizenship held before incarceration unless the facts show otherwise.

The court concluded that the parties were diverse for purposes of the diversity statute based on Cheng’s stated pre-incarceration New York citizenship and Cash’s Massachusetts citizenship. But Cheng did not allege that his claims met the required jurisdictional amount. Because the amount stated in the complaint was $50,000, the court held that it lacked diversity jurisdiction and could not hear Cheng’s state-law claims on that basis.

Disposition

Judge Laura Taylor Swain dismissed the complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3), with 30 days’ leave to replead. The court allowed amendment because Cheng might be able to allege additional facts establishing jurisdiction. The court also certified under 28 U.S.C. § 1915(a)(3) that an appeal would not be taken in good faith and denied fee-free status for purposes of an appeal.