Mark S. Rosen v. Chrysler Corporation , n/k/a DAIMLERC HRYSLER CORPORATION

*The Honorable James G. Carr, United States District Judge for the
Northern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0086P (6th Cir.)
File Name: 00a0086p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
M ARK S. R OSEN ; M ARC
S LUTZKY ; R ONALD BLIGH ;
GEORGE J. AMBROSIO , on
behalf of themselves and all
others similarly situated,
Plaintiffs-Appellees,
v.
C HRYSLER C ORPORATION ,
n/k/a D AIMLERC HRYSLER
C ORPORATION ,
Defendant-Appellant.
;>

1
No. 99-1017
Appeal from the United States District Court
for the Eastern District of Michigan at Ann Arbor.
No. 97-60374—George C. Steeh, District Judge.
Argued: December 6, 1999
Decided and Filed: March 9, 2000
Before: COLE and GILMAN, Circuit Judges; CARR,
District Judge.*

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2 Rosen, et al. v. Chrysler Corp. No. 99-1017
_________________
COUNSEL
ARGUED: Jeffrey S. Russell, LAW OFFICE OF BRYAN
CAVE, St. Louis, Missouri, for Appellant. Jerome M.
Congress, MILBERG, WEISS, BERSHAD, HYNES &
LERACH, New York, New York, for Appellees.
ON BRIEF: Jeffrey S. Russell, Charles A. Newman, LAW
OFFICE OF BRYAN CAVE, St. Louis, Missouri, John W.
Rogers, St. Louis, Missouri, for Appellant. Jerome M.
Congress, MILBERG, WEISS, BERSHAD, HYNES &
LERACH, New York, New York, for Appellees.
_________________
OPINION
_________________
JAMES G. CARR, District Judge. This is an appeal from
a decision by the United States District Court for the Eastern
District of Michigan to dismiss a class action lawsuit for lack
of subject matter jurisdiction. For the following reasons, we
REVERSE the judgment of the District Court, and REMAND
the case for further proceedings.
BACKGROUND
Named plaintiffs are owners and lessors of Jeep Grand
Cherokees, manufactured by DaimlerChrysler (defendant) and
equipped with the Quadra-Trac four wheel drive system.
They allege that they were fraudulently induced to buy or
lease their Grand Cherokees based on misrepresentations
regarding Quadra-Trac and seek to represent a class of Grand
Cherokee owners and lessors similarly defrauded. Their
amended complaint accuses defendant of 1) common law
fraud, 2) negligent misrepresentation, and 3) fraud under the
New Jersey Consumer Fraud Act. (J.A. at 44-46). For relief,
the amended complaint seeks payment of attorneys’ fees,
punitive damages, treble damages, rescission of the purchase
price (approximately $30,000) of plaintiffs’ Grand Cherokees,
No. 99-1017 Rosen, et al. v. Chrysler Corp. 7
Third, the amended complaint requests that damages be
awarded for violation of the New Jersey Consumer Fraud Act.
(J.A. at 91-92). The New Jersey Consumer Fraud Act
provides for treble damages. Cox v. Sears Roebuck & Co.,
647 A.2d 454, 465 (N.J. 1994) (observing that once plaintiff
proves an unlawful practice under the New Jersey Consumer
Fraud Act, treble damages are required). As the parties
correctly point out (J.A. at 21-23), the District Court
neglected to consider the possibility of treble damages in its
analysis. (J.A. at 114-17). A trebling of rescission damages
alone potentially could exceed the $50,000 amount in
controversy.
In conclusion, plaintiffs’ allegations satisfy the amount in
controversy requirement when considering recission,
constructive trust and treble damages under New Jersey law.
The District Court’s contrary finding is not supportable as a
legal certainty. For this reason, we need not consider the
questions of supplemental jurisdiction, punitive damages, and
aggregation raised by the parties.
CONCLUSION
For the foregoing reasons, the opinion of the District Court
is REVERSED and the case REMANDED for further
proceedings consistent with this opinion.

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6 Rosen, et al. v. Chrysler Corp. No. 99-1017
not including counterclaims or offsets); Savarse v. Edrick
Transfer & Storage, Inc., 513 F.2d 140, 142 (9th Cir. 1975)
(declining to count offset against amount in controversy);
Cohen v. North Ridge Farms, Inc., 712 F. Supp. 1265, 1266
(E.D. Ky. 1989) (holding that amount in controversy is met in
diversity action, in which plaintiff sought recission of contract
for purchase of a returnable good, without regard to offset);
Associated Press v. Berger, 460 F. Supp. 1003, 1004 (W.D.
Tex. 1978) (citing Jones v. Landry, 387 F.2d 102 (5th Cir.
1967) (remarking that though defendant claimed offset, the
amount in controversy should not consider the offset)); Bailey
v. Romney, 359 F. Supp. 596, 599 (D.D.C. 1972) (finding that
the amount in controversy is clearly satisfied where plaintiffs
seek to rescind the purchase of their homes and homes are
worth a substantial sum). Thus, the District Court erred by
offsetting the amended complaint’s recission claim by the
resale value of the Grand Cherokee. The amount in
controversy is the full contract price paid by plaintiffs –
approximately $30,000.
Second, the amended complaint requests that a constructive
trust be imposed “upon monies obtained by defendant as a
result of” defendant’s wrongful conduct. (J.A. at 93). The
District Court did not consider this request for relief in
determining whether the amount in controversy totaled
$50,000. (J.A. at 114-17).
Under New Jersey law, a constructive trust may be imposed
when failure to do so will result in unjust enrichment.
D’Ippolito v. Castro, 242 A.2d 617, 619 (N.J. 1968).
“Generally all that is required to impose a constructive trust
is a finding that there was some wrongful act, usually, though
not limited to, fraud, mistake, undue influence, or breach of
a confidential relationship, which has resulted in a transfer of
property.” Id. Here, plaintiffs have made allegations of fraud
in their amended complaint, and thus the value of the
constructive trust – “all monies obtained by defendant” from
sales of Grand Cherokees – should have been counted by the
District Court. The District Court did not do so, and thus
erred.
No. 99-1017 Rosen, et al. v. Chrysler Corp. 3
1Plaintiffs’ complaint was filed at a time when the amount in
controversy required under the diversity statute was $50,000. Although
that amount has since risen to $75,000, the amount in controversy is
determined as of the time of filing. Klepper v. First American Bank, 916
F.2d 337, 340 (6th Cir. 1990).
a constructive trust over all proceeds received by defendant
“as a result of [its] wrongful conduct,” and other
compensatory damages. (J.A. at 47).
Named plaintiffs sued defendant in federal court in New
Jersey on the basis of diversity of citizenship. The case was
transferred to Michigan. Once in Michigan, the District
Court, sua sponte, issued an order to show cause why the
lawsuit should not be dismissed for failure to meet the amount
in controversy requirement of 28 U.S.C. § 1332. (J.A. at 97-
100). Specifically, the District Court was leaning toward
finding that neither named plaintiffs nor unnamed class
members could recover the statutorily set $50,000 minimum.1
Issuance of the show cause order was precipitated by
deposition testimony from one of the plaintiffs that he had
paid $800-$1000 more for his Grand Cherokee because it was
equipped with Quadra-Trac. In light of this testimony, the
District Court concluded that each plaintiff’s individual
damages amounted to no more than $1000. (J.A. at 98). The
show cause order set a briefing schedule that granted
plaintiffs until November 20, 1998 to file a brief
demonstrating that they could meet the amount in
controversy, and granted defendant until December 15, 1998
to file a reply. (Id.)
On December 2, 1998 – after plaintiffs had filed their brief
but before the deadline for defendant’s reply – the District
Court dismissed the case. In its order of dismissal, the
District Court held that it appeared to a “legal certainty” that
the amount in controversy did not total $50,000.
Both plaintiffs and defendant disagree with the analysis of
the District Court, and challenge its method of calculating the

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4 Rosen, et al. v. Chrysler Corp. No. 99-1017
2A federal court sitting in diversity must apply the choice of law rules
of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 496 (1941). When a case is transferred, the transferee court
must apply the choice of law rules that the transferor court would have
applied had the case not been transferred. Ferens v. John Deere Co., 494
amount in controversy. Specifically, the parties argue that the
District Court: 1) improperly offset the value of plaintiffs’
recission claim, 2) failed to consider the value of a
constructive trust in its calculations, and 3) overlooked the
statutory trebling of damages mandated by the New Jersey
Consumer Fraud Act.
STANDARD OF REVIEW
In diversity cases, the general rule is that the amount
claimed by a plaintiff in his complaint determines the amount
in controversy, unless it appears to a legal certainty that the
claim is for less than the jurisdictional amount. Saint Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89
(1938); Sellers v. O’Connell, 701 F.2d 565, 578 (6th Cir.
1983). A claim is less than the jurisdictional amount where
the “applicable state law bar[s] the type of damages sought by
plaintiff.” Wood v. Stark Tri-County Bldg. Trades Council,
473 F.2d 272, 274 (6th Cir. 1973).
Here, the District Court determined that it was a legal
certainty that plaintiffs, both named and unnamed, could not
meet the jurisdictional amount of $50,000. (J.A. at 116). We
review the District Court’s decision de novo. American
Landfill, Inc. v. Stark, et al., 166 F.3d 835, 837 (6th Cir.
1999).
DISCUSSION
The parties allege that the District Court erred in not fully
counting towards the amount in controversy the damages
potentially recoverable on three theories of liability under
New Jersey law: recission, constructive trust and treble
damages.2 According to the parties, these damages, when
No. 99-1017 Rosen, et al. v. Chrysler Corp. 5
U.S. 516, 523 (1990). In this case, plaintiffs originally filed in New
Jersey. Thus, the choice of law rules of New Jersey apply.
In New Jersey, local law governs a dispute unless the parties
demonstrate that the law of a foreign jurisdiction is conflicting. Gantes
v. Kason Corp., 679 A.2d 106, 108 (N.J. 1996) (“The initial prong of the
governmental-interest analysis entails an inquiry into whether there is an
actual conflict . . . .”). Here, the parties concede there is no conflict.
(Defendant’s Brief at 18, n.10; Plaintiff’s Brief at 1). And no conflict
was noted by the District Court. Thus, in the absence of a conflict, New
Jersey law is controlling.
combined with attorney’s fees and compensatory damages,
likely give rise to an amount in controversy in excess of
$50,000. We agree.
First, the amended complaint requests that plaintiffs be
permitted to rescind their purchase or lease contracts with
defendant. (J.A. at 92). The District Court concluded that the
value of recission – the Grand Cherokee’s approximately
$30,000 price tag – would be offset by the return of the
vehicle to defendant, and thus was worth the difference
between the original contract price and the resale price. This
difference “would not amount to the $30,000 damages
recovery as alleged,” according to the District Court. (J.A. at
116).
As the District Court correctly noted, a recission is the
annulment or undoing of a contract. Under New Jersey law,
recission is available “where there is original invalidity, fraud,
failure of consideration or a material breach.” Notch View
Assocs. v. Smith, 615 A.2d 676, 680 (N.J. Super. Ct. Law Div.
1992). Plaintiffs have alleged facts which, if taken as true,
state a claim for recission. (J.A. at 89-92).
Contrary to the reasoning articulated by the District Court,
however, in cases where a plaintiff seeks to rescind a contract,
the contract’s entire value, without offset, is the amount in
controversy. See, e.g., Jadair, Inc. v. Walt Keeler Co., 679
F.2d 131, 133 n. 5 (7th Cir. 1982) (remarking that in a case of
contract recission, the amount in controversy is a net figure

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