
USCA1 Opinion

	




          December 7, 1995                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 95-1410                         COVENTRY SEWAGE ASSOCIATES, ET AL.,                               Plaintiffs, Appellants,                                          v.                             DWORKIN REALTY CO., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                       [Hon. Mary J. Lisi, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                           Stahl and Lynch, Circuit Judges.                                            ______________                                 ____________________                                     ERRATA SHEET                                     ERRATA SHEET            Please make  the  following  changes  to  the  opinion  issued  on        November 22, 1995:            Cover   sheet    -   delete   "Incorporation"    and   insert            "Incorporated" for name of appellants' law firm            Page 2, line 18 - change "appellants" to "appellees"                             United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 95-1410                         COVENTRY SEWAGE ASSOCIATES, ET AL.,                               Plaintiffs, Appellants,                                          v.                             DWORKIN REALTY CO., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                       [Hon. Mary J. Lisi, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                           Stahl and Lynch, Circuit Judges.                                            ______________                                 ____________________            David A.  Wollin with whom Adler,  Pollock & Sheehan  Incorporated            ________________           _______________________________________        was on brief for appellants.            Steven M. Richard with whom Tillinghast,  Collins & Graham was  on            _________________           ______________________________        brief for appellees.                                 ____________________                                  November 22, 1995                                 ____________________                      STAHL,  Circuit Judge.  Appellants, Coventry Sewage                      STAHL,  Circuit Judge.                              _____________            Associates  ("Coventry")  and   Woodland  Manor   Improvement            Association ("Woodland")  brought a diversity  action against            appellees, Dworkin Realty Co. ("Dworkin") and The Stop & Shop            Supermarket  Company  ("Stop &  Shop").    The United  States            District Court  for the District  of Rhode Island  found that            the amount-in-controversy requirement of  28 U.S.C.   1332(a)            was  not met and  dismissed the case,  pursuant to appellees'            motion  under Fed. R. Civ.  P. 12(b)(1), for  lack of subject            matter  jurisdiction.   For  the  reasons  stated below,  and            because of the unusual facts of this case, we reverse.                                          I.                                          I.                                          __                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       FACTUAL BACKGROUND AND PRIOR PROCEEDINGS                       ________________________________________                      Coventry  and Woodland  own and  operate a  private            sewer  line  and  sewage  pumping  station  servicing,  among            others, a supermarket run by Stop & Shop, located on property            owned  by Dworkin, a  wholly-owned subsidiary of  Stop & Shop            (hereinafter  appellees will  be referred to  collectively as            "Stop  &  Shop").1    In  June 1992,  Coventry  and  Woodland            (hereinafter, collectively "Coventry") entered into  a "Sewer            Connection Agreement" with  Stop & Shop, whereby  Stop & Shop            agreed  to pay  a  service fee  for  sewer-main usage.    The            service fee was based, in part, upon the number of cubic feet            of water consumed on  the property.  To determine  the amount                                            ____________________            1.  The existence of diversity of citizenship is undisputed.                                         -2-                                          2            of water  consumed, the parties' contract  relied on invoices            from the Kent County Water Authority ("KCWA").  The KCWA sent            these  invoices to  Stop  & Shop,  and Stop  &  Shop in  turn            forwarded them to Coventry.                      Because of a dispute  over the reasonableness of an            increase  in the service fee --  an increase Coventry claimed            was permitted by  the contract -- Stop &  Shop refused to pay            Coventry's bills which  accumulated beginning in early  1994.            In October 1994, Coventry  filed this action seeking recovery            of $74,953.00, the  amount it  claimed to be  due based  upon            water-usage numbers obtained from  the KCWA invoices and what            Coventry  claimed  was  the  correct new  service  fee  rate.            Coventry  also sought  contractual  attorneys' fees.   It  is            undisputed that,  at the time Coventry  commenced the action,            it  alleged the amount in  controversy in the  belief that it            exceeded the  jurisdictional minimum,  and not  as a ruse  to            invoke federal jurisdiction.                      Shortly after the  complaint was filed,  but before            Stop & Shop filed  its answer, Stop & Shop contacted the KCWA            about  the invoices  underlying Coventry's  fee calculations.            The KCWA then sent an employee to the property who discovered            that  there  had been  a misreading  of  Stop &  Shop's water            meters,  essentially caused by the adding of an extra zero to            the  number of  cubic  meters actually  consumed.   By letter            dated November 18, 1994,  the KCWA notified Stop &  Shop that                                         -3-                                          3            it was correcting the  billing error by changing  the amounts            of the invoices.                      Based upon the  KCWA's corrected invoices, Coventry            reduced  the  sum  of  its  bills  to  Shop  &  Stop to  only            $18,667.88,  an  amount  that   included  the  disputed   fee            increase.   Subsequently,  Stop  & Shop  paid the  undisputed            portion  of the  fee, $10,182.48,  initially withholding  the            disputed balance of $8,485.40.   Stop & Shop ultimately  paid            this remaining sum as well, reserving the right to recoup the            amount   should  it   prevail   in  its   challenge  to   the            reasonableness of the  service fee.  Stop &  Shop, presumably            doubting  the  existence  of  diversity  jurisdiction,  asked            Coventry to voluntarily dismiss  the federal action; Coventry            refused,  however, apparently  because  of  its intention  to            pursue in federal court  its claim for contractual attorneys'            fees.2                                            ____________________            2.  We note  that although  attorneys' fees usually  will not            constitute a portion  of the amount in  controversy, there is            an  exception  where,  as  here, the  fees  are  contractual.            Department of Recreation v. World Boxing Ass'n, 942 F.2d  84,            ________________________    __________________            89  (1st Cir.  1991).   In this  case, Coventry  cannot avail            itself of this exception as  a basis for federal jurisdiction            because, not only are there no specifics in  the record as to            the amount of such fees, Coventry informed this court at oral            argument  that its  estimation  of attorneys'  fees was  only            $10,000.                                         -4-                                          4                      Stop & Shop moved to dismiss  the action under Fed.            R.   Civ.   P.   12(b)(1)   for  lack   of   subject   matter            jurisdiction.3    The  district  court  granted  the  motion,            finding  that,   "to  a  legal  certainty,"   the  amount  in            controversy did not exceed $50,000 as required by 28 U.S.C.              1332(a).    Notwithstanding  the  small  amount  actually  in            controversy, Coventry  appeals the  dismissal of  the action.            At  oral argument  before  this court,  counsel for  Coventry            stated  that  the  reason  for the  insistence  upon  federal            jurisdiction  was that the case would get to an earlier trial            in federal  court (including the appeal  proceedings) than if            the case were pursued in state court.                                         II.                                         II.                                         ___                                      DISCUSSION                                      DISCUSSION                                      __________            A.  Standard of Review            ______________________                      We  review de novo  the district  court's dismissal                                 __ ____            for lack of subject matter jurisdiction under Fed. R. Civ. P.            12(b)(1).  Murphy  v. United  States, 45 F.3d  520, 522  (1st                       ______     ______________            Cir.),  cert. denied, 115 S.  Ct. 2581 (1995).   Although the                    _____ ______            facts  pertinent  to  this  appeal  are  undisputed,  we  are            nonetheless "mindful that the party invoking the jurisdiction            of  a  federal  court  carries  the  burden  of  proving  its                                            ____________________            3.  Although  the KCWA notified Stop  & Shop of  the error in            November 1994, Stop & Shop raised only a general, boilerplate            amount-in-controversy  defense in  its December  1994 answer,            and  did not formally  move to dismiss  on the jurisdictional            basis until February 1995.                                         -5-                                          5            existence."  Taber Partners,  I v. Merit Builders,  Inc., 987                         __________________    _____________________            F.2d 57, 60 (1st Cir.), cert. denied, 114 S. Ct. 82 (1993).                                    _____ ______            B.  Analysis            ____________                      Coventry  argues  that at  the  time  it filed  the            action,  it claimed,  in  good faith,  damages  in excess  of            $50,000;  thus, the  subsequent  reduction of  the amount  in            controversy   did   not   divest  the   district   court   of            jurisdiction.  Coventry contends that  the KCWA's post-filing            discovery of  the billing error  and changing of  the invoice            amounts was a "subsequent  event" that neither undermined its            good faith in filing,  nor disturbed the court's jurisdiction            once it attached.  Shop & Stop argues that  the billing error            was a mere  "subsequent revelation" that  proved, to a  legal            certainty,  that the  amount in  controversy had  always been            below the jurisdictional minimum  and thus the court properly            dismissed the case for lack of subject matter jurisdiction.                      This  case illustrates the  competing policies that            operate   when  a   court   makes  an   amount-in-controversy            determination.    On the  one  hand, a  federal  court should            rigorously  enforce the  jurisdictional limits  that Congress            chooses  to set in diversity  cases.  See  Pratt Central Park                                                  ___  __________________            Ltd.  v. Dames  & Moore,  Inc., 60  F.3d 350,  352 (7th  Cir.            ____     _____________________            1995).    On  the  other  hand,   preliminary  jurisdictional            determinations  should  neither  unduly delay,  nor  unfairly            deprive a party from, determination of the controversy on the                                         -6-                                          6            merits.  See id. at 351-52 (noting the undesirable  cost of a                     ___ ___            prolonged   jurisdictional  inquiry   that  only   serves  to            determine  which court  will  hear the  case);  14A Wright  &            Miller, Federal Practice and Procedure   3701 at 12-13 (1985)                    ______________________________            (noting competing policies).  As  a policy matter, the "which            court" determination ought to  be made with relative dispatch            so  that  the  parties  may  proceed  to  resolution  of  the            dispute'smerits.  See Pratt Central ParkLtd., 60 F.3d at 352.                              ___ ______________________                      For   the   purpose   of   establishing   diversity            jurisdiction,  the amount  in  controversy is  determined  by            looking to  the circumstances  at the time  the complaint  is            filed.  Thesleff v. Harvard Trust Co., 154 F.2d  732, 732 n.1                    ________    _________________            (1st Cir.  1946) (noting  that "federal  jurisdiction depends            upon  the facts at the time suit is commenced, and subsequent            changes . . . in the amount in controversy [will  not] devest            [sic] it"); 14A Charles A. Wright & Arthur R. Miller, Federal                                                                  _______            Practice and Procedure   3702 at 28-29 n.31 (1985); Watson v.            ______________________                              ______            Blankinship, 20  F.3d 383, 387  (10th Cir. 1994);  Klepper v.            ___________                                        _______            First American Bank, 916  F.2d 337, 340 (6th Cir.  1990); see            ___________________                                       ___            Newman-Green,  Inc. v.  Alfonzo-Larrain,  490  U.S. 826,  830            ___________________     _______________            (1989) (noting that for determining diversity of citizenship,            "[t]he existence of  federal jurisdiction ordinarily  depends            on the facts  as they  exist when the  complaint is  filed").            Moreover, it  has long been the rule that a court decides the            amount in controversy from the face of the complaint, "unless                                         -7-                                          7            it appears or is in some way shown that the  amount stated in            the complaint is not  claimed `in good faith.'"   Horton, 367                                                              ______            U.S. at 353  (quoting St. Paul Mercury Indem. Co.  v. Red Cab                                  ___________________________     _______            Co., 303 U.S. 283,  288 (1938)).  When a  plaintiff initiates            ___            an action  in federal  court, the  plaintiff knows  or should            know whether the claim  surpasses the jurisdictional minimum.            St. Paul, 303 U.S. at 290.            ________                      [The plaintiff's] good faith  in choosing                      the  federal forum  is open  to challenge                      not  only by  resort to  the face  of the                      complaint, but by the facts  disclosed at                      trial, and  if from either  source it  is                      clear  that his  claim  never could  have                      amounted to  the  sum necessary  to  give                      jurisdiction,  there  is no  injustice in                      dismissing the suit.            Id.            ___                      Coventry and  Stop &  Shop both cite  passages from            the  seminal case of St.  Paul, 303 U.S.  283 (1938), without                                 _________            discussing its facts.   We pause to do so here.  In St. Paul,                                                                ________            the plaintiff-employer initiated a state-court action against            the  defendant-insurer for  payment of  workers' compensation            benefits.  Id. at 284-85.  The plaintiff alleged an amount of                       ___            damages sufficient to permit the defendant to remove the case            to federal  court.  Id. at  285.  Once in  federal court, the                                ___            plaintiff  filed two  amended  complaints.   Attached to  the            second amended  complaint, which  alleged the same  amount of            damages as  originally claimed, was an  exhibit detailing the            damages;  the exhibit revealed that  the total sum of damages                                         -8-                                          8            was   no   more  than   $1,380.89,   an   amount  below   the            jurisdictional  minimum (then  $3,000).   Id.   The  court of                                                      ___            appeals, sua sponte, took notice  of the exhibit and directed                     ___ ______            a  remand   of  the  case,  reasoning  that   the  amount  in            controversy was less than the jurisdictional minimum and that            "[t]he court cannot  close its  eyes to the  obvious, nor  go            ahead  with  the  trial  of  a  cause  of  which  it  has  no            jurisdiction."  90 F.2d 229, 230 (7th Cir. 1936).                      The  Supreme Court reversed,  noting that there was            no evidence that, at  the time the action was  commenced, the            plaintiff  could  have  ascertained  the actual  sum  of  the            damages, and  that the later  exhibit setting forth  this sum            did not  undermine plaintiff's initial good faith.   303 U.S.            at 295-96 (also observing that  the sum claimed was comprised            of "numerous" items  that, in  turn, were each  the total  of            several other items).4   Accordingly, the Court reasoned that                                            ____________________            4.  The Court also noted that the removal posture of the case            additionally bolstered the finding  of good faith in claiming            damages.   St.  Paul,  303  U.S.  at  290-91.    Because  the                       _________            plaintiff  initially filed  in state  court, it  was unlikely            that the amount claimed  was meant to somehow  confer federal            jurisdiction.  Id.                            ___            The Court reasoned that a defendant's right to remove was not            to  be "subject  to  the plaintiff's  caprice" by  subsequent            events --  whether or not  such events are  under plaintiff's            control.    Id.  at 293-94;  see  also  Pro  Medica, Inc.  v.                        ___              ___  ____  _________________            Theradyne  Corp.,  331  F.   Supp.  231,  232  (D.P.R.  1971)            ________________            (refusing  to  allow   plaintiff's  amended  complaint,  that            reduced amount of damages claimed to less than jurisdictional            minimum,  to divest  federal court  of jurisdiction).   Thus,            events   occurring  subsequent   to   removal,   such  as   a            stipulation, an  affidavit, or an amendment  that reduces the            claim below the jurisdictional minimum, would not deprive the                                         -9-                                          9            the case  fell comfortably  within the rule  that "subsequent            reduction  of the  amount  claimed cannot  oust the  district            court's jurisdiction."  Id. at 295.                                    ___                      In  a portion  of St. Paul  crucial to  the instant                                        ________            case,  and  from which  the  parties  before us  parse  their            favorite phrases, the Court wrote:                           The  intent of  Congress drastically                      to   restrict  federal   jurisdiction  in                      controversies    between   citizens    of                      different   states    has   always   been                      rigorously enforced  by the courts.   The                      rule  governing  dismissal  for  want  of                      jurisdiction  in  cases  brought  in  the                      federal  court is  that,  unless the  law                      gives  a different rule,  the sum claimed                      by the plaintiff controls if the claim is                      apparently made in good  faith.  It  must                      appear  to  a  legal  certainty  that the                      claim  is  really   for  less  than   the                      jurisdictional    amount    to    justify                      dismissal.  The inability of plaintiff to                      recover  an amount  adequate to  give the                      court jurisdiction does  not show his bad                      faith or oust the jurisdiction.  Nor does                      the fact that the complaint discloses the                      existence  of  a  valid  defense  to  the                      claim.   But  if,  from the  face of  the                      pleadings,  it  is apparent,  to  a legal                      certainty,  that   the  plaintiff  cannot                      recover  the amount  claimed or  if, from                      the proofs, the court  is satisfied to  a                      like certainty that  the plaintiff  never                                            ____________________            court  of jurisdiction once it  has attached.   St. Paul, 303                                                            ________            U.S. at 292-93.                      Despite  the  added  weight  the   removal  posture            contributed to  the good faith finding, the  Court noted that            dismissal  of the  case  would not  have  been warranted  had            plaintiff originally brought the case  in federal court.  Id.                                                                      ___            at 290.  Therefore, we find the reasoning of St. Paul no less                                                         ________            applicable  to the  instant case,  where Coventry  originally            filed in federal court,  and where there is no  dispute as to            its good faith in its claimed amount in controversy.                                         -10-                                          10                      was  entitled to recover that amount, and                      that  his  claim was  therefore colorable                      for    the    purpose    of    conferring                      jurisdiction, the suit will be dismissed.                      Events   occurring   subsequent  to   the                      institution  of  suit  which  reduce  the                      amount  recoverable  below the  statutory                      limit do not oust jurisdiction.            Id. at 288-89 (footnotes and citations omitted).            ___                      The rules gleaned from the foregoing passage may be            summarized as follows.  First, federal courts must diligently            enforce  the  rules   establishing  and  limiting   diversity            jurisdiction.  Second, unless the law provides otherwise, the            plaintiff's  damages   claim  will  control  the   amount  in            controversy  for jurisdictional  purposes if  it is  made "in            good faith."   If  the face of  the complaint  reveals, to  a            legal  certainty, that  the  controversy cannot  involve  the            requisite amount, jurisdiction will not attach.   Id. at 289,                                                              ___            291.     Moreover,  if  later  evidence  shows,  to  a  legal            certainty,  that the  damages never  could have  exceeded the            jurisdictional minimum  such that  the claim  was essentially                                    ____ ____            feigned  (colorable)  in order  to  confer  jurisdiction, the            action must be  dismissed.  See also id. at  290 (noting that                                        ___ ____ ___            plaintiff's good  faith in  choosing a  federal forum may  be            challenged  by trial  facts which  establish that  the "claim            never  could  have  amounted to  the  sum  necessary  to give            jurisdiction").      Finally,   if   events   subsequent   to            commencement of  the action reduce the  amount in controversy                                         -11-                                          11            below  the  statutory  minimum,  the  federal  court  is  not            divested of jurisdiction.                      A careful  review of  St. Paul evinces  its primary                                            ________            concern  for the  plaintiff's  "good faith"  in alleging  the            amount in  controversy.   When discerning a  plaintiff's good            faith, a court may  look to whether it "appear[s] to  a legal            certainty  that  the  claim  is  really  for  less  than  the            jurisdictional  amount."  St. Paul, 303 U.S. at 289; see also                                      ________                   ___ ____            Horton, 367 U.S. at 353;  Jones v. Landry, 387 F.2d 102,  104            ______                    _____    ______            (5th Cir. 1967) ("Thus, there is but one test; good faith and            legal  certainty  are equivalents  rather  than two  separate            tests.").   But see Local  Div. No. 714,  Amalgamated Transit                        ___ ___ _________________________________________            Union v. Greater Portland  Transit Dist., 589 F.2d 1,  9 (1st            _____    _______________________________            Cir. 1978) (apparently finding alternative tests, noting that            where there is no evidence that the amount claimed was not in            good  faith, it must appear  "to a legal  certainty" that the            amount  in controversy  does  not exceed  the  jurisdictional            minimum),  overruled  on other  grounds  by  Local Div.  589,                       ________________________________  ________________            Amalgamated Transit Union v. Massachusetts, 666 F.2d 618 (1st            _________________________    _____________            Cir.), cert. denied, 457 U.S. 1117 (1981).                   _____ ______                      The parties in the instant case spill much ink over            the meaning of "good faith": whether it includes an objective            as  well   as  subjective  component,  and   if  so,  whether            "objective" good faith includes "objective facts" as  opposed            to  "actual facts,"  etc.    Stop  &  Shop  argues  that  the                                         -12-                                          12            "objective facts" were always the same: that it consumed much            less water than originally shown on KCWA's invoices, and that            although the  claimed amount in controversy  was over $50,000            at the time of filing, the "actual" amount in controversy is,            indisputably, less than the jurisdictional minimum.  Coventry            counters  that not  only  did it  file  with subjective  good            faith,  but,  because  a  wholly  independent  third  party's            actions were relied  upon (indeed,  it was Stop  & Shop  that            forwarded KCWA's  invoices to  Coventry), there is  no reason            that Coventry  "should have known" about  the "actual" amount            in  controversy   and  thus,   it  claimed  the   damages  in            "objective" good faith as well.                      This  court  has found  that  "good  faith" in  the            amount-in-controversy   context   includes   an  element   of            "objective"  good faith.  In Jimenez  Puig v. Avis Rent-A-Car                                         _____________    _______________            Sys.,  574  F.2d  37, 40  (1st  Cir.  1978),  we found  that,            ____            although  the  plaintiff had  not  acted  "in deliberate  bad            faith" in filing his damages claim for mental anguish, "[t]he            question,  however, is  whether to  anyone familiar  with the            applicable law this claim  could objectively have been viewed            as  worth  [the  jurisdictional   minimum]."    Id.  (viewing                                                            ___            evidence in  light most  favorable to plaintiff,  and finding            that, from the outset, plaintiff  had no chance of recovering            statutory minimum);  cf. Pratt Central  Park Ltd. v.  Dames &                                 ___ ________________________     _______            Moore,  60   F.3d  350,   353  (7th  Cir.   1995)  (upholding            _____                                         -13-                                          13            contractual  liability  cap of  $5,000,  then  dismissing for            failure to meet amount-in-controversy requirement).   We find            that here, there is  no dispute as to good  faith, subjective            or objective.5   It is undisputed  that Coventry alleged  the            amount  in controversy  believing its  accuracy at  the time.            Furthermore, there is no  evidence, and Stop & Shop  does not            argue otherwise, that  Coventry had any reason to believe, at            the time  of  filing, that  KCWA's invoices,  upon which  the            service  fee was  calculated, were  factually incorrect.   We            find that, objectively  viewed, at  the time  of its  filing,            Coventry's claim  was  worth  more  than  the  jurisdictional            minimum.                      This  case  fits well  within  the  rule that  once            jurisdiction  attaches,  it is  not  ousted  by a  subsequent            change of events.   See St.  Paul, 303 U.S. at  295; Klepper,                                ___ _________                    _______            916  F.2d at 340 (holding that summary judgment on one claim,            that reduced  amount in controversy  below statutory minimum,            did not divest court  of jurisdiction); 14A Wright &  Miller,            supra,   3702 at  35 (noting same).   In Thesleff v.  Harvard            _____                                    ________     _______            Trust  Co., 154 F.2d  732, 732 n.1 (1st  Cir. 1946), we noted            __________            that although  plaintiff filed  remittiturs that  reduced the            amount in controversy  below the jurisdictional minimum,  the            facts  at  the  time   the  action  was  commenced  conferred                                            ____________________            5.  We  decline,  at this  time, to  make  any sort  of legal            distinction between "objective facts" and "actual facts"  for            purposes of determining amount in controversy.                                         -14-                                          14            jurisdiction which  subsequent events could not  divest.  See                                                                      ___            also Ford, Bacon & Davis, Inc. v. Volentine, 64 F.2d 800, 801            ____ _________________________    _________            (5th Cir. 1933) (refusing  remand where an amended complaint,            removing co-plaintiff  who had  died after action  was filed,            "merely  discloses a  fact  which arose  after  the suit  and            recognizes  its  legal  consequences, without  impugning  the            original  propriety  of  the   jurisdiction").    As  in  the            amount-in-controversy context, the rule that  jurisdiction is            not divested  by subsequent events  has also been  applied to            the  diversity-of-citizenship  requirement.    See  Smith  v.                                                           ___  _____            Sperling,  354 U.S. 91, 93 n.1 (1957); Mollen v. Torrance, 22            ________                               ______    ________            U.S. 537, 539 (1824).                      In the  instant case, Coventry filed  the complaint            because  Stop  & Shop  refused  to  pay its  bills  totalling            $74,953.00.   The  amount  in  controversy, at  the  time  of            filing, exceeded  the  statutory minimum  regardless  of  the            then-unknown   "actual  facts"   of   Stop  &   Shop's  water            consumption.  It was not until Coventry filed the action that            Stop  &   Shop  inquired  about  KCWA's   invoices  and  KCWA            subsequently changed them to reflect accurately the amount of            water usage.   Presumably, had  the billing error  never been            detected,  the  action  would  have proceeded  on  Coventry's            damages claim  of $74,953.00.   The fact that  an independent            third  party's   error  initially  inflated   the  amount  in            controversy above the jurisdictional minimum does not lead to                                         -15-                                          15            the  inevitable  result that  the  third  party's correction,            subsequent  to  the  filing  of the  complaint,  affects  the            propriety of the jurisdiction once it attached.                      Stop &  Shop insists that, in this  case, we should            draw   a   distinction   between   "subsequent   events"  and            "subsequent  revelations."    Stop  & Shop  argues  that  the            subsequent revelation that the actual amount of damages never            met the jurisdictional minimum -- as opposed  to a subsequent            event  that  reduces  that amount  --  divests  the  court of            jurisdiction, regardless  of what the parties  knew or should            have known  at the time of  filing.  At oral  argument before            this court,  counsel for  Stop &  Shop acknowledged  that the            logical extension of  this argument is  that the court  would            have been without  jurisdiction over the case  even if KCWA's            error had not been discovered until trial.                      To support  this argument, Stop &  Shop cites three            cases  that are  factually  distinguishable from  the instant            one,  and that, in any  event, are not  controlling upon this            court.   First, in American Mutual Liab. Ins. Co. v. Campbell                               ______________________________    ________            Lumber Mfg. Corp., 329  F. Supp. 1283, 1284 (N.D.  Ga. 1971),            _________________            the plaintiff  filed an action  for amounts due  on insurance            contracts.  The plaintiff was forced to estimate its  damages            claim  because  certain  of  defendant's  records   were  not            available to it.  Id. at 1285.  During post-filing discovery,                              ___            the plaintiff  learned that the actual  amount in controversy                                         -16-                                          16            was  below the statutory minimum.   Id.  The court found that                                                ___            the maximum  amount  recoverable on  the  plaintiff's  theory            never  varied,   and  noted   that  the  correct   amount  in            controversy  was ascertainable  at  the time  the action  was            filed.   Id. at  1286.  Thus,  in dismissing the  action, the                     ___            court  reasoned that  the  plaintiff's  realization that  its            earlier  estimation  of  damages  was erroneous  was  not  an            "event," under St. Paul, that reduced the amount recoverable.                           ________            Id. at 1286.            ___                      Second, in Jones v.  Knox Exploration Corp., 2 F.3d                                 _____     ______________________            181,  182 (6th Cir.  1993), the plaintiffs  revealed in their            appellate brief that "it was not discovered until this appeal            that  the  amount  in   controversy  is  actually  less  than            $50,000."  The court acknowledged that subsequent events that            reduce the amount in controversy, such as an amendment to the            complaint  or  an  application  of  a   post-discovery  legal            defense,  would not oust  federal jurisdiction.   Id. at 183.                                                              ___            The  court  reasoned  that  "[a] distinction  must  be  made,            however, between subsequent events  that change the amount in            controversy  and subsequent  revelations that,  in fact,  the            required  amount  was  or  was  not  in  controversy  at  the            commencement of  the action."  Id.  at 183.  The  court found                                           ___            that there  was no subsequent  event that occurred  to reduce            the amount;  instead, there was only  a subsequent revelation            that,  in fact, the required amount was not in controversy at                                         -17-                                          17            the time the action was filed.  Id.  Thus,  the court ordered                                            ___            dismissal based on lack of subject matter jurisdiction.  Id.                                                                     ___                      Third,  in   Tongkook  America,  Inc.   v.  Shipton                                   ________________________       _______            Sportswear  Co.,  14 F.3d  781,  782-83 (2d  Cir.  1994), the            _______________            parties realized  during pre-trial  discovery that, one  year            prior  to filing  suit,  the plaintiff  had  drawn a  certain            amount  upon a letter of credit that was erroneously added to            the damages  claim.  The court  rejected plaintiff's argument            that  the  discovery  of the  failure  to  credit  the amount            withdrawn was an "event subsequent to  the institution of the            suit."   Id.  at 784-85.   The  court deemed  the plaintiff's                     ___            previous withdrawal upon the letter of credit an "event which            preceded  the commencement  of  the  suit [that]  objectively            altered  the amount  of [plaintiff's]  claim."   Id. at  786.                                                             ___            Thus,  the sum  certain  in controversy  was  lower than  the            jurisdictional  minimum  and  the  court  ordered   the  case            dismissed for lack of subject matter jurisdiction.                      In  the instant  case,  Coventry did  not base  its            damages   claim  on   a  faulty   estimation   that  required            recalculation  during  discovery,  as  in   American  Mutual;                                                        ________________            rather, it  alleged the  amount in  controversy based  upon a            third-party's information that  neither party had any  reason            to know was erroneous.  Unlike the "mere revelation" in Jones                                                                    _____            that there was never the requisite amount in controversy, the            reduction  in the  amount in  controversy here  occurred only                                         -18-                                          18            after KCWA's  affirmative acts  of checking the  water meters            and changing the invoice amounts.  Finally, although portions            of the Tongkook court's reasoning are not entirely consistent                   ________            with our decision here, we distinguish that case narrowly  on            the facts; in Tongkook, the parties themselves made the error                          ________            affecting the  amount in  controversy approximately  one year            prior to commencement of the suit.  14 F.3d at 782-83.  Thus,            it  appears that the plaintiff in that case should have known            that  its claim  did not  exceed the  jurisdictional minimum.            See  St.  Paul, 303  U.S. at  290  (stating that  a plaintiff            ___  _________            should know whether the claim meets the amount in controversy            requirement).   In  the  instant case,  an independent  third            party  with otherwise  no  connection  to  the case  made  an            apparently  non-obvious   error   so  that   the   amount-in-            controversy  at the  time  of filing,  in fact,  exceeded the            jurisdictional minimum.   Coventry had no reason to know that            its  claimed amount of damages  was in error.   Moreover, the            reduction  of the  amount in  controversy resulted  from acts            occurring wholly after the  action commenced.  We  hold that,            under these extraordinary circumstances, the district court's            jurisdiction was not disturbed by the subsequent reduction of            the amount in controversy.6                                            ____________________            6.  We note here  a paradox.   Under 28  U.S.C.   1332(b),  a            plaintiff  who  files  a  claim  in federal  court  based  on            diversity jurisdiction  is subject to the  court's imposition            of costs if the plaintiff "is finally adjudged to be entitled            to recover less than the sum or value of $50,000."  28 U.S.C.                                         -19-                                          19                                         III.                                         III.                                         ____                                      CONCLUSION                                      CONCLUSION                                      __________                      For the  foregoing reasons, we  vacate the judgment            of  the district  court, and  remand for  further proceedings            consistent  with this opinion.  Each party shall bear its own            costs.                                            ____________________            1332(b).  Assuming that Coventry will persist in pursuing the            case  in  federal  court, it  seems  odd  that  while it  has            technically  met the  requirements of    1332(a), it  may not            avoid  potential liability  under   1332(b)'s  cost sanction.            Cf.  Horton, 367 U.S. at 362 (noting the "strange result that            ___  ______            while respondent has met the requirements of   1332(a), . . .            under    1332(b) it will be  liable for costs  for failing to            meet  the same  requirements)  (Clark, J.  dissenting).   The            determination of whether or not to impose such cost sanctions            is,  of course, within  the sound discretion  of the district            court.                                         -20-                                          20
