St. Paul Mercury Indem. Co. v. Red Cab Co.

303 U.S. 283, 58 S. Ct. 586 (1938)

 

RULE:

The rule governing dismissal for want of jurisdiction in cases brought in federal court is that, unless the law gives a different rule, the sum claimed by plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim.

FACTS:

Respondent insured entered into a contract of insurance with petitioner insurer, an Indiana corporation, wherein petitioner insured respondent against loss or expense by reason of claims for compensation for a specified period. Respondent sued petitioner in state court after petitioner failed to reimburse respondent for insured losses. The complaint claimed $ 4,000 in damages. Petitioner removed the case to federal district court. The complaint was then amended to assert injuries totaling $ 1,380. A judgment was entered favoring respondent for $ 1,162.  The appellate court refused to decide the merits of petitioner's appeal on the ground that the case should have been remanded by the district court to the state court because the record showed that respondent's claim did not equal $ 3,000, the amount necessary to give the district court jurisdiction. The Supreme Court of the United States reversed the appellate court’s decision and remanded the case for further proceedings.

ISSUE:

Could an insurance claim filed in a state court originally claiming $ 4,000 in damages, be validly removed to a federal district court even after the complaint was amended to assert injuries totalling $ 1,380, which was below the $ 3,000 amount necessary to give the district court jurisdiction?

ANSWER:

Yes.

CONCLUSION:

Events occurring subsequent to removal of a case from state to federal court which reduce the amount recoverable, whether beyond a plaintiff's control or the result of his volition, did not oust a district court's jurisdiction once it had attached. On the face of the original pleading, which was found to have been made in good faith, petitioner was entitled to invoke the jurisdiction of the federal court, and the reduction of the amount claimed, after removal, did not take away that privilege.

Click here to view the full text case and earn your Daily Research Points.