                                                                   [PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS
                       FOR THE ELEVENTH CIRCUIT
                                                                      FILED
                                                              U.S. COURT OF APPEALS
                           ________________________
                                                                ELEVENTH CIRCUIT
                                                                    MAR 07 2001
                                 No. 00-10765                    THOMAS K. KAHN
                           ________________________                   CLERK


                         D. C. Docket No. 98-00083-CV-1

ELIZA KIRKLAND, individually, and on behalf
of all other Persons Similarly Situated,

                                                                   Plaintiff-Appellee,

                                       versus

MIDLAND MORTGAGE COMPANY,

                                                                Defendant-Appellant.

                           ________________________

                    Appeal from the United States District Court
                       for the Southern District of Georgia
                         _________________________
                                 (March 7, 2001)

Before ANDERSON, Chief Judge, MARCUS and KRAVITCH, Circuit Judges.

ANDERSON, Chief Judge:

      Midland Mortgage Company (“Midland”) brings this interlocutory appeal of

the district court’s certification of a class and denial of Midland’s motion for

summary judgment in this diversity action. Because we conclude that the district
court lacked subject matter jurisdiction, we vacate and remand with instructions to

remand to the state court.



                                      I. FACTS

      The plaintiff, Eliza Kirkland, obtained a mortgage from Cameron-Brown in

1985 for her residence. Ten years later, Midfirst Bank acquired the mortgage and

Midland began servicing it through an arrangement these two corporations have.

As part of its responsibilities, Midland ensures that the mortgagor has maintained

hazard insurance because this protects the mortgagee’s collateral. If the mortgagor

fails to retain the insurance, Midland is authorized to institute collection remedies,

including foreclosure. If the mortgagor is unable to obtain insurance, Midland

obtains “force-placed” or “lender-placed” insurance on the property through

Balboa Insurance Company (“Balboa”).

      Midland has a special procedure that it uses when placing insurance on these

properties. First, it sends a series of warning letters to the mortgagor which state

when the insurance will be placed on the property, that the insurance may be less

than the previous coverage, what the cost of the new premium will be, and that the

insurance may be placed with an affiliate of Midland, i.e. FirstInsure. Midland

also states that usually it calls the mortgagor before placing the insurance with


                                           2
FirstInsure. FirstInsure acquires the insurance policies from Balboa, which insures

properties that other companies decline to insure. Balboa pays commissions of

between twenty and thirty-three percent to FirstInsure. This relationship with

Balboa permits Midland to cancel policies and return premiums and also to have

policies issued retroactively.

      Ms. Kirkland’s mortgage required her to maintain hazard insurance on her

property, and she acquired her insurance through Allstate Insurance Company

(“Allstate”). On October 6, 1995, Allstate issued a cancellation notice of her

insurance, effective on September 29, 1995. Midland acquired the servicing rights

to the Kirkland mortgage in October 1995 but the notice of cancellation was sent to

the previous servicing company. Thus Midland did not learn of the cancellation

until January 1996. Because the property had apparently been uninsured for

several months, Midland dispensed with its usual procedures and sent Ms.

Kirkland only the last letter, informing her that insurance had been issued and that

the premium was $708, which would be charged to her escrow account. This letter

was dated April 3, 1996. After her escrow account was analyzed, Midland sent her

an escrow disclosure statement on July 29, 1996 informing her of the increase in

mortgage payment that was needed.

      Ms. Kirkland contacted Midland in August 1996, seeking an explanation.


                                          3
There were numerous telephone contacts until the end of September 1997, when

Allstate faxed a copy of its records showing coverage for the second year of

Balboa coverage, September 1996 through September 1997. In one of the two

faxes, Allstate stated that the policy was a continuous coverage policy but it did not

explain the notice of cancellation or whether the insurance had been reinstated

during the first year of Balboa coverage, September 1995 through September 1996.

Midland cancelled the Balboa coverage and refunded Ms. Kirkland’s payment for

the second year.

       Ms. Kirkland filed suit in the Superior Court of Richmond County against

Midland and Balboa Insurance Company (“Balboa”) on October 13, 1997, alleging

breach of fiduciary duty, fraud, theft, and money had and received. Shortly

thereafter, Balboa removed the case to federal court. On December 30, 1997, the

district court remanded the suit back to state court. On March 5, 1998, Ms.

Kirkland dismissed Balboa without prejudice. Thereafter, Midland removed the

action to the district court on April 23, 1998. Ms. Kirkland initially moved to

remand but later withdrew that motion.1

       In October 1998, Ms. Kirkland moved for class certification, and the district

       1
               Apparently the parties agreed that Kirkland would drop her motion to remand in
return for Midland’s promise not to transfer the action to another district court. However, parties
cannot create federal jurisdiction by agreement. See Morrison v. Allstate Indemnity Co., 228
F.3d 1255, 1261 (11th Cir. 2000).

                                                4
court granted the motion on January 4, 2000, for the breach of fiduciary duty

claim. At the same time, the district court denied Midland’s motion for

reconsideration of its denial of Midland’s motion for summary judgment. Both

the denial of the motion for summary judgment and the certification of the class

were certified by the district court pursuant to 28 U.S.C. §1292(b), and this court

granted permission to appeal pursuant to 28 U.S.C. §1292(b) and Fed.R.Civ.P.

23(f). Thus, we have appellate jurisdiction of this interlocutory appeal.



                                 II. JURISDICTION

      Federal courts are courts of limited jurisdiction and are required to inquire

into their jurisdiction at the earliest possible point in the proceeding. See

University of South Alabama v. American Tobacco Co., 168 F.3d 405, 410 (11th

Cir. 1999). Appellate courts must also examine the subject matter jurisdiction of

the lower courts in actions that they review. See id. (citing Mitchell v. Maurer, 293

U.S. 237, 244, 55 S.Ct. 162, 165 (1934)).

      One of the limited grounds of jurisdiction that federal courts have is

diversity jurisdiction, which is the only source of jurisdiction available in this case.

Article III of the Constitution provides the outer limits of the federal courts’

jurisdiction and vests in Congress the power to determine what the extent of the


                                           5
lower courts’ jurisdiction will be. See Morrison v. Allstate Indemnity Co., 228

F.3d 1255, 1261 (11th Cir. 2000). The diversity jurisdiction statute, 28 U.S.C.

§1332, requires not only diversity of citizenship among the parties but also that

“the matter in controversy exceeds the sum or value of $75,000, exclusive of

interest and costs.” 28 U.S.C. §1332.

       Generally, if no single plaintiff can satisfy the jurisdictional amount, then

there is no diversity jurisdiction. However, in certain instances, multiple plaintiffs

have a unified, indivisible interest in a common fund which would permit them to

aggregate2 their individual claims to reach the jurisdictional amount. See

Morrison, 228 F.3d at 1262 (quoting Zahn v. Int’l Paper Co., 414 U.S. 291, 94

S.Ct. 505 (1973)).

       Although the claim of each individual class member in the instant case was

apparently far less than the $75,000 jurisdictional amount, Midland removed this

case on the basis of Tapscott v. MS Dealer Service Corp., 77 F.3d 1353 (11th Cir.

1996). The court in Tapscott held that the claim of class members for Alabama

punitive damages was a single collective right in which the putative class has a

common and undivided interest, thus permitting determination of the jurisdictional

       2
         As the court in Cohen v. Office Depot, Inc., 204 F.3d 1069, 1073 n.3 (11th Cir. 2000),
explained, the use of the word “aggregate” in this context “is commonly used by courts when
addressing the issue of whether the total amount of a class claim should be attributed to each
member of the class.”

                                               6
amount on the basis of the aggregate punitive damages for the class.

       However, in Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir.

2000)(“Cohen II”), we held that Tapscott’s holding about aggregation of punitive

damages was inconsistent with a binding earlier case, Lindsey v. Alabama Tel. Co.,

576 F.2d 593 (5th Cir. 1978).3 Cohen II held that where there is an intracircuit

conflict of authority, the earlier panel opinion binds, and thus that Lindsey must be

followed rather than Tapscott. See 204 F.3d at 1072. Both Tapscott and Lindsey

involved the issue of aggregation of Alabama punitive damages for purposes of

determining the jurisdictional amount, and thus the effect of Cohen II was to

abrogate Tapscott’s holding with respect to the aggregation of punitive damages.

Accord Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1264-65 (11th Cir. 2000)

(following Cohen II). Cohen II involved a class action asserting claims, including

punitive damages, based on Florida law. In Cohen v. Office Depot, 184 F.3d 1292,

1295 (11th Cir. 1999)(“Cohen I”), the court had already held that there was no

material difference between the nature of Florida punitive damages and Alabama

punitive damages for purposes of the aggregation issue. In both states, punitive

damages serve the collective good by deterring a public wrong and punishing


       3
           In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981)(en banc), this
Court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down
prior to the close of business on September 30, 1981.

                                               7
egregious wrongdoing on the part of the defendant; the award is measured to

reflect, not the wrong done to a single individual, but the wrongfulness of the

conduct as a whole. Cohen II, 204 F.3d at 1075.

      With Tapscott no longer available to prop up Midland’s theory to support

jurisdiction, Midland resorts to several alternative arguments. First, Midland

argues that the instant case is governed by Georgia law, and that the nature of

punitive damages under Georgia law is materially different from that under the

laws of Alabama and Florida. We reject this argument. The only aspect of

Georgia law to which Midland points as being different is that a Georgia defendant

would not be concerned with the division of a potential punitive damages award.

However, the same was true under Alabama law, see Tapscott, 77 F.3d at 1359,

and of course the binding Lindsey case establishes that there can be no aggregation

of Alabama punitive damages. Like the law in Florida and Alabama, the law of

punitive damages in Georgia restricts the use of punitive damages to the deterrence

and punishment of the defendant, not the compensation of the plaintiff. See

O.C.G.A. § 51-12-5.1 (c)(“Punitive damages shall be awarded not as compensation

to a plaintiff but solely to punish, penalize, or deter a defendant.”). The amount of

the award is based not on the injury to the particular plaintiff but on the behavior of

the defendant in general. See Southeastern Sec. Ins. Co. v. Hotle, 222 Ga. App.


                                           8
161, 164, 473 S.E. 2d 256, 261 (1996). For purposes of the aggregation issue, we

hold that the nature of punitive damages under Georgia law is not materially

different from that under the laws of Alabama and Florida, and thus we hold that

the rule against aggregation of punitive damages established in Morrison and

Cohen II applies also to Georgia punitive damages.

       We note that plaintiffs in the instant case argue that Oklahoma law, not

Georgia law, governs. We also note that the district court so held. We need not

decide which law governs, because we hold that the nature of punitive damages

under Oklahoma law is not materially different from that in Alabama, Florida, and

Georgia.4

       Without aggregation of punitive damages, it is clear that Midland will not be

able to carry its burden of proof5 that punitive damages are likely to be large

enough to approach the $75,000 jurisdictional amount per class member, when



       4
                 In Oklahoma, punitive damages are awarded to deter tortious behavior and to set
an example. See Okla. Stat. tit. 23, § 9.1 (A) (2000). The amount awarded is based on a number
of factors, including “the seriousness of the hazard to the public,” the excessiveness of the tort,
and “the degree of the defendant's awareness of the hazard and of its excessiveness.” Id.
       5
                Midland argues that dismissal of a case for lack of diversity requires a showing to
“a legal certainty that the claim is really for less than the jurisdictional amount.” St. Paul
Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938). However, in removal cases, the
burden is on the party who sought removal to demonstrate that federal jurisdiction exists. See
Tapscott, 77 F.3d at 1356. Where the plaintiff has not plead a specific amount of damages, as
Ms. Kirkland has not here, the defendant is required to show that by a preponderance of the
evidence that the amount in controversy can more likely than not be satisfied. See id. at 1357.

                                                 9
divided by the numerous class members in the instant case. If there are 9,400 class

members, as Ms. Kirkland currently asserts, the claim including punitive damages

would have to total approximately $700,000,000,6 which seems inconceivable

under the circumstances of this case.7

       Midland next argues that the Cohen II decision should not be applied

retroactively because jurisdiction is fixed at the time of removal. The general rule

is that judicial decisions are applied retroactively. See, e.g., McKinney v. Pate, 20

F.3d 1550, 1565 (11th Cir. 1994). Retroactive application of a "new" rule of law

may be avoided only if:

       1) the decision adopting the rule does so "either by overruling clear
       past precedent or by deciding an issue of first impression the
       resolution of which was not clearly foreshadowed;" and

       2) "the application of the old rule in the instant case [does] not
       contravene the purpose and operation of the provision being
       interpreted;" and

       3) "application of the new rule in the instant case [would] be
       inequitable."



       6
               9,400 times $75,000 equals $705,000,000.
       7
                Midland does not argue that an award of attorney’s fees could significantly
contribute to satisfaction of the jurisdictional amount. However, even if attorney’s fees were
permissible under the governing law, under Morrison any such award would also have to be
divided pro rata amongst the class members for purposes of determining the jurisdictional
amount, unless an applicable state statute provided that attorney’s fees were awarded solely to
the class representative. Morrison, 228 F.3d at 1274.

                                               10
Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1391 n.40(11th Cir. 1998) (en

banc)(quoting McKinney, 20 F.3d at 1565).

      In this case, none of the foregoing conditions is present. Because of the

existence of Lindsey, Tapscott did not provide clear precedent that Cohen II

overruled. Moreover, application of the Tapscott rule would contravene the

purpose of the provision being interpreted. As discussed above, subject matter

jurisdiction is an important consideration that cannot be waived or ignored so that

the application of an erroneous jurisdictional rule would contravene the purpose of

the relevant provision. Lastly, Midland has not demonstrated how remand to the

state court would be inequitable.

      Finally, Midland requests that we remand this action to the district court to

give it an opportunity to demonstrate that Ms. Kirkland or another member of the

class could meet the jurisdictional amount in controversy. In Morrison, 228 F.3d

at 1275, we did just that. However, in Morrison, there was an apparently credible

assertion that some members of the class had suffered substantial damages. By

contrast, in the instant case, there has been no such assertion, but rather a merely

conclusory request for a remand. At oral argument, we pressed counsel for

Midland for some credible basis upon which Ms. Kirkland or another class

member might satisfy the jurisdictional amount, but counsel was unable to


                                          11
articulate any such basis. Accordingly, we conclude that the requested remand

would be futile.



                                 III. CONCLUSION

      For the foregoing reasons, the judgment of the district court is vacated, and

the case is remanded to the district court with instructions to remand to the state

court due to lack of subject matter jurisdiction.

      VACATED AND REMANDED WITH INSTRUCTIONS.




                                          12
