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Insurance Brokers West, Inc. v. Liquid Outcome, LLC

United States Court of Appeals, First Circuit

October 23, 2017

INSURANCE BROKERS WEST, INC., Plaintiff, Appellant,
v.
LIQUID OUTCOME, LLC, f/k/a ASTONISH RESULTS, LLC, d/b/a INTYGRAL, Defendant, Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. John J. McConnell, Jr., U.S. District Judge]

          Matthew W. Sparks, with whom Rosenberg Johnson & Sparks, PLLC, Charles S. Beal, and Beal Law, LLC were on brief, for appellant.

          Robert J. Cavanagh, Jr., with whom Blish & Cavanagh, LLP was on brief, for appellee.

          Before Torruella, Thompson, and Kayatta, Circuit Judges.

          KAYATTA, CIRCUIT JUDGE.

         This appeal turns on whether it is certain that Plaintiff Insurance Brokers West, Inc. ("IBW") has no chance to recover in excess of $75, 000 should it prevail on its claim for breach of contract against Liquid Outcome, LLC, formerly known as Astonish Results, LLC ("Astonish"). For the following reasons, we agree with the district court that IBW certainly has no such chance. We therefore affirm the dismissal of IBW's complaint for failure to meet the amount-in-controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332.

         I. Background

         The limited facts relevant to jurisdiction are undisputed for purposes of considering the issue on appeal. IBW is an insurance agency incorporated and located in California. Astonish is a Delaware marketing firm, with its principal place of business in Rhode Island. In December 2010, IBW and Astonish entered into an agreement (the "Agreement"), pursuant to which Astonish agreed to provide digital marketing services, such as website development and design, and IBW agreed to pay Astonish for those services. IBW agreed to pay an initial "Set Up Fee" of $8, 000 due immediately, as well as $2, 695 per month for sixty months. Four years later, in December 2014, IBW and Astonish executed an amendment (the "Amendment") to the Agreement. Both parties agree that they executed the Amendment because of a dispute regarding Astonish's performance of the Agreement.

         Three parts of the Amendment are relevant to this appeal. First, Astonish agreed to "complete a website theme-based redesign and website content re-optimization at no additional cost to [IBW], " in addition to performing its original duties under the Agreement, which were incorporated into the Amendment. Second, Astonish agreed to accept reduced monthly payments from IBW for the remaining eighteen months of the contract term, totaling $22, 550. Third, the Amendment contained a release provision (the "Release"), stating the following:

From and after the date hereof, [IBW] agrees it will not sue for any reason and hereby releases and forever discharges Astonish from any and all claims, actions, damages, and losses whatsoever known and unknown as of the date of this Amendment, except those claims which occur in the future as a result of a material default in Astonish's performance of this Amendment.

         Twenty-two months later, IBW filed suit against Astonish in federal court, alleging that Astonish breached the Agreement both before and after it was amended. IBW's complaint asserted diversity jurisdiction but did not estimate its damages stemming from Astonish's alleged breaches. After Astonish moved to dismiss IBW's complaint for lack of jurisdiction, IBW filed an amended complaint. In its amended complaint, IBW estimated its damages as exceeding $140, 000, based on all the payments IBW had made to Astonish both before and after the Amendment. IBW did not specify how it calculated $140, 000, but presumably it derived the estimate by summing the $8, 000 set up fee, forty-two monthly payments at $2, 695 per month (pursuant to the Agreement), thirteen monthly payments at $1, 350 per month (pursuant to the Amendment), and five monthly payments at $1, 000 per month (pursuant to the Amendment).

         Astonish moved to dismiss the amended complaint, on the basis that IBW's claims did not meet the amount-in-controversy requirement for diversity jurisdiction. Astonish argued that the bulk of IBW's alleged damages occurred prior to the execution of the Amendment and, pursuant to the Release, IBW had released those claims. The district court granted Astonish's motion to dismiss, finding: that the Release "clearly and unambiguously prevents IBW from pursuing claims for pre-Amendment conduct"; that IBW's post-Amendment claims do not exceed $75, 000; and that IBW therefore fails to meet the amount-in-controversy requirement for diversity jurisdiction. IBW timely appealed.

         II. Discussion

         United States district courts have original jurisdiction in all civil actions between citizens of different states "where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs." 28 U.S.C. § 1332(a). Neither party disputes that diversity of citizenship exists in this case. The only issue on appeal is whether the amount-in-controversy requirement is met. We decide that issue de novo. See Stewart ...


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