Louisiana Federal Court Rules that Lien Amount Satisfies Amount in Controversy Requirement

In a recent case involving Laperouse, APLC’s client, the Louisiana Middle District Court ruled that when a lien is the object of litigation, the amount in controversy requirement pursuant to 28 U.S.C. § 1332(a) is satisfied if the lien amount exceeds $75,000. The plaintiff, a general contractor, filed suit to remove a lien filed by Laperouse APLC’s client, a subcontractor, on a construction project. The plaintiff also sought indemnification for all attorneys’ fees, court costs, and expenses incurred for removal of the lien. The defendant removed the case to federal court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332 and claimed the amount in controversy requirement was satisfied because the principal amount of the lien was over $75,000. The plaintiff sought to remand the case back to state court by asserting that the true object of the litigation only amounted to the costs to remove the lien, which had not been shown to be over $75,000.

Under federal law, a suit may be removed from state court to federal court if complete diversity of citizenship exists between the parties and the amount in controversy exceeds “the sum or value of $75,000, exclusive of interests and costs.”[1] It is well-established in federal jurisprudence that the amount in controversy is measured by the value of the object of the litigation.[2] Specifically, the 5th Circuit Court of Appeals has held that the amount in controversy “is the value of the right to be protected or the extent of the injury to be prevented.”[3]

The Middle District, in its review of federal caselaw involving equitable relief and declaratory judgment, found that the dispute to remove the lien constituted Plaintiff seeking to relieve itself of the obligation to pay an amount more than it claims it owes to the Defendant.[4] In other words, the amount the plaintiff stands to lose, or the extent of its injury, is not just the amount to remove the lien. Instead, the plaintiff stands to lose the principal amount of the lien if it does not prevail in the matter. After Laperouse, APLC’s briefing on the issue, the Court sided with its client and denied the motion to remand, finding that the amount in controversy requirement was met.

[1] 28 U.S.C. § 1332(a)-(a)(1).

[2] Garcia v. Koch Oil Co. of Texas Inc., 351 F.3d 636, 640 (5th Cir. 2003).

[3] St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998).

[4] See Cisney v. Johnson, No. 2:17-CV-705-TFM, 2018 WL 2594991, at *1 (M.D. Ala. July 25, 2018); Procare Automotive, LLC v. MidAmerican Energy Services, LLC, No. SA-21-CV-00896-XR, 2021 WL 5822832, at *1

(W.D. Tex. Dec. 7, 2021); Leininger v. Leininger, 705 F.2d 727 (5th Cir. 1983); San Antonio Nat. Bank v. Daktronics, Inc., No. SA-11-CA-0149-XR, 2011 WL 972429, at *1 (W.D. Tex. March 17, 2011).