JTH Tax, Inc. v. Frashier
Facts
Liberty franchised tax preparation offices and had entered into a franchise agreement with Frashier that included post-termination obligations, including a covenant not to compete and a requirement to return customer lists and equipment. After the parties failed to agree on sale terms for Frashier's franchise territory, Frashier closed the franchise and Liberty terminated the agreement. Liberty then filed a federal complaint seeking $80,000 in damages and a permanent injunction requiring compliance with the post-termination provisions, alleging that Frashier used his former office to support a competing tax enterprise and failed to return materials. Although Liberty later sought $60,456.25 in money damages in a summary judgment motion, it did not amend its complaint.
Issue
Whether the district court lacked diversity jurisdiction because Liberty's case failed to satisfy the $75,000 amount-in-controversy requirement after Liberty later sought less than $75,000 in damages in a summary judgment motion. Also, whether the district court was required to consider the value of Liberty's requested injunctive relief in determining the amount in controversy.
Rule
Ordinarily, the amount in controversy is determined by the sum claimed in the plaintiff's complaint, so long as the claim is made in good faith. If the complaint alleges an amount exceeding the jurisdictional threshold, dismissal is proper only when it appears to a legal certainty that the plaintiff cannot recover that amount. Subsequent events reducing the amount recoverable do not oust jurisdiction. In actions seeking injunctive relief, the amount in controversy includes the value of the injunction, measured by the greater of its worth to the plaintiff or its cost to the defendant, and claims may be aggregated to reach the jurisdictional minimum.
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