### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 14

- 2959 J OSEPH C

. M C C ORMICK and M ARY C. M C C ORMICK , Plaintiffs

- Appellants ,

v.
I NDEPENDENCE L IFE AND A NNUITY C OMPANY , Defendant

- Appellee

.

____________________ Appeal from the Unit ed States District Court for the Eastern District of Wisconsin

. No. 12

- C

- 763

— William C. Griesbach , Chief Judge

.

____________________
A RGUED J UNE 2, 2015

— D ECIDED J ULY 24, 2015

____________________

Before P OSNER , E ASTERBROOK , and S YKES , Circuit Judges

. E ASTERBROOK , Circuit Judge

. Joseph and Mary McCormick bought a single

- premium variable life

- insurance policy that permits them to borr ow against its cash value. L oans are s ecured by moving an equivalent amount from sub

- accounts that the po licyholder can in vest to a “general ac count” that draws 4% interest . The policyholder owes 4.7% on any bo rrowed sums , so the net is 0.7% per annum, plus foregoing the opportunity t o exercise discretion about how to invest2 No. 14

- 2959

the bor rowed sum . The policy adds that , if the owner does not pay the annual 4.7% interest, “it will be added to the principal of the loan and will bear interest.” The McCormicks borrowed against the policy’s cash va lue and did not pay interest. Independence, the insurer, ad ded the amount of unpaid interest “to the principal of the loan” (which caused additional sums to be moved from i nvestments into the general account as security ) and charged interest on the higher indebtedness . Ove r the years, co mpound interest has increased the debt by $44,000, which if
not re paid will reduce th e policy’s death benefit. T he McCormicks seek a declaration that they do not owe this $44,000. As they see things, when the unpaid annual interest was “added to the princi pal of the loan” each year and moved to the general account , it was thus “paid” automat ically

— and what has been paid cannot draw interest . The i nsurer removed the suit to federal court, and the district judge granted judgment on the pleadings, since the dispute turns entirely on th e policy’s language. The judge thought that the language unambiguously supports the insur er

. 2014 U.S. Dist

. L EXIS 34981 (E.D. Wis. Mar. 18, 2014). Our mention of a $44,000 dispute is a tipoff to the only question we need address: What is this case doing i n federal court? Removal rested on diversity of citizenship, and $75,000 is the minimum amount in controversy for that j urisdiction. 28 U.S.C. §1332(a). Both sides nonethele ss support the removal and maintain that it was proper because the McCormicks’ comp laint asked for cancellation of the entire loan balance (roughly $70,000) in addition to elimination of the interest. The problem is that there is no legal basis forNo. 14

- 2959 3

that request, which the McCormicks voluntarily dropped soon after removal.
If a suit is fi led initially in federal court, a plaintiff’s good

- faith estimate of th e stakes controls unless it is legally impossible for a court to award what the plaintiff demands. St. Paul Mercury Indemnity Co. v. Red Cab Co ., 303 U.S. 283 , 289 (1938) (asking whethe r it “appear [ s ] to a legal certainty” that the plaintiff cannot recover the jurisdictional minimum)

. The same approach applies to a removing defendant’s est imate of the stakes. Dart Cherokee Basin Operating Co. v. O wens , 135 S. Ct. 547, 553

– 54 (2014). Canc ellation of the princ ipal balance as a remedy for excessive in terest is legally i mpossible in Wisconsin, whose law supplies the rule of dec ision. When pressed at oral argument for any authority u nderlying the complaint’s demand for this remedy, the McCormi cks’ lawyer conceded that there is none. Wisconsin entitles a party aggrieved by breach of contract to a remedy that will restore him to the position he would have occupied had all promises been fulfilled. See, e.g., Thorp Sales Corp. v. Gyuro Grading Co ., 111 Wis. 2d 431 (1983). Cancellation of the principal debt would be a windfall, not a means of vindica ting the McCormicks’ contractual rights.
Counsel told us that he put the demand in the complaint only becaus e Joseph McCormick really wants cancellation of the debt and thinks himself entitled to it

— though without a legal basis. The complaint might as well have demand ed treble the amount of disputed interest, even though Wisco nsin law offers not a shred of support for a treble

- damages remedy. The amount

- in

- controversy requirement would not be worth the paper it’s written on if arbitrary multipliers, or4 No. 14

- 2959

a plaintiff’s fondest wishes, counted toward federal jurisdi ction. In a memorandum filed after the oral argument, the i nsurer contends that jurisdiction is supported by the co mplaint’s request for an injunction against cancellation of the policy. The policy allows cancellation if a loan’s unpaid ba lance equals or exceeds the policy’s cash value. The McCo rmicks’ loan (includ ing interest) was nearing that point, and Independence sent them a notice of proposed cancellation. But how does this propel the stakes over $75,000? If the pol icy really was at (or approaching) a negative value, then the difference between its continuatio n and its cancellation has a correspondingly small value. Suppose, despite this, that the policy’s value exceeds $75,000. The policy serves as security for the loan. Forget i nsurance for a moment and consider the situation in which the owner of a parcel of land worth $1 million uses it as s ecurity for a $50,000 loan. The borrower does not repay, and the lender seeks to foreclose and sell the parcel to satisfy the debt. What is the amount in controversy: $50,000 or $1 mi llion? The amount is $50,000, because that is what would sa tisfy the lender’s entire demand on the date the suit was filed. See Gardynski

- Leschuck v. Ford Motor Co

. , 142 F.3d 955 (7th Cir. 1998). Similarly, the McCormicks could have satisfied Independence’s demand by paying the $44,000 it clai ms as interest

— and they could have avoided a risk of the policy’s cancellation by paying even less (just enough to keep its cash value positive). The request for an injunction against cance llation therefore does not turn this dispute about $44,000 into

a c ontroversy worth more than $75,000.No. 14

- 2959 5

Finally, the insurer maintains that the district court had jurisdiction when it entered judgment, even if not when the case was removed, because after the removal the McCo rmicks added a federal securities

- law claim to th eir co mplaint, furnishing federal

- question jurisdiction under 28 U.S.C. §1331. There are two potential problems with that line of argument. First, jurisdiction usually depends how things stand when a case is removed , not on what happens later. St. Paul Mer cury , 303 U.S. at 291

– 94; In re Shell Oil Co. , 966 F.2d 1130, amended, 970 F.2d 355 (7th Cir. 1992)

. These decisions hold that post

- removal changes to the pleadings do not ca ncel federal jurisdiction that existed on the date of removal, which leaves open t he possibility that new bases of federal jurisdiction could be added. See Caterpillar, Inc. v. Lewis , 519 U.S. 61 (1996). Otherwise a court might dismiss a suit for lack of jurisdiction, only to have it re

- filed the next day with jurisdiction secure. Cf. N ewman

- Green, Inc. v. Alfonzo

- Larrain , 490 U.S. 826 (1989) . So we turn to the second problem: the securities claim is as impossible as the demand for zeroing out the loan’s principal balance

. Plaintiffs invoked §12 of the Securities Act of 1933, 15 U.S.C. § 77 l , which governs the sa le of securities. (Variable insurance policies are securities. See SEC v. Variable Annuity Life Insurance Co. of America , 359 U.S. 65 (1959) .) They asser ted that the insurer violated §12 by stating in the registration statement and prospectus that interest on loans will be d educted from the policy’s cash value if not paid when due. Yet t he McCormicks’ complaint avers that this is exactly what the policy itself says. The complaint therefore does not allege a false statement

. The McCor micks alleged breach of contract, not fraud. On the difference between these two for6 No. 14

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the purpose of federal securities law, see Wharf (Holdings) Ltd. v. United International Holdings, Inc ., 532 U.S. 588 (2001)

. More than that: As the district court observed, 2014 U.S. Dist. L EXIS 34981 at *11

– 14, the complaint reveals that the claim is time

- barred

— by twenty

- four years ! A claim under §12 arises when the security is first offered to the public, 15 U.S.C. §77m, and a statute of repos e sets three years as the outer limit for suit. The McCormicks bought their policy in 1987 (the policy may have been “offered” even earlier) and did not assert a s ecurities claim until 2014. S tatutes of repose cannot be equitably tolled, see Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson , 501 U.S. 350 , 363 (1991) , and ongoing injury (which the McC ormicks assert) differs from a new claim. New injury from an old wrong does not affect the p eriod of limitations. See, e.g., National Railroad Passenger Co rp. v. Morgan , 536 U.S. 101 , 110

– 15 (2002) ; United States v. K ubrick , 444 U.S. 111 (1979). The securities claim is wacky, so far beyond the pale that it cannot support federal jurisdiction. See Hagans v. Lavine , 415 U.S. 528 , 537 (1974) (an “essentially fictitious” claim does not support jurisdiction under §1331 )

. The judgment is vacated, and the case is remanded with instructions to dismiss for lack of subject

- matter jurisdiction.