The district court’s subject-matter jurisdiction; Hodge v State Farm Mut Auto Ins Co; Effect of a joint stipulation in good faith to an amount in controversy that has been court-approved; Effect of the parties’ failure to explicitly stipulate to an appropriate amendment of the complaint when they requested the circuit court transfer the case to the district court; Administrative Order No. 1998-1

In an order in lieu of granting leave to appeal, the court reversed the Court of Appeals judgment (see e-Journal # 71572 in the 11/4/19 edition), reinstated the district court’s judgment, and remanded to the district court. It held that the Court of Appeals erred in ruling that the district court lacked subject-matter jurisdiction given that “the parties jointly stipulated in good faith to an amount in controversy less than $25,000.” The court concluded that their “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.” In addition, the parties’ “failure to explicitly stipulate to an appropriate amendment of the complaint when they requested that the circuit court transfer the case to the district court, as required by Administrative Order No. 1998-1, . . . did not deprive the district court of subject-matter jurisdiction over the” case, and defendants waived any error that may have taken place when the circuit court transferred it “without an express stipulation to an appropriate amendment of the complaint. Finally, because the district court had subject-matter jurisdiction upon the parties’ good-faith joint stipulation to the amount in controversy, it possessed the authority to allow plaintiffs to amend their complaint after the jury’s verdict but before the entry of judgment.” Thus, it had subject-matter jurisdiction over the case and had the authority to enter judgment for plaintiffs.

Concurring, Justice Clement supported the outcome the court reached, but disagreed with much in the “order, primarily the assertion that parties can stipulate to a court’s subject-matter jurisdiction.” However, because Michigan “law allows liberal amendment of pleadings, with no exception applicable here, . . . the defective prayer for relief could be, and was, amended, making the district court’s judgment a proper exercise of its power.”

Dissenting, Justice Zahra concluded that, absent the parties’ stipulation “to an appropriate amendment of the complaint alleging that plaintiff’s damages were less than $25,000 . . . there was no authority upon which plaintiffs could file an appropriate amended complaint that would bring their case within the district court’s jurisdictional amount.” He also disagreed “with the majority’s extension of the limited ‘bad faith’ exception discussed in Hodge to resolve this case.”