Opinion ID: 760942
Heading Depth: 2
Heading Rank: 2

Heading: Jurisdiction After Summary Judgment

Text: 10 Satisfaction of the § 1332(a) diversity requirements (amount in controversy and citizenship) is determined as of the date that suit is filed--the time-of-filing rule. Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289-90, 58 S.Ct. 586, 590-91, 82 L.Ed. 845 (1938). Thus it is the well-settled rule that a federal court does not lose jurisdiction over a diversity action which was well founded at the outset even though one of the parties may later change domicile or the amount recovered falls short of [the statutory minimum]. Rosado v. Wyman, 397 U.S. 397, 405 n. 6, 90 S.Ct. 1207, 1214 n. 6, 25 L.Ed.2d 442 (1970). Federal diversity jurisdiction is not lost by post-filing events that change or disturb the state of affairs on which diversity was properly laid at the outset. See Chase Manhattan Bank, N.A. v. American Nat'l Bank & Trust Co. of Chicago, 93 F.3d 1064, 1070 (2d Cir.1996) (The amount in controversy is determined at the time the action is commenced. (quoting Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir.1994))); see also Linardos v. Fortuna, 157 F.3d 945, 947 (2d Cir.1998) (noting that the time-of-filing rule applies in the citizenship context). 5 11 In Chase Manhattan Bank, the plaintiff bank invoked diversity jurisdiction to enforce a mortgage guaranty, alleging that $4 million in improvements would be required post-foreclosure. Shortly after suit was filed, the bank foreclosed and sold the property unimproved. The district court dismissed for lack of jurisdiction on the ground that the remaining amount in controversy fell short of the amount required to support diversity jurisdiction. We reinstated the complaint on the ground that it alleged in good faith a sufficient amount in controversy notwithstanding subsequent events that made recovery of that amount legally impossible. Chase Manhattan Bank, 93 F.3d at 1070-71. The district court had confused the jurisdictional inquiry with the ultimate issue of recovery. Chase Manhattan Bank, 93 F.3d at 1071. 12 Wolde-Meskel's complaint alleged an implied employment contract and contract claims aggregating over $50,000 in damages. This Court recognizes a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy. See Tongkook, 14 F.3d at 785-86 (If the right of recovery is uncertain, the doubt should be resolved ... in favor of the subjective good faith of the plaintiff. (quoting McDonald v. Patton, 240 F.2d 424, 426 (4th Cir.1957))). Moreover, there has been no argument presented or finding made that the jurisdictional allegations of the complaint were made in bad faith in an attempt to feign jurisdiction. In any event, to demonstrate a filing in bad faith, [i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. St. Paul, 303 U.S. at 289, 58 S.Ct. at 590. Legal certainty is analyzed by what appears on the face of the complaint; subsequent events--such as a valid defense offered by the defendant, 6 or actual recovery in an amount less than the minimum jurisdictional amount--do [ ] not show [plaintiff's] bad faith or oust the jurisdiction. St. Paul, 303 U.S. at 289, 58 S.Ct. at 590. 13 Not to the contrary is Tongkook in which plaintiff alleged over $100,000 in contract damages, but discovery revealed a letter of credit drawn on by plaintiff prior to the suit that reduced the disputed amount below the jurisdictional amount needed to support diversity jurisdiction. We affirmed the district court's dismissal, noting that when the suit was commenced, the balance due was actually below the requisite amount. Tongkook, 14 F.3d at 783. Rejecting the argument that a plaintiff's subjective belief as to the amount in controversy at the time the complaint is filed is sufficient to create good faith, we relied on the fact that from the outset, [plaintiff], to a 'legal certainty,' could not recover the statutory jurisdictional amount. Tongkook, 14 F.3d at 785. 14 Wolde-Meskel's breach of contract claim was defeated by the legal defenses adduced by VIPCS, and by Wolde-Meskel's inability to prove that the totality of the circumstances created an implied employment contract. Summary judgment on Wolde-Meskel's breach of contract claim was therefore appropriate. But while that ruling reduced the amount in controversy, it did not establish the quite distinct proposition that the amount claimed was never in controversy. We cannot conclude that the face of Wolde-Meskel's complaint was so patently deficient as to reflect to a legal certainty that he could not recover the amount alleged, or that the damages alleged were feigned to satisfy jurisdictional minimums.