F & S CONSTRUCTION COMPANY v. Jensen, 7470

• Decision Date: 05 November 1964
• Docket Number: No. 7470,7473.,7470
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: F & S CONSTRUCTION COMPANY, Inc., an Arizona corporation, Appellant, v. Oliver Andrew JENSEN and Neldo M. Jensen, Appellees. F & S CONSTRUCTION COMPANY, Inc., an Arizona corporation, Appellant, v. Orval Eldan WINTERS and Ruth W. Winters, Appellees.

337 F.2d 160 (1964)

F & S CONSTRUCTION COMPANY, Inc., an Arizona corporation, Appellant, v. Oliver Andrew JENSEN and Neldo M. Jensen, Appellees.

F & S CONSTRUCTION COMPANY, Inc., an Arizona corporation, Appellant, v. Orval Eldan WINTERS and Ruth W. Winters, Appellees.

Nos. 7470, 7473.

United States Court of Appeals Tenth Circuit.

September 1, 1964.

Rehearing Denied November 5, 1964.

William E. Kenworthy, of Fugate, Mitchem & Hoffman, Denver, Colo., for appellant.

Robert G. McIlhenny, Denver, Colo. (George Castillo, Denver, Colo., on the brief), for appellees.

Before PICKETT, LEWIS and HILL, Circuit Judges.

PICKETT, Circuit Judge.

These consolidated appeals present the question of the sufficiency of the amount in controversy to give the district court jurisdiction under the provisions of 28 U.S.C. § 1332(a). In each case the complaint alleges that the plaintiff purchased a home in Adams County, Colorado from the defendant for a consideration of $10,500; that the value of the property was increased to approximately $13,000 through improvements; that because of defects in the houses the properties were rendered valueless and the damages sustained by the plaintiffs was approximately $14,000. The allegations as to the value of the properties were denied, and in its answers, the defendant did not admit that the amount in controversy exceeded $10,000, but put the plaintiffs "to strict proof thereon." Thereafter defendant moved to dismiss the actions upon the grounds that the plaintiffs could not in good faith assert that their damages exceeded the sum of $10,000. This motion was denied. The cases were tried to the court without a jury, and damages in the sum of $5,000 was awarded to each.

Upon the trial, plaintiffs established their damages as the difference between the value of the properties in an undamaged condition and the value after the defects occurred.¹ The evidence was without conflict that plaintiffs' properties as improved, without the defects and damages which occurred after the properties were purchased, would have a value of from $12,000 to $13,000. The highest cost for necessary repairs to the houses was given as $7,000, and as low as $5,000. The plaintiffs' evidence was that the present fair market value of the houses at the time of trial was between $6,500 and $7,000.² The Winters' house sold for $7,500 at about the time the action was brought. It appears that the Jensens were living in their home at the time of trial. The record clearly shows that the plaintiffs never had a claim which would exceed $10,000, and that the allegation with reference thereto was inflated for jurisdictional purposes. In each case, the court found that the plaintiff's claim for damages in excess of $10,000 could not have been made in good faith. Plaintiffs were denied their costs and judgment for the defendant for its costs was entered.

Prior to 1958 the amount in controversy necessary to give federal district courts jurisdiction in diversity cases was $3,000. To relieve the congestion caused by the rapidly increasing number of civil cases brought in federal courts, 28 U.S.C. § 1332(a) was amended to raise the jurisdictional amount to $10,000. Horton v. Liberty Mutual Ins. Co., 367 U.S. 348, 81 S.Ct. 1570, 6 L.Ed.2d 890, rehearing denied 368 U.S. 870, 82 S.Ct. 24, 7 L.Ed.2d 70; U.S.Code Cong. & Adm. News 1958, Vol. 2, p. 3099. Section 1332 was also amended to authorize the district court to deny costs to the plaintiff and to impose defendant's costs upon the plaintiff in any case where the plaintiff's recovery was less than the sum or value of $10,000.

It is now settled that when there is an issue as to the sufficiency of the jurisdictional amount, the burden of proving jurisdiction is on the party asserting it. City of Lawton, Okl. v. Chapman, 10 Cir., 257 F.2d 601; McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135. Furthermore, statutes conferring jurisdiction on federal courts are to be strictly construed, and doubts resolved against federal jurisdiction. Aetna Ins. Co. v. Chicago, R. I. & P. R. R., 10 Cir., 229 F.2d 584; Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 78 L.Ed. 1248.

Ordinarily the amount claimed by the plaintiff in pleadings controls if the claim is apparently in good faith, even though the recovery is less than the jurisdictional amount. But if it is established, as a matter of law, before trial or during the trial, that the plaintiff was not entitled to recover an amount equal to the jurisdictional requirement, the court does not have jurisdiction. The test enunciated in St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 is: "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 was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed." Similar language was used by this court in Wyoming Ry. Co. v. Herrington, 10 Cir., 163 F.2d 1004, 1006, where it was said:

"It is only where it appears to a legal certainty from the face of the

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