Summary
The Michigan Supreme Court reversed the Court of Appeals, reinstated the district court’s judgment, and remanded for further proceedings. The Court held that the parties’ good-faith, court-approved stipulation that the amount in controversy was less than $25,000 governed subject-matter jurisdiction, despite the original complaint’s contrary allegation. The Court also held that any procedural error in transferring the case without an express stipulation to amend the complaint was waived, and that the district court could permit amendment before entry of judgment.
Topics
Practice areas
Questions Presented
- Whether a good-faith joint stipulation approved by the court that the amount in controversy is less than $25,000 governs subject-matter jurisdiction despite a complaint alleging more than $25,000.
- Whether the circuit court's failure to obtain an express stipulation to amend the complaint before transferring the action was a jurisdictional defect or a waivable procedural error.
- Whether the district court had authority to permit amendment of the complaint after the jury verdict but before entry of judgment.
Holdings
- A good-faith joint stipulation to an amount in controversy below $25,000, when approved by the court, governs subject-matter jurisdiction; a contrary pleading allegation is unjustifiable and cannot be proved in light of the binding stipulation.
- The failure to obtain an express stipulation to amend the complaint before transferring the action was a procedural error, not a jurisdictional defect, and defendants waived the error by failing to challenge the transfer within a reasonable time.
- Because the district court had subject-matter jurisdiction, it had authority to allow plaintiffs to amend their complaint after the verdict and before entry of judgment.
Key quotations
“Where the parties jointly stipulate in good faith to an amount in controversy and the court accepts that stipulation, it is binding on the parties and the court.” (at 2)
“In sum, the parties’ good-faith joint stipulation to an amount in controversy less than $25,000 vested the district court with subject-matter jurisdiction over the action, as plaintiffs’ pleading alleging an amount in controversy more than $25,000 was unjustifiable in light of that stipulation.” (at 3)
Factual background
Plaintiffs originally alleged damages exceeding $25,000 in a circuit court complaint. Following defendants' rejection of a $14,000 case-evaluation award, the parties stipulated in good faith that the amount in controversy was less than $25,000 and obtained a transfer to district court. The jury ultimately returned a verdict exceeding $25,000, but the district court reduced the damages to the jurisdictional limit and entered judgment for plaintiffs.
Procedural history
Plaintiffs initially filed in circuit court seeking more than $25,000. After defendants rejected a $14,000 case-evaluation award, the parties jointly stipulated that the amount in controversy was less than $25,000 and requested transfer to district court. The circuit court accepted the stipulation and transferred the case, and the district court later permitted amendment of the complaint, entered judgment for plaintiffs, and reduced the jury's award to the district court's jurisdictional limit. The Court of Appeals held that the district court lacked subject-matter jurisdiction, but the Michigan Supreme Court reversed, reinstated the district court judgment, and remanded.
Remand instructions
Reverse the Court of Appeals judgment, reinstate the March 24, 2017 judgment of the 46th District Court, and remand to the district court for further proceedings.