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BlogsPublications | June 7, 2016
2 minute read

MSC holds that the monetary jurisdictional limit for district courts is determined by the pleadings, not by the proofs at trial

A district court does not lose jurisdiction over a case which through the course of litigation becomes worth more than $25,000, if the initial prayer for relief is within the jurisdictional limit, according to the Michigan Supreme Court’s unanimous decision in Hodge v State Farm, No.149043.

Linda Hodge suffered serious injuries when she was struck by an automobile in Detroit driven a driver insured by State Farm. Hodge sued State Farm for first-party no fault benefits and sought damages “not in excess of $25,000” in her complaint. MCL 600.8301 states that district courts have “exclusive jurisdiction in civil actions when the amount in controversy does not exceed $25,000.” In discovery, it became apparent that Hodge could prove more than $25,000 in injuries. The jury returned a verdict of $85,927 for Hodge which the district court reduced to the jurisdictional limit of $25,000 plus $1,769 in no-fault interest. State Farm appealed the verdict to the circuit court, claiming that the amount in controversy exceeded the district court’s jurisdictional limit. The circuit court affirmed, as did the Court of Appeals.

The Michigan Supreme Court reversed, holding that a district court is not divested of subject matter jurisdiction when, through pre-trial discovery and evidence presented at trial the actual amount in controversy comes to exceed $25,000. In absence of bad faith, the pleadings control the amount in controversy and the amount of damages a plaintiff can recover—not the proofs at trial. The Court did not consider the issue of whether Hodge pled her damages in bad faith because State Farm did not raise the issue on appeal. Justice Markman concurred in the judgment, but wrote separately to expound on the issue of pleading in bad faith.