Dist. Ct. erred in dismissing with prejudice plaintiff’s claim seeking $34 million plus $2 billion in punitive damages alleging that defendant improperly repossessed plaintiff’s truck and sold it for less than amount plaintiff owed on his truck, after Dist. Ct. found that instant lawsuit satisfied requirements for diversity jurisdiction. While complaint asserted damages exceeding $75,000 jurisdictional minimum, record established to legal certainty that plaintiff could never recover amount in excess of $75,000 given fact that re-sale of truck produced only $13,582 deficiency. Moreover, Ct. rejected plaintiff’s contention that his lawsuit satisfied jurisdictional requirements of admiralty jurisdiction where plaintiff’s otherwise frivolous claim had no relation to maritime activities. Also, Dist. Ct. could not properly grant defendant’s motion for default judgment on its $13,582 counterclaim where it lacked jurisdiction over plaintiff’s claim, and where counterclaim had no independent basis for jurisdiction. On remand, Dist Ct. must either dismiss plaintiff’s lawsuit without prejudice, or with prejudice (as unrequested sanction due to frivolous nature of claim). Moreover, Dist. Ct. must vacate default judgment in counterclaim and dismiss said claim without prejudice.