SW Legal Educational Publishing

For Diversity Jurisdiction, Counterclaims Included in Amount in Controversy
Description In diversity jurisdiction suit, plaintiff's claim was for less than $50,000. Request by defendant for the court to dismiss the case based on inadequate amount in controversy fails because defendant counterclaimed for more than $50,000.
Topic Court Procedure
Key Words Amount in Controversy, Diversity Jurisdiction, Counterclaim
C A S E   S U M M A R Y
Facts Spectacor sued former executive Brown for $47,000 it claimed he was overpaid in severance when his position was terminated. The sum was less than the $50,000 minimum required for diversity jurisdiction. [Note that the amount has since been increased to $75,000.] Brown responded by denying that the court had diversity jurisdiction, because the pleading was for $47,000, and counterclaimed for over $1 million in compensation he claimed he was owed. The district court asserted jurisdiction. Brown appealed.
Decision Affirmed. "We hold that where, as here, a defendant elects not to file a motion to dismiss for lack of jurisdiction, but answers a complaint by asserting a compulsory counterclaim, the amount of that counterclaim may be considered by the court in determining if the amount in controversy exceeds the statutory requirement for diversity jurisdiction." Brown did not seek just to have the suit dismissed based on lack of necessary amount in controversy. "Instead, he asserted a counterclaim against Spectacor based upon the same transactions that gave rise to Spectacor's suit against him."
Citation Spectacor Management Group v. Brown, 131 F.3d 120 (3rd Cir., 1997)

Back to Court Procedure Listings

©1997  South-Western, All Rights Reserved