MAXWELL v. KAYLOR (2021)

United States Court of Appeals, Ninth Circuit.2021-06-25No. No. 19-16258

Summary · law.co

Holding. The judgment dismissing the action for lack of subject matter jurisdiction is reversed and remanded. The district court must reevaluate the amount in controversy using the correct legal standard and consider the effect of the settlement agreement on remand.

Michael Terry Maxwell, representing himself, challenged a federal district court's dismissal of his state-law lawsuit over California real property rights. The district court had ruled it lacked authority to hear the case because Maxwell failed to demonstrate the required monetary amount for diversity jurisdiction. On appeal, the appellate court found that the district court had applied the wrong legal test when evaluating whether the case met the financial threshold. Under the correct standard, a court must accept the plaintiff's claimed amount unless it can be shown with legal certainty that the case is worth less than the jurisdictional minimum.

The appellate court reversed the dismissal and sent the case back to the district court for reconsideration under the proper legal framework. Additionally, after the appeal was filed, the parties reached a settlement agreement in a related state court case involving the same property. The appellate court noted that the district court should address whether this release agreement affects Maxwell's claims when the case is reconsidered on remand.

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Key issues

Proper legal standard for determining amount in controversy in diversity jurisdiction cases
Whether plaintiff's claimed amount must be accepted absent legal certainty to the contrary
Effect of subsequent settlement agreement on pending federal action

Procedural posture

Maxwell appealed pro se from the district court's dismissal of his diversity action for insufficient amount in controversy, with appellate review conducted de novo.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM *

Michael Terry Maxwell appeals pro se from the district courts judgment dismissing for lack of subject matter jurisdiction his action alleging state law claims arising out of a dispute regarding an interest in real property in California. We have jurisdiction under 28 U.S.C. § 1291. We review de novo. Naffe v. Frey, 789 F.3d 1030, 1035 (9th Cir. 2015). We reverse and remand.

The district court dismissed Maxwells action because it determined that Maxwell failed to establish the amount in controversy required for diversity jurisdiction. However, the district court applied an incorrect standard to evaluate the amount in controversy. See 28 U.S.C. § 1332(a); Naffe, 789 F.3d at 1039-40 (setting forth elements of diversity jurisdiction and explaining that the “legal certainty” test requires a “district court [to] accept the amount in controversy claimed by the plaintiff unless it can declare to a legal certainty that the case is worth less”); Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010) (under the legal certainty test, “a federal court has subject matter jurisdiction unless upon the face of the complaint, it is obvious that the suit cannot involve the necessary amount” (citation and internal quotation marks omitted)). We reverse the judgment, and remand for the district court to reevaluate the amount in controversy under the correct legal standard.

After this appeal was filed, the parties entered into a release agreement in a separate state court case between the parties relating to the subject real property. See Docket Entry No. 53. Kaylor argues that this release agreement has settled all claims in this action. The district court did not have the benefit of this release agreement when dismissing the case. On remand, the district court should consider in the first instance the effect of the release agreement on Maxwells claims in this action.

We do not consider arguments and allegations raised for the first time on appeal. See Padgett v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009).

Kaylors motion to take judicial notice (Docket Entry No. 53) is granted. All other pending motions are denied as unnecessary.

REVERSED and REMANDED.