For the purpose of establishing diversity jurisdiction under 28 U.S.C.S. § 1332(a), the amount in controversy is determined by looking to the circumstances at the time the complaint is filed. Federal jurisdiction depends upon the facts at the time suit is commenced, and subsequent changes in the amount in controversy will not divest it. The courts decide the amount in controversy from the face of the complaint, unless it appears or is in some way shown that the amount stated in the complaint is not claimed in good faith.
Appellant sewage company filed an action against appellee customer to recover amounts it alleged were owed by appellee for sewage services. Appellant's complaint set forth a claim in excess of the jurisdictional minimum amount in controversy set forth in 28 U.S.C.S. § 1332(a). Subsequently, information provided by a third-party resulted in a reduction of appellant's claim to an amount below the jurisdictional requirements. Appellee then filed a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). Appellee's motion was granted by the district court. Appellant sought review.
Was the action correctly dismissed based on information from a third-party that the amount involved fell below the jurisdictional amount, even if the appellant believed in good faith that the amount indicated in the complaint was above the jurisdictional minimum amount?
The court held that the district court erred when it granted appellee's motion to dismiss because viewed under the objective good faith standard, at the time appellant's claim was filed, it was worth more than the jurisdictional minimum. The court held that the objective good faith standard had been satisfied because appellant had no reason to know that its claimed amount of damages was in error, and therefore the district court's jurisdiction was not disturbed by the subsequent reduction of the amount in controversy.