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Callahan v. Shepherd

United States District Court, D. Massachusetts

February 23, 2018



          Denise J. Casper United States District Judge.

         I. Introduction

         Plaintiffs Peter Callahan and Josephine Sasso Callahan (“the Callahans”) have filed this lawsuit against Defendants Susan Shepherd (“Shepherd”) and Mark Hart (“Hart”) alleging breach of contract, breach of the implied covenant of good faith and fair dealing, breach of express and implied warranties, negligence, and violations of Mass. Gen. L. c. 93A and Mass. Gen. L. c. 142A. D. 1. Shepherd and Hart now move to dismiss for lack of subject matter jurisdiction. D. 9. For the reasons stated below, the Court DENIES the motion.

         II. Standard of Review

         In diversity actions, the existence of subject matter jurisdiction requires diversity of citizenship between the parties and an amount-in-controversy exceeding $75, 000. 28 U.S.C. § 1332 (2011). A defendant can move to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), allowing the defendant to contest the court's “subject matter jurisdiction by challenging the allegations in the complaint as insufficient on their face or by questioning the accuracy of those allegations.” Hernandez-Santiago v. Ecolab, Inc., 397 F.3d 30, 33 (1st Cir. 2005). When addressing Rule 12(b)(1) motions, courts “may consider extrinsic materials and, to the extent it engages in jurisdictional factfinding, is free to test the truthfulness of the plaintiff's allegations.” Dynamic Image Techs., Inc. v. United States, 221 F.3d 34, 37 (1st Cir. 2000); see also Gonzalez v. United States, 284 F.3d 281, 288 (1st Cir. 2002).

         There are two methods for challenging jurisdiction based on diversity: a “sufficiency challenge” (or a “facial challenge”), in which a party challenges the sufficiency of the pleaded jurisdictional facts, and a “factual challenge, ” which attacks the accuracy of the jurisdictional facts. See Valentin v. Hosp. Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001). In sufficiency challenges, “the court must credit the plaintiff's well-pleaded factual allegations . . . draw all reasonable inferences from them in her favor, and dispose of the challenge accordingly.” Id. In factual challenges, the movant attacks the jurisdictional facts by “proffering materials of evidentiary quality in support” of their contentions, and “the plaintiff's jurisdictional averments are entitled to no presumptive weight.” Id. Factual challenges afford courts “broad authority to order discovery, consider extrinsic evidence, and hold evidentiary hearings” to resolve factual disputes between the parties and “determine [the court's] jurisdiction.” Id.; see Torres-Negron v. J & N Records, LLC, 504 F.3d 151, 163 (1st Cir. 2007) (noting that “in a factual 12(b)(1) motion . . . the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case” (quoting Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)).

         III. Factual Background

         Plaintiffs Peter and Josephine Callahan reside in New York City and have owned the property and residential dwelling at 45 Fair Street, Nantucket, Massachusetts since 2005, using it as a second home. D. 1 ¶¶ 1-2, 8-9. In September 2015, the Callahans entered into an agreement with Defendants Susan Shepherd and Mark Hart for improvements and renovations to the Fair Street residence. D. 1 ¶ 10. Shepherd and Hart drafted a written agreement, but none of the parties signed the agreement. Id. In October 2015, the parties “revised the scope of the renovations, home improvements and repairs to be performed by the [D]efendants” and created a document “reflect[ing] the agreed-upon scope of the work.” D. 1 ¶ 11; see D. 1-1. The Callahans allege the “Defendants agreed and promised that the home improvements . . . described and set forth in the Scope of the Work [document] would be completed by May 15, 2016.” D. 1 ¶ 12.

         Shepherd and Hart did not complete the agreed-upon work by the completion date. D. 1 ¶¶ 12-13. Moreover, the Callahans allege Shepherd and Hart did at least some of the work in a “substandard” manner and made changes to the Fair Street residence both outside the scope of the work and not approved by the Callahans. D. 1 ¶¶ 14-15. Shepherd and Hart also allegedly overcharged the Callahans by over $80, 000 and double-billed for some of the work. D. 1 ¶¶ 16-17. The Callahans further allege that the Fair Street residence was “uninhabitable” on the proposed date of completion. D. 1 ¶ 18. The Callahans anticipate they will have to spend upwards of $200, 000 to complete the renovations and repair or replace work done improperly. D. 1 ¶ 19.

         IV. Procedural History

         The Callahans initiated this action on March 24, 2017. D. 1. Shepherd and Hart have now moved to dismiss for lack of subject matter jurisdiction. D. 9.

         V. Discussion

         Shepherd and Hart contend that under either a “sufficiency challenge” or “factual challenge” the Callahans do not meet the requirements for diversity jurisdiction. D. 9-1 at 2. Shepherd and Hart's motion challenges whether the pleaded facts sufficiently support a finding of diversity jurisdiction: they characterize the Callahans' amount-in-controversy allegations as “vague and conclusory” and claim “the allegations of the complaint destroy diversity of citizenship [on their face].” See D. 9-1 at 3-5. “The general rule . . . is that a pleading's allegations of jurisdiction are taken as true unless denied or controverted by the movant.” Torres-Negron, 504 F.3d at 162 n.8 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1363, at 653-54 (1969)). Shepherd and Hart do not controvert the factual allegations in the complaint and offer no “materials of evidentiary quality in support of [their] position.” Valentin, 254 F.3d at 363. Shepherd and Hart have not, therefore, adequately stated a factual challenge. The Court will treat their motion to dismiss as a sufficiency challenge and “constru[e] the complaint liberally, treating all well-pled facts as true and drawing all reasonable inferences in the plaintiff's favor.” United States ex rel. Cunningham v. Millenium Labs., Inc., 202 F.Supp.3d 198, 202 (D. Mass. 2016).

         A. Diversity ...

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