Archive for the 'PA – Removal & Remand' Category

CASE REMANDED BECAUSE NO PROOF TO A LEGAL CERTAINTY THAT PUNITIVE DAMAGES CLAIM WOULD TAKE THE CASE ABOVE $75,000 (Philadelphia Federal)

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This UIM breach of contract and bad faith case was removed to federal court. The court sua sponte remanded the matter to state court. Significantly for this action, the tortfeasor driver was also named as a defendant.

The ad damnum clauses in the complaint’s various counts expressly state damages do not exceed $50,000. The bad faith count’s ad damnun clause specifically only seek an “’award of compensatory and punitive damages in an amount not in excess of Fifty Thousand Dollars ($50,000).’” The civil cover sheet states the damages were not in excess of $50,000. Pennsylvania’s Rules provide compulsory arbitration for cases at or below $50,000.

Any federal jurisdiction would have to be based on (1) diversity of citizenship, and (2) a jurisdictional minimum amount-in-controversy above $75,000. The removing party bears the burden of proving these two jurisdictional elements, and doubts concerning jurisdiction are resolved in favor of remand. Because subject matter jurisdiction is involved, the court always has the power to review diversity jurisdiction, and can raise the issue sua sponte.

The court first ruled there was no diversity. The plaintiff insureds and defendant tortfeasor driver were all Pennsylvania citizens. The court rejected the notion that because the non-diverse tortfeasor defendant had not been served, the diverse insurer defendant could remove the case. [This is not the situation where diversity otherwise exists, and a non-forum defendant can remove because the forum defendant has not been served, as in the Third Circuit’s 2018 Encompass case.]

Second, the $75,000 jurisdictional minimum amount-in-controversy was not established. A plaintiff is the master of its own claim and may limit a claim so it falls below the jurisdictional threshold. In those circumstances “’a defendant seeking removal must prove to a legal certainty that plaintiff[s] can recover the jurisdictional amount.’” Three principles guide a court under these circumstances:

“(1) The party wishing to establish subject matter jurisdiction has the burden to prove to a legal certainty that the amount in controversy exceeds the statutory threshold;

(2) A plaintiff, if permitted by state laws, may limit her monetary claims to avoid the amount in controversy threshold; and

(3) Even if a plaintiff states that her claims fall below the threshold, this Court must look to see if the plaintiff’s actual monetary demands in the aggregate exceed the threshold, irrespective of whether the plaintiff states that the demands do not.”

The insurer failed to makes its case here. First, the insureds limited their demand below $50,000, putting themselves within the state court’s compulsory arbitration threshold. Eastern District courts have found that a plaintiff expressly limiting damages to $50,000, so as to fall within the compulsory arbitration limit, does not meet the $75,000 federal jurisdiction minimum.

The court looked further into whether the facts pleaded could result in more than $75,000 in damages, to a legal certainty. Here the UIM $15,000 policy limit fell well below $75,000, but the insurer argued punitive damages could bring the case above that sum, implying a punitive damages multiplier of four times compensatory damages. The court rejected that argument (1) because the insurer provided no basis why a multiplier of four would be applied and (2) a multiplier of four would bring the case up to $75,000, but federal jurisdiction requires the damages exceed $75,000.

In sum, the insurer could not prove to a legal certainty the amount in controversy would exceed $75,000.

Date of Decision: November 5, 2019

Mordecai v. Progressive Casualty Insurance Co., U. S. District Court Eastern District of Pennsylvania, CIVIL ACTION NO. 19-4351, 2019 U.S. Dist. LEXIS 192331 (E.D. Pa. Nov. 5, 2019) (Younge, J.)

POTPOURRI OF ISSUES ADDRESSED IN RESPONSE TO 11 COUNT COMPLAINT: (1) REMAND (2) GIST OF THE ACTION/ECONOMIC LOSS (3) UIPA; (4) DUTY OF GOOD FAITH AND FAIR DEALING; (5) UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW (6) DECLARATORY JUDGMENT ACTIONS BY BREACH OF CONTRACT PLAINTIFFS AND (7) ADEQUATELY PLEADING BAD FAITH (Philadelphia Federal)

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In this Opinion, Eastern District Judge Tucker addresses a wide range of fundamental legal issues in the context of ruling on a motion to dismiss the insured’s 11 count complaint. The complaint includes not only breach of contract and bad faith claims, but tort claims, UIPA claims, declaratory judgment claims, and injunctive relief claims, all arising out of the alleged failure to pay on an insurance claim. The court also addresses a motion to remand after removal.

We do not address all of the issues Judge Tucker discusses, but highlight a few of the key principles adduced in her opinion. Her full opinion can be found here.

  1. Motion to remand denied.  (i) In determining the jurisdictional minimum amount-in-controversy, the court may consider the possibility of punitive damages under the bad faith statute. (ii) Diversity of citizenship can be established by showing the defendant is not a citizen of plaintiff’s state, just as well as by affirmatively showing the state(s) in which defendant is a citizen.

  2. The gist of the action doctrine and/or the economic loss doctrine will typically bar tort claims based on violations of an insurance contract.

  3. Violating the Unfair Insurance Practices Act (UIPA) (i) does not create a private right of action, and (ii) some courts hold it may not be used to establish violation of statutory bad faith.

As the court states: “Plaintiff’s claim is also barred to the extent that it relies on an alleged violation of the Pennsylvania Unfair Insurance Practices Act (‘UIPA’) because the UIPA does not permit private recovery for a violation of its provisions. Plaintiff advances a claim for damages based, in part, on a theory that [the insurer] was negligent having breached duties imposed upon it by the UIPA, 40 Pa Const. Stat. Ann. § 1171.1, et seq. ‘Courts within the Third Circuit and the Commonwealth of Pennsylvania continue to recognize [, however,] that the UIPA does not provide plaintiffs with a private cause of action.’ Tippett, 2015 U.S. Dist. LEXIS 37513, 2015 WL 1345442 at *2 (quoting Weinberg v. Nationwide Cas. and Ins. Co., 949 F. Supp. 2d 588, 598 (E.D. Pa. 2013)) (internal quotation marks omitted). Indeed, in Tippett, the district court not only rejected a plaintiff’s attempt to state a separate claim under the UIPA, but also rejected the plaintiff’s arguments that proof of a UIPA violation might otherwise provide support for the plaintiff’s independent bad faith claim. Id. Plaintiff’s claim under the UIPA in this case is similarly barred.”

  1. Breach of the common law duty of good faith and fair dealing is subsumed in the breach of contract claim.

  2. The Unfair Trade Practices and Consumer Protection Law applies to the sale of insurance policies, not claims handling.

As the court states: “While Plaintiff rightly notes that the ‘UTPCPL creates a private right of action in persons upon whom unfair methods of competition and/or unfair or deceptive acts or practices are employed and who, as a result, sustain an ascertainable loss,’ … Plaintiff fails to note that ‘the UTPCPL applies to the sale of an insurance policy [but] does not apply to the handling of insurance claims.’” Thus, as the alleged “wrongful conduct under the UTPCPL relate[s] solely to [the insurer’s] actions after the execution of the homeowner’s insurance policy,” the UTPCPL claim was dismissed.

  1. Declaratory judgment count not permitted in light of breach of contract claim.

The court states: “Federal courts routinely dismiss actions seeking declaratory judgment that, if entered, would be duplicative of a judgment on an underlying breach of contract claim.” Judge Tucker cites case law for the propositions that “granting a defendant’s motion to dismiss a plaintiff’s independent cause of action for declaratory judgment because the claim for declaratory judgment was duplicative of an underlying breach of contract claim,” and “dismissing a plaintiff’s duplicative claim for declaratory judgment in the face of an underlying breach of insurance contract claim and observing that ‘pursuant to discretionary declaratory judgment authority, district courts have dismissed declaratory judgment claims at the motion to dismiss stage when they duplicate breach of contract claims within the same action.’”

  1. The insured pleads a plausible bad faith claim.

Judge Tucker highlighted the following allegations in ruling that the bad faith claim could proceed:

i the insurer “attempted to close her insurance claim despite never having sent an adjuster or inspector to evaluate the damage to the Property.”;

ii the insurer “engaged in intentional ‘telephone tag’ to delay and deny Plaintiff coverage under the homeowner’s insurance policy.”;

iii. the insurer never “scheduled an inspection of the Property or otherwise [took] any action to deny or grant coverage under the homeowner’s insurance policy.”

Thus, at the end of the day, after reviewing all of the claims and motion to remand, the insured was allowed to proceed on the breach of contract and bad faith claims.

Date of Decision: August 13, 2019

Neri v. State Farm Fire & Cas. Co., U. S. District Court Eastern District of Pennsylvania CIVIL ACTION NO. 19-0355, 2019 U.S. Dist. LEXIS 136820 (E.D. Pa. Aug. 13, 2019) (Tucker, J.)

PUNITIVE DAMAGES CLAIM PREVENTS REMAND; BAD FAITH PLEADED WHERE CASE IS NOT MERELY A VALUATION DISPUTE (Middle District)

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On July 1, 2019, Judge Munley issued two opinions in this UIM bad faith case: (1) finding removal proper; and (2) finding the insured pleaded a plausible bad faith case.

Removal was proper where potential punitive damages could take the case above the $75,000 jurisdictional minimum

Judge Munley ruled that the case would remain in federal court, after removal from state court. The insured allegedly suffered severe personal injuries, and the carrier refused to pay the $25,000 UIM policy limits. The state court complaint sought damages in excess of $50,000, punitive damages, interest, counsel fees and costs.

The court recognized that actual damages were limited to $25,000, and the punitive damage and attorney’s fees claims would have to exceed $50,000 to meet the $75,000 jurisdictional minimum. Judge Munley found that “[a] punitive damages award which is double the amount of the policy limit is reasonable and possible in such a case.” As remand is only proper when it appears to “a legal certainty that the plaintiff cannot recover, or was never entitled to recover, the jurisdictional amount [$75,000],” he denied the motion to remand.

The insured pleads a plausible bad faith claim where delays and refusal to pay the sum demanded are not mere disagreements over valuation

Judge Munley observed the insured alleged a severe injury, with damages beyond the tortfeasor’s coverage limits. The insured’s UIM coverage was $25,000, which the defendant carrier refused to pay. Judge Munley concluded the case, as pleaded, was not merely a disagreement over claim valuation, but made out a plausible bad faith claim.

The following averments were sufficient to survive the insurer’s motion to dismiss:

  1. “The amended complaint avers that defendant failed to effectuate a prompt fair and equitable settlement of plaintiff’s claim and compelled her to seek legal redress and commence litigation to recover the benefits to which she was entitled.”

  2. “Further, defendant ignored and discounted the severity of plaintiff’s injuries.”

  3. “Also, defendant did not promptly evaluate the claim, but rather engaged in dilatory and abusive claims handling by delaying the valuation of plaintiff’s claim and failing to pay the claim.”

  4. “The amended complaint also suggests that defendant failed to timely investigate or to make a reasonable settlement offer.”

  5. “Defendant further delayed by asking for authorization to receive medical records which were already in its possession.”

The court also refused to dismiss an attorney’s fee demand under the breach of contract count, as such fees might prove permissible under the Motor Vehicle Financial Responsibility Act (MVFRL).

Dates of Decision: July 1, 2019

Pivtchev v. State Farm Mutual Auto Insurance Co., U. S. District Court Middle District of Pennsylvania No. 3:19cv150, 2019 U.S. Dist. LEXIS 109378 (M.D. Pa. July 1, 2019) (Munley, J.)

Pivtchev v. State Farm Mutual Auto Insurance Co., U. S. District Court Middle District of Pennsylvania No. 3:19cv150, 2019 U.S. Dist. LEXIS 109377 (M.D. Pa. July 1, 2019) (Munley, J.)

CASE REMANDED WHERE INSURED’S COUNSEL ADMITTED CASE WAS WORTH LESS THAN $75,000, EVEN THOUGH COUNSEL WOULD NOT SIGN A STIPULATION TO THAT EFFECT PREPARED BY OPPOSING COUNSEL (Philadelphia Federal)

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The insurer removed this bad faith action, and the insured sought to remand on the basis that the claims did not exceed $75,000. The court agreed, based chiefly on the fact there was no dispute that plaintiff’s counsel admitted “the damages clearly do not exceed $75,000.”

In addition, although the complaint alleged “substantial” losses and other boilerplate language concerning damages, there were “no allegations of specific events and losses, [and] any determination of same by this Court would constitute pure speculation.” Speculation about damages based on boilerplate allegations can not meet the insurer’s burden to establish a proper basis for removal.

Further, the insured’s refusal to stipulate its claim was worth less than $75,000 was not dispositive. Case law indicates such a stipulation may be considered as evidence, or as a factor, in weighing whether the jurisdictional amount is met.  The focus, however, must remain on a reasonable reading of the complaint. This is especially true when the stipulation is entered after the complaint was filed, which the court said “is of no legal significance.”

There was also some issue as to whether choosing not to sign a stipulation prepared by opposing counsel, is the equivalent of refusing to stipulate. The court observes that: “A party’s failure to sign a stipulation limiting damages—though worthy of some consideration—is not dispositive of the amount-in-controversy issue, given that both defendants and plaintiffs typically seek to use it as a tactical advantage in removing cases.”

Quoting an earlier opinion, the court states:

Defendants read too much into this unsigned stipulation. First, as best as this Court can tell, Plaintiffs’ lawyer has not signed the stipulation prepared by opposing counsel, which is different from Plaintiffs refusing to agree to cap their damages. Lawyers tend to be cautious. It is therefore unsurprising that Plaintiffs’ lawyer’s first reaction to a stipulation limiting his clients’ recovery was not to take out his pen and say, “where do I sign?” . . . But just as a complaint that limits damages to a figure below the jurisdictional threshold does not guarantee the case stays out of federal court, a lawyer’s refusal to limit his clients’ recovery by signing a stipulation should not end the inquiry[.]

Thus, the matter was remanded.

Date of Decision: June 5, 2019

Murphy Murphy & Murphy v. Nationwide Insurance Co., U. S. District Court Eastern District of Pennsylvania, CIVIL ACTION NO. 19-0712, 2019 U.S. Dist. LEXIS 94673 (E.D. Pa. June 5, 2019) (Jones, J.)

DISTRICT JUDGE LEESON ISSUES TWO OPINIONS DEMONSTRATING THE DIFFERENCE BETWEEN WELL-PLEADED vs. CONCLUSORY BAD FAITH COMPLAINTS (Philadelphia Federal)

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In these two UIM cases, Eastern District Judge Joseph F. Leeson, Jr. addressed motions to dismiss bad faith claims. In Krantz v. Peerless, he dismissed the bad faith claim and remanded the action to state court, but in Perez-Garcia v. State Farm, the bad faith claim survived a motion to dismiss. The pleading differences in these two cases are described below.

Failure to plead to supporting facts results in dismissal of bad faith claim.

In Krantz, the UIM bad faith plaintiff argued that the insurer improperly interpreted the policy in refusing to pay full policy limits. The complaint alleged the insurer relied upon an invalid and unlawful setoff provision in withholding $37,500 out of the $100,000 policy limit. Judge Leeson found, however, the insured failed to plead facts showing the setoff provision was invalid, “or, more importantly, that [the insurer] knew or should have known that it was denying the full amount of benefits based on an invalid provision.”

In granting the motion to dismiss the bad faith claim, Judge Leeson also found the following allegations conclusory because the complaint lacked any other supporting factual allegations that could make these statement plausible:

(1) the insurer did not make any good faith offers to settle despite repeated demands;

(2) the insurer “failed to objectively and fairly evaluate his claim”;

(3) the insurer “failed to promptly tender payment of the fair value of the claim”; and

(4) the insurer failed to reasonably investigate the claim.

Judge Leeson gave examples of the kind of facts needed to support these sorts of conclusory allegations, but such facts were absent from the complaint. He concluded:  “’Essentially, Plaintiff’s cursory allegations assert that Defendant lacked a reasonable basis for denying Plaintiff’s claim for benefits, but do not provide any factual allegations from which the Court could make a plausible inference that Defendant knew or recklessly disregarded its lack of a reasonable basis for denying benefits.’”

The case had been removed from the Court of Common Pleas of Lancaster County. After dismissing the bad faith count, plaintiff’s damage claims no longer exceeded $75,000. Thus, Judge Leeson remanded the case.

Date of Decision: March 11, 2019

Krantz v. Peerless Indemnity Insurance Co., U. S. District Court Eastern District of Pennsylvania No. 18-cv-3450, 2019 U.S. Dist. LEXIS 38923, 2019 WL 1123150 (E.D. Pa. Mar. 11, 2019) (Leeson, Jr., J.)

Factual details support the bad faith claim, but UTPCPL claim dismissed.

In Perez-Garcia, the insured alleged he “incurred medical bills and wage loss following an automobile accident caused by an underinsured driver….” The complaint alleged the insured provided “medical documentation clearly setting forth injuries to [his] right knee and injuries to the left ankle caused by the motor vehicle accident….” [Emphasis added.]

To support his bad faith claims, plaintiff further alleged the insurer’s claim specialist “asserted, without medical support, that none of the injuries that Plaintiff sustained were the result of the motor vehicle accident” at issue. The complaint alleged the insurer refused to pay any benefits on the basis on this adjuster’s medical conclusions, despite medical reports to the contrary which had been provided to the adjuster.

The insurer unsuccessfully moved to dismiss the bad faith claim. Judge Leeson first rejected the notion that this was merely a bald claim that the insurer refused to pay UIM benefits after having paid first-party benefits. Rather, the complaint specifically alleged that the insurer had medical documentation in hand that supported the insured’s version of events, but rejected that evidence without any medical evidence to the contrary.

The complaint alleged the insurer did not conduct a proper investigation into the medical history. Rather, the insurer allowed its own claim adjuster — described as “a non-medical reviewer” — to substitute the adjuster’s medical judgment for the judgment of actual medical professionals. These facts were sufficient to state a bad faith claim.

Judge Leeson did dismiss plaintiff’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) claim on two bases: (1) there were no allegations that plaintiff relied upon the conduct at issue in suffering any damages; and (2) the UTPCPL can only address claims surrounding formation of the insurance contract, not post-contract claim denial.

Date of Decision: March 15, 2019

Perez-Garcia v. State Farm Mutual Automobile Insurance Co., U. S. District Court Eastern District of Pennsylvania No. 5:18-cv-03783, 2019 U.S. Dist. LEXIS 42327 (E.D. Pa. Mar. 15, 2019) (Leeson, Jr., J.)

COURT OUTLINES PRINCIPLES FOR REMOVING BAD FAITH CLAIMS TO FEDERAL COURT (Philadelphia Federal)

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Federal Judge Mitchell S. Goldberg sets out useful examples and principles concerning removal of statutory bad faith claims to federal court. The issue in these cases is the degree of certainty needed to measure claims made against the $75,000 jurisdictional threshold.

  1. The sum at issue is determined at the time the petition to remove is filed.

  2. Courts do not look at the low end of an open-ended claim; rather, the measure is “a reasonable reading of the value of the rights being litigated.”

  3. Punitive damages and attorneys’ fees are considered in statutory bad faith cases.

  4. There is no recovery cap on the punitive damages and attorneys’ fees available under the bad faith statute.

[Note: Attorney’s fees must still be reasonable, and the U.S. Supreme Court has placed limits on punitive damages to conform to due process requirements.]

  1. In a bad faith case, the “amount in controversy exceeds the $75,000 threshold where a plaintiff is able to recover a specified amount of damages, plus punitive damages and attorney’s fees….”

  2. The court gave two case examples of pleading specified damages along with punitives: (1) a claim for $53,315 in contract damages accompanied by a bad faith claim “in excess of $50,000 together with interests and costs” was sufficient; and (2) a claim for $28,682.41 in unpaid benefits plus punitive damages was sufficient.

  3. Under this line of cases, the instant plaintiff’s claim for $24,711.11 plus punitive damages meets the $75,000 pleading threshold.

  4. By contrast, failure to plead a specific unpaid benefit amount works against removal.

  5. In two cases where the action was remanded, the plaintiffs pleaded lost benefits in “an amount not in excess of $50,000” and punitive damages “not in excess of $50,000”.

In this case, even though the $75,000 threshold was met, the court still remanded the action because removal was untimely. The insurer argued that any damage sum was uncertain as pleaded in the complaint. Therefore, any effort at removal lacked “legal certainty” and the insurer had to serve requests for admissions to get sufficient clarity before it could properly remove the action. This process took many months.

The court disagreed, finding the complaint itself was adequate to make the monetary threshold determination. Thus, the thirty-day removal period from service of the complaint had long passed, without the insurer taking action to remove the case, and the case was remanded.

Date of Decision: January 28, 2019

Hutchinson v. State Farm Fire & Casualty Co., U.S. District Court Eastern District of Pennsylvania CIVIL ACTION No. 18-cv-2588, 2019 U.S. Dist. LEXIS 13820 (E.D. Pa. Jan. 28, 2019) (Goldberg, J.)

AUGUST 2018 BAD FAITH CASES: PUNITIVE DAMAGES CONSIDERED IN DETERMINING REMAND, EVEN IF MOTION TO DISMISS BAD FAITH CLAIM WAS PENDING (Philadelphia Federal)

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The insured claimed “removal was improper because the amount in controversy [did] not exceed $75,000” on the face of the complaint. The insurer argued that the controversy exceeded $75,000 because the complaint sought attorneys’ fees, interest, costs, and punitive damages. The insured sought remand because the insurer “has not shown that punitive damages would lead to an award exceeding $75,000.”

On removal, the “defendant bears the burden of showing that federal jurisdiction is proper.” The insurer specifically argued the controversy exceeded the $75,000 jurisdictional minimum because the complaint asserted a claim for “compensatory damages consisting of collision coverage benefits ‘in a sum in excess of $14,500.00,’ punitive damages (which are available under Pennsylvania law if Defendant has acted in bad faith), attorneys’ fees, interest, and costs.” It cited authority “where jurisdiction was retained based on asserted compensatory damages of $14,000-$15,000 as well as the plaintiffs’ requests for attorney fees and punitive damages.”

The insured did not refute this authority, but instead argued the insurer moved to dismiss the bad faith claim, which was the source for punitive damages. The Court observed that a “motion to remand must be decided before the Court exercises jurisdiction over the case and Defendant’s motion to dismiss.” Thus, the Court considered the punitive damages claim and denied insured’s motion to remand.

Date of Decision: July 24, 2018

Winslow v. Progressive Specialty Ins. Co., U. S. District Court, Middle District of Pennsylvania, CIVIL ACTION NO. 3:18-CV-1094, 2018 U.S. Dist. LEXIS 123266, 2018 WL 3546560 (Conaboy, J.)

 

 

MARCH 2018 BAD FAITH CASES: COURT REMANDS CASE WHERE BAD FAITH CLAIM DROPPED AFTER REMOVAL, AND SUM AT ISSUE FALLS BELOW $75,000 (Western District)

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The carrier removed the case based on diversity jurisdiction. At the time of removal, there was diversity and “there was a good faith belief that the amount in controversy exceeded $75,000 because [the insured] could recover punitive damages under the Pennsylvania Bad Faith statute.” However, the insured later “agreed to voluntarily dismiss the insurance bad faith claim leaving only an $18,000 breach of contract claim.

The court looked to 28 U.S.C. § 1447(c): “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” Applying section 1447(c), the court found the case no longer involved a dispute in excess of $75,000, and the insurer agreed that remand was proper.

Date of Decision: February 26, 2018

Sciulli v. GEICO General Insurance Co., CIVIL ACTION NO. 16-1907, 2018 U.S. Dist. LEXIS 30158 (W.D. Pa. Feb. 26, 2018) (Flowers Conti, C.J.)

DECEMBER 2017 BAD FAITH CASES: REMAND DENIED WHERE AMOUNT IN CONTROVERSY MET; THE COURT NOTING THAT FEDERAL COURTS ROUTINELY HEAR UIM CONTRACT AND BAD FAITH CLAIMS (Western District)

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This is a report and recommendation authored by a U.S. Magistrate Judge, subject to final review and decision by the District Court Judge.

The insured sued his insurer for breach of contract and bad faith surrounding a UIM claim in the Fayette County Court of Common Pleas. The insurer removed the action to federal court based upon diversity jurisdiction. Thereafter, the insured filed a motion to remand, arguing that the case should not proceed in federal court because it involves questions of Pennsylvania law.

The Court stated “the party asserting jurisdiction bears the burden of showing that at all stages of the litigation the case is properly before the federal court.” As such, the insurer “bears the burden of demonstrating that . . . removal . . . [is] proper in all respects.”

The insured cited case law referencing the Declaratory Judgment Act, but the insured’s complaint did not seek a declaratory judgment. Consequently, the Court found that the insured’s brief was largely irrelevant. The Court further found that the amount in controversy requirement was satisfied because the insured sought damages of $60,000, plus additional damages of attorneys’ fees, costs, and more, likely reaching the $75,000 threshold. Because “[f]ederal courts routinely resolve issues of state law relating to insurance, including UIM benefits and bad faith[,]” the Court denied the insured’s motion to remand.

Date of Decision: December 12, 2017

Carney v. GEICO, Civil Action No. 17-1486, (W.D. Pa. Dec. 12, 2017) (Mitchell, M.J.)

SEPTEMBER 2017 BAD FAITH CASES: FEDERAL REMAND WHERE POLICY’S FORUM SELECTION CLAUSE ALLOWS INSURED OR ASSIGNEE TO CHOSE COURT; ANTI-ASSIGNMENT CLAUSE INEFFECTIVE WHERE ASSIGNMENT IS POST-OCCURRENCE (Philadelphia Federal)

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This action originated from a bad faith suit filed in the Philadelphia County Court of Common Pleas. The insured alleged that the insurer refused to defend and indemnify in a separate Lehigh County action which resulted in a judgment of $500,000 against the insured. The insured assigned its rights against the insurer to the instant plaintiff-assignee.

The insurer removed the matter to federal court. Plaintiff filed a motion to remand, arguing that the insurance policy contained a “Service of Suit Amendment” whereby the insurer agreed to litigate in any forum chosen by the insured. The insurer argued that the Service of Suit Amendment pertains only to the original insured party, and not to an assignee.

The insurer further argued that the policy contained an anti-assignment clause, which further limits the plaintiff-assignee’s rights to enforce the forum selection clause.

Courts in the Third Circuit had not previously decided the question of whether an assignee could enforce a forum selection clause against an insurer. The Court held that “where an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of his rights.”

The Court further ruled that per Pennsylvania law, “an insurer may not limit an insured’s ability to assign his or her rights under a policy after the occurrence of the event which gives rise to the insurer’s liability.” Because the assignment here occurred after the event that created liability, the plaintiff-assignee could enforce the forum selection clause against the insurer, despite the presence of an anti-assignment clause in the policy.

Lastly, the Court denied plaintiff-assignee’s request for attorneys’ fees, because the insurer did not lack an objectively reasonable basis for seeking removal.

Date of Decision: August 25, 2017

Wimberly v. First Fin. Ins. Co., No. 5:17-cv-02952, 2017 U.S. Dist. LEXIS 137380 (E.D. Pa. Aug. 25, 2017) (Leeson, Jr., J.)