USCA1 Opinion

December 7, 1995
United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
____________________

No. 95-1410

COVENTRY SEWAGE ASSOCIATES, ET AL.,

Plaintiffs, Appellants,

v.

DWORKIN REALTY CO., ET AL.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Mary J. Lisi, U.S. District Judge]

___________________

____________________

Before

Torruella, Chief Judge,

___________
Stahl and Lynch, Circuit Judges.
______________

____________________

ERRATA SHEET
ERRATA SHEET

Please make

the

following

changes

to

the

opinion

issued

November 22, 1995:

Cover

sheet

delete

"Incorporation"

"Incorporated" for name of appellants' law firm

and

insert

Page 2, line 18 - change "appellants" to "appellees"

United States Court of Appeals

United States Court of Appeals
For the First Circuit
For the First Circuit
____________________

No. 95-1410

COVENTRY SEWAGE ASSOCIATES, ET AL.,

Plaintiffs, Appellants,

v.

DWORKIN REALTY CO., ET AL.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Mary J. Lisi, U.S. District Judge]

___________________

____________________

Before

Torruella, Chief Judge,

___________
Stahl and Lynch, Circuit Judges.
______________

____________________

David A. Wollin with whom Adler, Pollock & Sheehan Incorpora

________________
____________________________________
was on brief for appellants.
Steven M. Richard with whom Tillinghast, Collins & Graham was
_________________
______________________________
brief for appellees.

____________________

November 22, 1995

____________________

STAHL,
STAHL,

Associates

Circuit Judge.
Circuit Judge.
_____________

("Coventry")

Association ("Woodland")

and

Appellants, Coventry Sewage

Woodland

Manor

brought a diversity

Improvement

action against

appellees, Dworkin Realty Co. ("Dworkin") and The Stop & Shop

Supermarket

Company

District Court

("Stop &

for the District

Shop").

The United

of Rhode Island

States

found that

the amount-in-controversy requirement of

was

not met and

dismissed the case,

motion

under Fed. R. Civ.

matter

jurisdiction.

28 U.S.C.

pursuant to appellees'

P. 12(b)(1), for

For

the

1332(a)

reasons

lack of subject

stated below,

and

because of the unusual facts of this case, we reverse.

I.
I.
__

FACTUAL BACKGROUND AND PRIOR PROCEEDINGS

FACTUAL BACKGROUND AND PRIOR PROCEEDINGS
________________________________________

Coventry

sewer

line

and

and Woodland

sewage

pumping

own and

operate a

station

private

servicing,

among

others, a supermarket run by Stop & Shop, located on property

owned

by Dworkin, a

(hereinafter

"Stop

&

wholly-owned subsidiary of

appellees will

Shop").1

In

be referred to

June 1992,

Coventry

Stop & Shop

collectively as

and

Woodland

(hereinafter, collectively "Coventry") entered into

Connection Agreement" with

agreed

to pay

Stop & Shop, whereby

service fee

for

a "Sewer

Stop & Shop

sewer-main usage.

The

service fee was based, in part, upon the number of cubic feet

of water consumed on

the property.

To determine

the amount

____________________

1.

The existence of diversity of citizenship is undisputed.

-22

of water

consumed, the parties' contract

relied on invoices

from the Kent County Water Authority ("KCWA").

The KCWA sent

these

Shop in

invoices to

Stop

& Shop,

and Stop

&

turn

forwarded them to Coventry.

increase

Because of a dispute

over the reasonableness of an

in the service fee --

an increase Coventry claimed

was permitted by

the contract -- Stop &

Coventry's bills which

accumulated beginning in early

In October 1994, Coventry

of $74,953.00, the

claimed

amount it

was

the

1994.

filed this action seeking recovery

claimed to be

water-usage numbers obtained from

Coventry

Shop refused to pay

due based

upon

the KCWA invoices and what

correct new

service

fee

rate.

Coventry

also sought

undisputed that,

it

contractual

at the time Coventry

alleged the amount in

exceeded the

attorneys' fees.

is

commenced the action,

controversy in the

jurisdictional minimum,

It

and not

belief that it

as a ruse

to

invoke federal jurisdiction.

Shortly after the

Stop & Shop filed

about

complaint was filed,

but before

its answer, Stop & Shop contacted the KCWA

the invoices

underlying Coventry's

fee calculations.

The KCWA then sent an employee to the property who discovered

that

there

meters,

the

had been

a misreading

of

Stop &

Shop's water

essentially caused by the adding of an extra zero to

number of

cubic

meters actually

dated November 18, 1994,

consumed.

the KCWA notified Stop &

By letter

Shop that

-33

it was correcting the

billing error by changing

the amounts

of the invoices.

Based upon the

reduced

the

$18,667.88,

sum

an

of

amount

KCWA's corrected invoices, Coventry

its

bills

that

to

Shop

included

the

&

Stop to

only

disputed

fee

increase.

portion

Subsequently,

of the

Stop

& Shop

fee, $10,182.48,

disputed balance of $8,485.40.

paid the

undisputed

initially withholding

the

Stop & Shop ultimately

paid

this remaining sum as well, reserving the right to recoup the

amount

should

it

prevail

reasonableness of the

doubting

the

in

service fee.

existence

of

however, apparently

pursue in federal court

fees.2

challenge

Stop &

diversity

Coventry to voluntarily dismiss

refused,

its

to

the

Shop, presumably

jurisdiction,

asked

the federal action; Coventry

because

of

its intention

to

its claim for contractual attorneys'

____________________

2.

We note

that although

constitute a portion
an

exception

attorneys' fees usually

of the amount in

where,

as

here, the

will not

controversy, there is
fees

are

contractual.

Department of Recreation v. World Boxing Ass'n, 942 F.2d

________________________
__________________
89

(1st Cir.

1991).

In this

itself of this exception as

case, Coventry

84,

cannot avail

a basis for federal jurisdiction

because, not only are there no specifics in

the record as to

the amount of such fees, Coventry informed this court at oral

argument

that its

estimation

$10,000.

-44

of attorneys'

fees was

only

Stop & Shop moved to dismiss

R.

Civ.

P.

12(b)(1)

jurisdiction.3

finding

The

that,

"to

for

district

legal

the action under Fed.

lack

of

subject

court

granted

certainty,"

the

the

matter

motion,

amount

in

controversy did not exceed $50,000 as required by 28 U.S.C.

1332(a).

Notwithstanding

controversy, Coventry

At

oral argument

stated

that

jurisdiction

in federal

the

the

appeals the

small

amount

dismissal of

before

this court,

reason

for the

actually

the action.

counsel for

insistence

in

upon

Coventry

federal

was that the case would get to an earlier trial

court (including the appeal

proceedings) than if

the case were pursued in state court.

II.
II.
___

DISCUSSION
DISCUSSION
__________

A. Standard of Review
______________________

We

review de novo
__ ____

the district

court's dismissal

for lack of subject matter jurisdiction under Fed. R. Civ. P.

12(b)(1).

Cir.),

facts

Murphy
______

v. United States, 45 F.3d

______________

cert. denied, 115 S.

_____ ______

pertinent

to

this

520, 522

Ct. 2581 (1995).

appeal

are

(1st

Although the

undisputed,

we

are

nonetheless "mindful that the party invoking the jurisdiction

of

federal

court

carries

the

burden

of

proving

its

____________________

3.

Although

the KCWA notified Stop

& Shop of

the error in

November 1994, Stop & Shop raised only a general, boilerplate

amount-in-controversy

defense in

and

move to dismiss

did not formally

its December

1994 answer,

on the jurisdictional

basis until February 1995.

-55

existence."

Taber Partners, I v. Merit Builders, Inc., 987

__________________
_____________________

F.2d 57, 60 (1st Cir.), cert. denied, 114 S. Ct. 82 (1993).

_____ ______

B. Analysis
____________

Coventry

argues

that at

action,

it claimed,

in

good faith,

$50,000;

thus, the

controversy

did

jurisdiction.

discovery of

subsequent

not

divest

amounts was a "subsequent

good faith in filing,

once it attached.

time

it filed

the

in excess

of

the amount

in

damages

reduction of

the

Coventry contends that

the billing error

the

district

court

of

the KCWA's post-filing

and changing of

the invoice

event" that neither undermined its

nor disturbed the court's jurisdiction

Shop & Stop argues that

was a mere

"subsequent revelation" that

certainty,

that the

amount in

below the jurisdictional minimum

the billing error

proved, to a

controversy had

legal

always been

and thus the court properly

dismissed the case for lack of subject matter jurisdiction.

operate

This

case illustrates the

when

determination.

rigorously

chooses

Ltd.
____

1995).

court

On the

enforce the

makes

one

an

hand, a

cases.

v. Dames & Moore, Inc., 60

_____________________

determinations

the

other

should

amount-in-controversy

federal

jurisdictional limits

to set in diversity

On

competing policies that

hand,

neither

See
___

court should

that Congress

Pratt Central Park

__________________

F.3d 350,

preliminary

unduly delay,

352 (7th

Cir.

jurisdictional

nor

unfairly

deprive a party from, determination of the controversy on the

-66

merits.

prolonged

determine

See id. at 351-52 (noting the undesirable

___ ___

jurisdictional

which court

inquiry

will

that

hear the

case);

Miller, Federal Practice and Procedure

______________________________

(noting competing policies).

court" determination ought to

so

that

the

parties

may

As

only

cost of a

serves

14A Wright

to

&

3701 at 12-13 (1985)

a policy matter, the "which

be made with relative dispatch

proceed

to

resolution

of

the

dispute'smerits.

For

jurisdiction,

looking to

filed.

the

purpose

the amount

in

the circumstances

of

establishing

controversy is

at the time

1946) (noting

that "federal

diversity

determined

by

the complaint

is

Thesleff v. Harvard Trust Co., 154 F.2d

________
_________________

(1st Cir.

upon

See Pratt Central ParkLtd., 60 F.3d at 352.

___ ______________________

732, 732 n.1

jurisdiction depends

the facts at the time suit is commenced, and subsequent

changes . . . in the amount in controversy [will

not] devest

[sic] it"); 14A Charles A. Wright & Arthur R. Miller, Federal

_______

Practice and Procedure

______________________

Blankinship, 20
___________

3702 at 28-29 n.31 (1985); Watson v.

______

F.3d 383, 387

First American Bank, 916

___________________

(10th Cir. 1994);

Klepper v.
_______

F.2d 337, 340 (6th Cir.

1990); see
___

Newman-Green, Inc. v.
___________________

Alfonzo-Larrain,
_______________

490

U.S. 826,

830

(1989) (noting that for determining diversity of citizenship,

"[t]he existence of

federal jurisdiction ordinarily

exist when the

complaint is

depends

on the facts

as they

filed").

Moreover, it

has long been the rule that a court decides the

amount in controversy from the face of the complaint, "unless

-77

it appears or is in some way shown that the

the complaint is not

U.S. at 353

claimed `in good faith.'"

Horton, 367
______

(quoting St. Paul Mercury Indem. Co.

___________________________

Co., 303 U.S. 283,

___

an action

amount stated in

288 (1938)).

in federal

When a

court, the

know whether the claim

v. Red Cab
_______

plaintiff initiates

plaintiff knows

surpasses the jurisdictional minimum.

St. Paul, 303 U.S. at 290.

________

[The plaintiff's] good faith

the

federal forum

not

only by

is open

resort to

clear

if from either

that his

amounted to
jurisdiction,

claim

the

in choosing
to challenge

the face

complaint, but by the facts

trial, and

or should

disclosed at
source it

never could

sum necessary

there

of the

is no

to

is
have
give

injustice in

dismissing the suit.

Id.
___

Coventry and

the

Stop &

Shop both cite

seminal case of St. Paul, 303 U.S.

_________

discussing its facts.

passages from

283 (1938), without

We pause to do so here.

In St. Paul,
________

the plaintiff-employer initiated a state-court action against

the

defendant-insurer for

benefits.

Id. at 284-85.
___

payment of

workers' compensation

The plaintiff alleged an amount of

damages sufficient to permit the defendant to remove the case

to federal

court.

plaintiff

filed two

second amended

Id. at
___

285.

amended

Once in

complaints.

complaint, which

federal court, the

Attached to

alleged the same

the

amount of

damages as

damages;

originally claimed, was an

the exhibit revealed that

exhibit detailing the

the total sum of damages

-88

was

no

more

jurisdictional

than

$1,380.89,

minimum (then

an

$3,000).

appeals, sua sponte, took notice

___ ______

amount

Id.
___

below

The

the

court of

of the exhibit and directed

remand

of

the

case,

reasoning

that

the

amount

in

controversy was less than the jurisdictional minimum and that

"[t]he court cannot

ahead

with

the

jurisdiction."

The

close its

trial

did not

cause

of

Supreme Court reversed,

could

damages, and

obvious, nor

which

it

has

go

no

90 F.2d 229, 230 (7th Cir. 1936).

no evidence that, at

plaintiff

of

eyes to the

noting that there was

the time the action was

have

ascertained

that the later

the actual

commenced, the

sum

exhibit setting forth

undermine plaintiff's initial good faith.

at 295-96 (also observing that

of "numerous" items

that, in

several other items).4

of

the

this sum

303 U.S.

the sum claimed was comprised

turn, were each

the total

of

Accordingly, the Court reasoned that

____________________

4.

The Court also noted that the removal posture of the case

additionally bolstered the finding

damages.

St. Paul,
_________

303

plaintiff

initially filed

that the amount claimed

jurisdiction.

U.S.

of good faith in claiming

at

in state

290-91.

Because

court, it

was unlikely

was meant to somehow

the

confer federal

Id.
___

The Court reasoned that a defendant's right to remove was not

to

be "subject

events -control.

to

whether or not
Id.
___

at 293-94;

Theradyne Corp.,
________________
(refusing

the plaintiff's

to

331

allow

F.

caprice" by

such events are

see
___

also
____

Supp.

plaintiff's

subsequent

under plaintiff's

Pro Medica, Inc.

_________________

231,

232

amended

v.

(D.P.R.

1971)

complaint,

that

reduced amount of damages claimed to less than jurisdictional

minimum,
events

to divest
occurring

stipulation, an

federal court
subsequent

to

of jurisdiction).
removal,

affidavit, or an amendment

such

Thus,
as

that reduces the

claim below the jurisdictional minimum, would not deprive the

-99

the case

reduction

fell comfortably

of the

amount

court's jurisdiction."

In

case,

and

a portion

from which

within the rule

claimed cannot

that "subsequent

oust the

Id. at 295.
___

of St. Paul
________

the

parties

crucial to

before us

the instant

parse

favorite phrases, the Court wrote:

The
to

intent of

restrict

controversies

district

Congress drastically

federal
between

jurisdiction

in

citizens

of

their

different

states

has

rigorously enforced
rule

governing

jurisdiction
federal
gives

always

by the courts.

dismissal

in

cases

court is

been

for

want

of

in

the

unless the

law

brought

that,

a different rule,

The

the sum claimed

by the plaintiff controls if the claim is

apparently made in good
appear
claim

to
is

legal

really

jurisdictional
dismissal.
recover

faith.

It

certainty
for

less

amount

must

that the
than

to

the

justify

The inability of plaintiff to

an amount

adequate to

court jurisdiction does

give the

not show his bad

faith or oust the jurisdiction.

Nor does

the fact that the complaint discloses the

existence
claim.

of
But

a
if,

pleadings,

it

certainty,

that

recover

valid

from the

is apparent,
the

the amount

the proofs, the court

like certainty that

____________________

defense

to

the

face of

the

to

a legal

plaintiff

claimed or

cannot
if, from

is satisfied to
the plaintiff

never

court

of jurisdiction once it

has attached.

St. Paul, 303

________

U.S. at 292-93.
Despite
contributed to
dismissal

the

added

weight

removal

the good faith finding, the

of the

case

would not

have

plaintiff originally brought the case

at 290.

the

posture

Court noted that

been warranted

had

in federal court.

Id.
___

Therefore, we find the reasoning of St. Paul no less

________

applicable

to the

instant case,

filed in federal court,

where Coventry

and where there is no

originally

dispute as to

its good faith in its claimed amount in controversy.

-1010

was

entitled to recover that amount, and

that

his

for

claim was

the

therefore colorable

purpose

of

conferring

jurisdiction, the suit will be dismissed.

Events

occurring

institution
amount

of

subsequent

suit

recoverable

which

to

the

reduce

below the

the

statutory

limit do not oust jurisdiction.

Id. at 288-89 (footnotes and citations omitted).

___

The rules gleaned from the foregoing passage may be

summarized as follows.

enforce

the

jurisdiction.

rules

First, federal courts must diligently

establishing

damages

controversy

for jurisdictional

legal

limiting

diversity

Second, unless the law provides otherwise, the

plaintiff's

good faith."

and

If

claim

will

the face of

certainty, that

the

control

purposes if

the

amount

it is

in

made "in

the complaint

reveals, to

controversy cannot

involve

the

requisite amount, jurisdiction will not attach.

291.

Moreover,

certainty,

if

that the

(colorable)

action must be

challenged

never

could

such that
____ ____

in order

dismissed.

plaintiff's good

faith in

by trial

have

jurisdiction").

commencement of

evidence

damages never

jurisdictional minimum

feigned

later

shows,

could have

the claim

to

confer

See also id. at

___ ____ ___

choosing a

facts which

amounted to

Finally,

if

legal

exceeded the

jurisdiction, the

290 (noting that

federal forum may

sum

events

the action reduce the

to

was essentially

establish that

the

Id. at 289,
___

be

the "claim

necessary

to give

subsequent

to

amount in controversy

-1111

below

the

statutory

minimum,

the

federal

court

is

not

divested of jurisdiction.

A careful

concern

amount in

for the

review of

plaintiff's

controversy.

St. Paul evinces

________

"good faith"

When discerning a

its primary

in alleging

the

plaintiff's good

faith, a court may

certainty

that

jurisdictional

look to whether it "appear[s] to

the

claim

amount."

Horton, 367 U.S. at 353;

______

is

really

for

less

a legal

than

the

St. Paul, 303 U.S. at 289; see also

________
___ ____

Jones v. Landry, 387 F.2d 102,

_____
______

104

(5th Cir. 1967) ("Thus, there is but one test; good faith and

legal

certainty

tests.").

are equivalents

rather

than two

separate

But see Local Div. No. 714, Amalgamated Transit

___ ___ _________________________________________

Union v. Greater Portland Transit Dist., 589 F.2d 1,

_____
_______________________________

9 (1st

Cir. 1978) (apparently finding alternative tests, noting that

where there is no evidence that the amount claimed was not in

good

amount

faith, it must appear

in controversy

minimum),

does

"to a legal

not exceed

certainty" that the

the

overruled on other grounds by

________________________________

jurisdictional

Local Div. 589,

________________

Amalgamated Transit Union v. Massachusetts, 666 F.2d 618 (1st

_________________________
_____________

Cir.), cert. denied, 457 U.S. 1117 (1981).

_____ ______

The parties in the instant case spill much ink over

the meaning of "good faith": whether it includes an objective

as

so,

whether

"objective" good faith includes "objective facts" as

opposed

to

well

as

subjective

"actual facts,"

etc.

component,

Stop

-1212

&

and

Shop

if

argues

that

the

"objective facts" were always the same: that it consumed much

less water than originally shown on KCWA's invoices, and that

although the

claimed amount in controversy

was over $50,000

at the time of filing, the "actual" amount in controversy is,

indisputably, less than the jurisdictional minimum.

counters

faith,

that not

but,

only

because

actions were relied

forwarded KCWA's

that Coventry

did it

file

wholly

independent

upon (indeed,

invoices to

with subjective

it was Stop

third

good

party's

& Shop

Coventry), there is

"should have known" about

Coventry

that

no reason

the "actual" amount

in

controversy

and

thus,

it

claimed

the

damages

in

"objective" good faith as well.

This

court

has found

amount-in-controversy

"objective"

Sys.,
____

574

although

context

good faith.

F.2d

the

that

"good

includes

faith" in

the

element

of

an

In Jimenez Puig v. Avis Rent-A-Car

_____________
_______________

37, 40

(1st

plaintiff had

Cir.

not

1978),

acted

we found

"in deliberate

that,

bad

faith" in filing his damages claim for mental anguish, "[t]he

question,

however, is

whether to

applicable law this claim

as

worth

evidence in

[the

with the

could objectively have been viewed

jurisdictional

light most

anyone familiar

minimum]."

favorable to plaintiff,

that, from the outset, plaintiff

Id.
___

(viewing

and finding

had no chance of recovering

statutory minimum);

Moore,
_____

60

F.3d

cf. Pratt Central Park Ltd. v.

___ ________________________

350,

353

(7th

Cir.

1995)

Dames &
_______

(upholding

-1313

contractual

liability

cap of

$5,000,

then

dismissing for

failure to meet amount-in-controversy requirement).

We find

that here, there is

or objective.5

amount

no dispute as to good

It is undisputed

in controversy

argue otherwise, that

the time

service

of

the

the time.

does not

Coventry had any reason to believe, at

KCWA's invoices,

calculated, were

find that, objectively

Coventry's claim

accuracy at

evidence, and Stop & Shop

filing, that

fee was

that Coventry alleged

believing its

Furthermore, there is no

faith, subjective

viewed, at

was

worth

more

upon which

the

factually incorrect.

We

the time

than

of its

the

filing,

jurisdictional

minimum.

This

jurisdiction

case

attaches,

change of events.

916

fits well

it is

within

not

the

ousted

rule that

by a

See St. Paul, 303 U.S. at

___ _________

once

subsequent

295; Klepper,
_______

F.2d at 340 (holding that summary judgment on one claim,

that reduced

amount in controversy

did not divest court

supra,
_____

3702 at

that although

of jurisdiction); 14A Wright &

35 (noting same).

Trust Co., 154 F.2d

__________

below statutory minimum,

In Thesleff v.
________

732, 732 n.1 (1st

plaintiff filed

Miller,

Harvard
_______

Cir. 1946), we noted

remittiturs that

reduced the

amount in controversy

below the jurisdictional minimum,

facts

the

at

the

time

action

was

commenced

the

conferred

____________________

5.

We

decline,

at this

time, to

make

any sort

of legal

distinction between "objective facts" and "actual facts"

purposes of determining amount in controversy.

-1414

for

jurisdiction which

subsequent events could not

divest.

See
___

also Ford, Bacon & Davis, Inc. v. Volentine, 64 F.2d 800, 801
____ _________________________
_________

(5th Cir. 1933) (refusing

removing co-plaintiff

"merely

original

who had

discloses a

recognizes

its

fact

legal

propriety

remand where an amended complaint,

of

died after action

which arose

after

consequences, without

the

jurisdiction").

amount-in-controversy context, the rule that

was filed,

the suit

and

impugning

the

As

the

in

jurisdiction is

not divested

the

by subsequent events

diversity-of-citizenship

Sperling,
________

has also been

requirement.

applied to

See
___

Smith
_____

v.

354 U.S. 91, 93 n.1 (1957); Mollen v. Torrance, 22

______
________

U.S. 537, 539 (1824).

In the

because

Stop

$74,953.00.

& Shop

The

filing, exceeded

then-unknown

consumption.

Stop

&

Shop

instant case, Coventry filed

refused

amount

the

in

to

pay its

"actual

facts"

bills

controversy, at

statutory minimum

of

Stop

the complaint

totalling

the

time

of

of

the

regardless

&

Shop's

water

It was not until Coventry filed the action that

inquired

about

KCWA's

invoices

and

KCWA

subsequently changed them to reflect accurately the amount of

water usage.

Presumably, had

the billing error

never been

detected,

the

damages claim

third

party's

action

would

have proceeded

of $74,953.00.

The fact that

error

initially

inflated

on

Coventry's

an independent

the

amount

in

controversy above the jurisdictional minimum does not lead to

-1515

the

inevitable

subsequent

to

result that

the

filing

the

third

of the

party's correction,

complaint,

affects

the

propriety of the jurisdiction once it attached.

Stop &

draw

"subsequent

Shop insists that, in this

distinction

between

revelations."

case, we should

"subsequent

Stop

& Shop

events"

argues

that

and

the

subsequent revelation that the actual amount of damages never

met the jurisdictional minimum -- as opposed

event

that

reduces

that amount

jurisdiction, regardless

have known

at the time of

this court,

counsel for

logical extension of

have been without

--

divests

of what the parties

filing.

Stop &

At oral

to a subsequent

the

knew or should

argument before

Shop acknowledged

this argument is

court of

that the

that the court

jurisdiction over the case

would

even if KCWA's

error had not been discovered until trial.

To support

cases

one,

court.

that are

this argument, Stop &

factually

and that, in any

distinguishable from

event, are not

the instant

controlling upon this

First, in American Mutual Liab. Ins. Co. v. Campbell

______________________________
________

Lumber Mfg. Corp., 329

_________________

the plaintiff

contracts.

claim

Shop cites three

F. Supp. 1283, 1284 (N.D.

filed an action

for amounts due

Ga. 1971),

on insurance

The plaintiff was forced to estimate its

because

certain

available to it.

the plaintiff

of

defendant's

Id. at 1285.
___

records

damages

were

not

During post-filing discovery,

learned that the actual

-16-

amount in controversy

16

was

below the statutory minimum.

the maximum

never

varied,

controversy

filed.

court

amount

recoverable on

and

noted

that

was ascertainable

Id. at
___

1286.

reasoned that

Thus,

the

at

Id.
___

the

the

The court found that

plaintiff's

correct

the time

amount

the action

in dismissing the

plaintiff's

theory

in

was

action, the

realization that

its

earlier

estimation

of

damages

was erroneous

was

not

an

"event," under St. Paul, that reduced the amount recoverable.

________

Id. at 1286.
___

Second, in Jones v.
_____

181,

182 (6th Cir.

Knox Exploration Corp., 2 F.3d

______________________

1993), the plaintiffs

revealed in their

appellate brief that "it was not discovered until this appeal

that

the

$50,000."

amount

in

controversy

is

actually

less

than

The court acknowledged that subsequent events that

reduce the amount in controversy, such as an amendment to the

complaint

defense,

The

court

or

an

application

would not oust

reasoned

that

of

post-discovery

federal jurisdiction.

"[a] distinction

must

legal

Id. at 183.
___

be

made,

however, between subsequent events

controversy

required

and subsequent

amount

commencement of

that there

the amount;

that,

was

or

that change the amount in

revelations that,

was

the action."

was no subsequent

not

Id.
___

in

in fact,

controversy

at 183.

The

event that occurred

instead, there was only

at

the

the

court found

to reduce

a subsequent revelation

in fact, the required amount was not in controversy at

-1717

the time the action was filed.

Id.
___

Thus,

the court ordered

dismissal based on lack of subject matter jurisdiction.

Third,

in

Tongkook America, Inc.

________________________

Sportswear Co.,
_______________

14 F.3d

parties realized

during pre-trial

prior

suit,

amount

to filing

782-83 (2d

Cir.

Shipton
_______

1994), the

discovery that, one

the plaintiff

had

drawn a

year

certain

upon a letter of credit that was erroneously added to

the damages

that

781,

v.

Id.
___

the

claim.

The court

discovery

of the

rejected plaintiff's argument

failure

withdrawn was an "event subsequent to

to

credit

the amount

the institution of the

suit."

Id.
___

at 784-85.

The

court deemed

the plaintiff's

previous withdrawal upon the letter of credit an "event which

preceded

altered

Thus,

the commencement

the amount

of

the

suit [that]

of [plaintiff's]

the sum

certain

in controversy

jurisdictional

minimum

and

the

objectively

claim."

was

court

Id. at
___

786.

lower than

ordered

the

the

case

dismissed for lack of subject matter jurisdiction.

In

damages

the instant

claim

recalculation

rather, it

on

during

alleged the

case,

faulty

estimation

discovery,

amount in

third-party's information that

to know was erroneous.

Coventry did

as

in

not base

that

its

required

American Mutual;
________________

controversy based

upon a

neither party had any

reason

Unlike the "mere revelation" in Jones

_____

that there was never the requisite amount in controversy, the

reduction

in the

amount in

controversy here

occurred only

-1818

after KCWA's

affirmative acts

of checking the

and changing the invoice amounts.

water meters

Finally, although portions

of the Tongkook court's reasoning are not entirely consistent

________

with our decision here, we distinguish that case narrowly

on

the facts; in Tongkook, the parties themselves made the error

________

affecting the

amount in

controversy approximately

prior to commencement of the suit.

it

one year

14 F.3d at 782-83.

Thus,

appears that the plaintiff in that case should have known

that

See
___

its claim

did not

St. Paul, 303

_________

exceed the

U.S. at

290

jurisdictional minimum.

(stating that

a plaintiff

should know whether the claim meets the amount in controversy

requirement).

party

In

the

with otherwise

apparently

controversy

instant case,

no

non-obvious

at the

time

connection

error

so

of filing,

an independent

to

the case

that

the

in fact,

third

made

an

amount-in-

exceeded the

jurisdictional minimum.

its

Coventry had no reason to know that

claimed amount of damages

reduction

of the

amount in

occurring wholly after the

was in error.

Moreover, the

controversy resulted

action commenced.

We

from acts

hold that,

under these extraordinary circumstances, the district court's

jurisdiction was not disturbed by the subsequent reduction of

the amount in controversy.6

____________________

6.

We note here

plaintiff

who

a paradox.
files

diversity jurisdiction

Under 28

claim

U.S.C.

in federal

is subject to the

court

1332(b),

based

on

court's imposition

of costs if the plaintiff "is finally adjudged to be entitled

to recover less than the sum or value of $50,000."

-1919

28 U.S.C.

III.
III.
____

CONCLUSION
CONCLUSION
__________

For the

of

the district

consistent

costs.

foregoing reasons, we

court, and

with this opinion.

remand for

vacate the judgment

further proceedings

Each party shall bear its own

____________________

1332(b).

Assuming that Coventry will persist in pursuing the

case

in

federal

technically
avoid
Cf.
___

court, it

met the

seems

odd

requirements of

potential liability

under

that

while it

1332(a), it

1332(b)'s

has

may not

cost sanction.

Horton, 367 U.S. at 362 (noting the "strange result that

______

while respondent has met the requirements of

1332(a), . . .

under

for failing to

1332(b) it will be

meet

the same

requirements)

liable for costs

(Clark, J.

dissenting).

The

determination of whether or not to impose such cost sanctions

is,

of course, within

the sound discretion

court.

-2020

of the district