Seasons Homeowners Association Inc v Richmond Homes of Nevada Inc., 2016 WL 7155746 (D. Nev. Dec. 7, 2016).
In this construction defect dispute, a District Court in Nevada denied the plaintiff’s motion to remand because the the plaintiff’s supporting documents pertained to a separate case and, therefore, could not serve as “other paper” to put the defendants on notice of the amount in controversy in the instant case.
The plaintiff, representing the individual owners of 380 homes in Henderson, NV, brought a putative class action in the state court alleging that the defendants installed defective air conditioners in their residences resulting in damages. The defendant Aspen Manufacturing Holding, Inc. (“Aspen”) manufactured the allegedly defective air conditioning cooling coils installed in the 380 residences. Following class certification, the instant action (“Seasons”) was consolidated with another state court case, Stanton v. Richmond American Homes of Nevada (“Stanton/Turner”), which involved the same alleged construction defect by Aspen.
The defendants removed the consolidated cases to federal court pursuant to CAFA. The District Court granted the plaintiff’s motion to remand based on a lack of subject matter jurisdiction under CAFA. After the remand, the consolidated cases Seasons & Stanton/Turner was consolidated with another state court case, Lee v. Aspen Manufacturing, Inc. (“Lee/In re Aspen”) for discovery purposes and each case maintained its separate character. The defendants, after receiving the plaintiff’s settlement letter demanding $6,735,917.00, removed the action to the federal court pursuant to CAFA. The plaintiff accordingly moved to remand the action to the state court, which the District Court denied.
The plaintiff contended that the defendants’ removal was untimely. The parties did not dispute that 28 U.S.C. § 1446(b)(3) governed the timeliness analysis of the defendants’ removal, rather they disagreed as to which ‘paper’ triggered the timeframe for removal. The District Court noted that under § 1446(b)(3), the thirty-day window for removal begins “after the defendant receives a paper ‘from which it may first be ascertained that the case is one which is or has become removable’ if ‘the case stated by the initial pleading is not removable.’” The plaintiff argued that the amount in controversy was made clear to the defendants through a series of documents produced in discovery that would trigger the thirty-day period under § 1446(b)(3).
According to the plaintiff, all of the damages listed under NRS 40.655 were combined to calculate the final amount in controversy. The plaintiff asserted that the series of documents outlined each of the damages that the defendants could have used to calculate the amount in controversy. The District Court, however, found that damages under NRS 40.655 for construction defect cases included: (i) the market value of the residence as if no constructional defect existed, (ii) the value of improvements made to the property, (iii) reasonable attorney’s fees and fees for experts; and (iv) any costs, including costs and expenses for moving and costs. The District Court thus found that the plaintiff disclosed the cost of its repairs, as well as the fees for experts, but nothing more. The plaintiff’s cost estimated for repairs was $3,391,550.00 and the plaintiff provided invoices for eight experts totalling $331,175.00.
The District Court found that while the plaintiff asserted that the defendants were made aware of contingency fees in two separate class notices, it did not provide the defendants notice of attorney’s fees. The District Court further found that while the two documents the plaintiff cited outlined contingency fee agreements of 33.3% to 40% of the gross amount, those fees did not pertain to the instant case. While the Stanton/Turner case was consolidated with the instant case, the class notice pertained exclusively to the Stanton/Turner case and thus did not serve to put the defendants on notice of the cost of attorney’s fees for the instant case.
Next, the plaintiff cited to a demand letter associated with Lee/In re Aspen demanding $90,000,000.00, as proof of the amount in controversy. The District Court, however, found that the demand letter also pertained to a separate case that was consolidated with the instant Seasons case solely for discovery purposes. The District Court therefore found that the demand letter did not serve to put the defendants on notice of removability under CAFA because it was dealing with homes throughout the entire state of Nevada, not the one neighborhood the plaintiff represented.
The defendants argued that the first paper from which they could ascertain removability under CAFA was the plaintiff’s settlement letter demanding $6,735,917.00 from the defendants to settle the instant case exclusively. The District Court found that because that paper demonstrated an amount in controversy in excess of CAFA’s $5,000,000.00 threshold, it was the first document from which the defendants could ascertain federal jurisdiction under CAFA. The District Court therefore found that the defendants’ removal was timely as it was filed one day after the thirty (30)-day timeframe was triggered under § 1446(b)(3).
Accordingly, the District Court denied the plaintiff’s motion to remand.
By: T. Dylan Reeves