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Spooner Petroleum Company, Inc. v. Utsey

United States District Court, S.D. Alabama, Southern Division

June 11, 2015

JOHN J. UTSEY, et al., Defendants.


WILLIAM H. STEELE, Chief District Judge.

This matter comes before the Court on defendants' Motion to Dismiss (doc. 23) pursuant to Rules 12(b)(1) and 12(b)(6), Fed.R.Civ.P. The Motion has been briefed and is now ripe for disposition on an expedited basis.

I. Relevant Background.

Plaintiff, Spooner Petroleum Company, brought this action in this District Court against defendants, John J. Utsey, Julie W. Utsey, John Jefferson Utsey Investments, LLC, and Treobye B. Utsey, as Trustee of the William L. Utsey Grandchildren's Trust. Well-pleaded factual allegations in the Complaint reflect that Spooner is preparing to conduct a "geophysical 3D seismic survey" exploring for prospective oil and gas properties in a 65 square-mile area near the City of Butler in Choctaw County, Alabama (the "Butler Survey"). (Doc. 1, ¶ 13.) The Complaint further alleges that "Spooner and its partners have spent approximately $2.2 million in leases, permits and other project costs in preparation for the survey, " including obtaining permits from more than 600 individual surface owners. ( Id., ¶ 14.)

According to the Complaint, a major obstacle to Spooner's ability to move forward with the Butler Survey is that defendants own 21 tracts of real property (the "Utsey Tracts") located near the geographical center of the Butler Survey. ( Id., ¶¶ 12, 15.) Spooner alleges that it has obtained mineral permits and/or leases executed by mineral rights owners for each of those parcels, and that such permits and leases confer upon it a right to acess the surface of the Utsey Tracts to conduct the Butler Survey, but that defendants have nonetheless refused to allow Spooner onto those tracts. ( Id., ¶¶ 16-19.) Spooner alleges that this state of affairs places it in a bind because (i) the mineral permits and oil/gas/mineral leases it has obtained at great expense to conduct the Butler Survey have a limited shelf life, with expiration dates looming "soon, " and (ii) because of "the central location and large size" of the Utsey Tracts, seismic data from those tracts "is essential to providing a complete and accurate seismic survey of the area." ( Id., ¶¶ 15, 24.)

This brings us to the relief sought by Spooner. In Count One of the Complaint, Spooner requests a preliminary and permanent injunction compelling defendants to "immediately allow Spooner and/or its surveying contractors access to the [Utsey Tracts] for the purpose of conducting its seismic surveying work and further preventing the Defendants and said other individuals from interfering, in any way, with the surveying work." ( Id. at 9.) In Count Two, Spooner seeks a declaratory judgment that it is entitled to access the Utsey Tracts to perform the Butler Survey. ( Id. ) And in Count Three, Spooner claims damages pursuant to the following allegations: "The Butler Survey must be accomplished now. Without access to the [Utsey Tracts], Spooner is incurring and will continue to incur damages. Permit crews and survey crews cannot commence their work without access to the Subject Property." ( Id., ¶ 32.)

On May 7, 2015, one day after filing the Complaint, Spooner filed a Motion for Preliminary Injunction (doc. 4) and supporting Brief (doc. 5). In those filings, Spooner reiterated that it has spent more $2.2 million on the Butler Survey to date, that Spooner holds valid mineral permits and/or oil and gas leases covering each of the Utsey Tracts, that defendants have nonetheless refused to allow Spooner access to the Utsey Tracts, and that Spooner will be irreparably harmed if defendants continue to bar it from accessing the Utsey Tracts because those permits and leases will expire in the near future. The Court entered an expedited briefing schedule on the Motion for Preliminary Injunction. ( See doc. 9.) On May 22, 2015, the final day of that briefing period, defendants filed their Motion to Dismiss (doc. 23), challenging the existence of federal jurisdiction and particularly focusing on the requisite amount in controversy. (The Motion to Dismiss also asserts that the Complaint fails to state a claim for damages.) Briefing on the Motion for Preliminary Injunction was suspended until such time as the jurisdictional issue can be resolved. ( See doc. 26.)

II. Analysis.

A. The Amount-in-Controversy Requirement.

1. Legal Standard.

The Complaint predicated federal subject matter jurisdiction on the diversity provisions of 28 U.S.C. § 1332. (Doc. 1, ¶ 9.) Pursuant to that statute, federal courts have original jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs. See Underwriters at Lloyd's, London v. Osting-Schwinn, 613 F.3d 1079, 1085 (11th Cir. 2010) ("For federal diversity jurisdiction to attach, all parties must be completely diverse... and the amount in controversy must exceed $75, 000.") (citations omitted). "In light of the federalism and separation of powers concerns implicated by diversity jurisdiction, federal courts are obligated to strictly construe the statutory grant of diversity jurisdiction... [and] to scrupulously confine their own jurisdiction to the precise limits which the statute has defined." Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1268 (11th Cir. 2000) (citations omitted); see also Osting-Schwinn, 613 F.3d at 1086 (similar).

The focal point of defendants' jurisdictional attack is the amount-in-controversy prong of § 1332. To be sure, the Complaint alleges that "[t]he amount in controversy exceeds $75, 000." (Doc. 1, ¶ 9.) The Eleventh Circuit has observed that "[a] plaintiff satisfies the amount in controversy requirement by claiming a sufficient sum in good faith." Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807 (11th Cir. 2003); see also Wellington v. Royal Caribbean Cruises, Ltd., 511 Fed.Appx. 974, 977 (11th Cir. Mar. 8, 2013) (similar). Here, however, Spooner does not identify a specific sum of damages, and its allegations concerning the amount in controversy relate to the value of its claims for declaratory and injunctive relief. For § 1332 jurisdiction to lie in that context, "the party seeking to invoke federal jurisdiction bears the burden of proving by a preponderance of the evidence that the claim on which it is basing jurisdiction meets the jurisdictional minimum." McKinnon Motors, 329 F.3d at 807; see also SUA Ins. Co. v. Classic Home Builders, LLC, 751 F.Supp.2d 1245, 1248 (S.D. Ala. 2010) ("This preponderance-of-the-evidence standard applies to declaratory judgment actions brought in federal court.... This makes sense, given that a declaratory judgment plaintiff does not seek damages at all and thus does not seek a determinate amount of damages."). Thus, the critical question underlying the jurisdictional challenge is whether Spooner has shown by a preponderance of the evidence that the amount in controversy exceeds $75, 000, exclusive of interest and costs.

Where, as here, a plaintiff's claims sound in declaratory or injunctive relief, "the amount in controversy is the monetary value of the object of the litigation from the plaintiff's perspective." McKinnon Motors, 329 F.3d at 807 (citation omitted).[1] "In other words, the value of the requested injunctive relief is the monetary value of the benefit that would flow to the plaintiff if the injunction were granted, ... or, conversely, the losses that will follow from not obtaining the injunction." Mixon v. ...

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