Hodge v. State Farm Mutual Automobile Insurance Company, 499 Mich. 211

Plaintiff Linda Hodge was injured in an auto accident and sued State Farm in 36th District Court for first-party no-fault (PIP) benefits; her complaint expressly sought damages “not in excess of $25,000.”
During discovery, defendant learned plaintiff’s provable damages likely exceeded $25,000 (attendant care alone > $150,000); State Farm moved in limine to bar proof of damages over $25,000; the district court denied the motion.
At trial plaintiff presented evidence exceeding $25,000; the jury awarded $85,957; the district court reduced the judgment to $25,000 (the jurisdictional cap) plus interest.
The Wayne Circuit Court reversed, holding the district court lacked subject-matter jurisdiction because pretrial discovery and trial proofs showed the amount in controversy exceeded $25,000; the Court of Appeals affirmed that approach.
The Michigan Supreme Court granted limited review and held that, absent pleadings showing bad faith, a district court’s subject-matter jurisdiction is determined by the amount claimed in the pleadings (the prayer for relief), not by subsequent proofs; it reversed the Court of Appeals and reinstated the district-court judgment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a district court is divested of jurisdiction when the complaint pleads ≤ $25,000 but trial proofs show > $25,000 (how to determine “amount in controversy”)	Hodge: jurisdiction is fixed by the pleading; her prayer for relief capped recovery at $25,000 so district court retains jurisdiction	State Farm: the amount in controversy should be determined by evidence and pretrial disclosures; discovery/proofs showing > $25,000 divest the district court	Held: amount in controversy is determined from the prayer for relief in the pleadings (exclusive of fees, costs, interest); district court retained jurisdiction absent bad faith
Whether a plaintiff’s pleading of ≤ $25,000 can be treated as fraudulent or made in bad faith so as to oust district-court jurisdiction	Hodge: no bad-faith allegations were pleaded; therefore jurisdiction stands	State Farm/Ct. of Appeals: pleading a lesser amount while knowing true damages exceed the cap can divest jurisdiction	Held: bad-faith pleadings can oust jurisdiction (Fix principle); but bad faith must appear from the pleadings (or be clearly shown); on these facts no bad faith finding existed, so jurisdiction remained intact

Strong v. Daniels, 3 Mich. 466 (1855) (historic rule that jurisdictional amount is determined by the amount pleaded)
St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938) (federal rule that the sum claimed controls the amount in controversy if made in good faith)
Fix v. Sissung, 83 Mich. 561 (1890) (pleading made in bad faith is a fraud on the court and can oust jurisdiction)
Moody v. Home Owners Ins. Co., 304 Mich. App. 415 (2014) (Court of Appeals decision adopting the pleadings-plus-proofs approach that the Supreme Court reversed)
In re Bradley Estate, 494 Mich. 367 (2013) (when Legislature uses common-law terms, courts interpret them consistent with common-law meaning)