Unreported / Non-Citable
Background
Plaintiffs Kodie Eugene Nailor and Katy Hutton, as next friend of minor J.H., filed suit in Dallas County Court-at-Law No. 3 seeking damages of $200,000 to $1,000,000 arising from a motor vehicle accident. Defendants Amarjit Sanhu and Sun Freight Logistics, Inc. removed the case to federal court under diversity jurisdiction, asserting that they are California citizens while the plaintiffs are Texas citizens and that the amount in controversy exceeds $75,000. The parties then jointly moved to remand the case back to state court.
The Court’s Holding
The court denied the joint motion to remand, holding that it possessed proper federal diversity jurisdiction under 28 U.S.C. § 1332. The defendants had established both required elements: complete diversity between all parties and an amount in controversy exceeding the $75,000 threshold. The court emphasized that subject matter jurisdiction cannot be waived or eliminated by party agreement or consent.
The court noted that a plaintiff may dissolve diversity jurisdiction only by filing a binding stipulation or affidavit demonstrating to a legal certainty that the amount in controversy does not exceed $75,000. Since no such binding stipulation had been filed, the court retained jurisdiction. The court announced its intention to appoint a guardian ad litem in a subsequent order to evaluate whether the proposed settlement—which the parties represented they had reached—is in the minor’s best interest.
Key Takeaways
- Federal courts have an independent, non-waivable obligation to examine and maintain their own jurisdiction, even when all parties consent to remand
- Diversity jurisdiction requires both complete diversity of citizenship and an amount in controversy exceeding $75,000; both elements must be present
- Plaintiffs may eliminate diversity jurisdiction only through a binding stipulation or affidavit establishing that the amount in controversy falls below the statutory threshold
- When a minor is a party to a settlement, courts must appoint a guardian ad litem to review and approve the settlement to protect the minor’s interests
Why It Matters
This decision reinforces a fundamental principle of federal jurisdiction: the court’s power cannot be surrendered by the consent or agreement of the parties. Even when both plaintiff and defendant wish to return to state court, federal courts lack the discretion to remand if the jurisdictional statute is satisfied. This protects the structural allocation of federal and state judicial authority and prevents litigants from circumventing federal jurisdiction through tactical settlement or procedural agreement.
For practitioners, the ruling confirms that a joint motion to remand will fail unless the moving party files a binding stipulation establishing that the amount in controversy falls below $75,000. The court’s appointment of a guardian ad litem also highlights the judiciary’s protective gatekeeping role when minors settle claims, ensuring that settlement terms genuinely serve the child’s interests rather than merely facilitating a convenient exit from federal court.