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Community Foundation of North Alabama v. Anniston Hma LLC

United States District Court, N.D. Alabama, Eastern Division

May 10, 2017

COMMUNITY FOUNDATION OF NORTH ALABAMA, Plaintiff,
v.
ANNISTON HMA LLC., Defendants.

          MEMORANDUM OPINION AND ORDER

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         This case stems from a dispute concerning assignment of a lease made between Community Foundation of North Alabama and Anniston HMA, which is fully guaranteed by Health Management Associates. The Foundation sued AHMA in the Circuit Court of Calhoun County, Alabama, seeking a declaratory judgment that the lease had already been assigned and asking for an injunction against AHMA proceeding to arbitration. The Foundation then moved to remand the case back to state court based on insufficient amount in controversy. (Doc. 4). Because the court finds it has subject matter jurisdiction over this matter, the court DENIES the Foundation's motion.

         I. BACKGROUND

         The Foundation is a non-profit organization that operates as a testamentary trust whose purpose is to establish a hospital to serve the local community. In 2008, the Foundation and AHMA executed a 40-year lease of the hospital established by the trust. The rent per year under the lease was $600, 000. HMA fully guaranteed the lease.

         In November 2016, AHMA and The Health Care Authority of Anniston, which operates as Regional Medical Center (“RMC”), began negotiations to structure a deal where AHMA would sell its assets, including the lease with the Foundation, to RMC. AHMA and RMC drafted an Asset Purchase Agreement to that effect, which was agreed to on March 3, 2017 and closed on May 1, 2017.

         The lease specifies that assignments are not permitted unless specific conditions are satisfied. If the Foundation consents to the assignment, Section 17.4 allows the lease to be assigned without recourse against AHMA or HMA.[1] Section 17.5 allows the lease to be assigned without the Foundation's consent, so long as AHMA and HMA remained fully obligated under the lease.[2]Finally, Section 17.6 provides that if the Foundation declines to consent under Section 17.4, the question of the assignability of the lease could be submitted to arbitration.[3]

         On April 5, 2017, AHMA and HMA asked the Foundation for consent to assign the lease to RMC. On April 27, the Foundation's Board met and declined the request. The next day, AHMA and HMA served the Foundation with a demand for arbitration under Section 17.6 of the lease. On May 3, the Foundation sued in Calhoun County Circuit Court seeking a declaratory judgment that the lease had already been assigned under Section 17.5 on May 1, 2017, when the APA closed, and requested an injunction preventing AHMA and HMA from pursuing arbitration. AHMA and HMA removed the action on the same day it was filed.

         At the Foundation's request, the court set a hearing for May 4 on its request for emergency relief. Barely over half an hour before the hearing, the Foundation filed a motion to remand. (Doc. 4). Because the Foundation challenged the court's subject matter jurisdiction, the court acknowledged at the hearing that its jurisdiction had to be resolved before it could address the Foundation's request for emergency relief. Thus, the court set a briefing schedule on the motion to remand, which is now under submission.

         The next day, AHMA and HMA offered the Foundation $75, 001 for consent to assign the lease. The offer expired on May 8 without the Foundation accepting it.

         II. STANDARD OF REVIEW

         Consistent with the limited nature of federal jurisdiction, the party seeking a federal venue must establish the federal venue's jurisdictional requirements. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). In the removal context, the removing defendant must establish the court's jurisdiction. Miedema v. Maytag Corp., 450 F.3d 1322, 1328 (11th Cir. 2006). When the plaintiff has not specified the amount of damages in the complaint, the removing defendant must establish the jurisdictional amount by a preponderance of the evidence. See Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014).

         The Foundation cites authority that a removing party must prove the amount in controversy to “a legal certainty.” See (Doc. 4 at 3). However, the 2012 amendment to the removal procedure statute lowers that standard, even if the complaint contains a sum demanded in good faith. See 28 U.S.C. 1446(c)(2)(B) (“[R]emoval of the action is proper on the basis of an amount in controversy asserted under subparagraph (A) if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds the amount specified in section 1332(a)”); see also Dart Cherokee, 135 S.Ct. at 554 (“This provision, added to § 1446 as part of the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (JVCA), clarifies the procedure in order when a defendant's assertion of the amount in controversy is challenged. In such a case, both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.”). And even prior to the amendment, when a sum was not requested in the complaint, the defendant bore the burden of demonstrating by a preponderance of evidence that the amount in controversy was met. See Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1356-57 (11th Cir. 1996).

         III. DISCUSSION

         AHMA and HMA removed this case on the basis of diversity jurisdiction. The sole question before the court is whether the value of the declaratory and injunctive relief the Foundation seeks exceeds ...


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