JANUARY 2010 BAD FAITH CASES
AFTER REMOVAL TO FEDERAL COURT, INSURED HAS TOUGH BURDEN FOR REMAND BASED ON AMOUNT IN CONTROVERSY REQUIREMENT (Middle District)

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In Rice v. Allstate Assurance Company, the insured filed a complaint against the insurer for breach of contract and bad faith pursuant to 42 Pa. C.S.A. § 8371. In the insured’s breach of contract claim, he sought damages in the amount of $16,428.60 plus interest and penalties.  In his bad faith claim, the insured requested damages “in excess of $ 50,000.00” plus compensatory damages and punitive damages, interest, costs and attorney’s fees. The insurer filed a timely notice of removal of the case to federal court based on diversity jurisdiction, and the case was removed to federal court. The insured filed a motion to remand the case to state court, alleging that the amount in controversy did not exceed $75,000.

The court stated that since the insured did not make a demand for an exact monetary amount with respect to the bad faith claim, it had to make an independent appraisal of the claim and after a generous reading of the complaint, determine the reasonable value of the rights being litigated, including the value of potential compensatory and punitive damages.  The court emphasized that in order for a case to be remanded, it must be evident to a legal certainty that the insured cannot recover an amount greater than the $75,000 required for diversity jurisdiction.  The court found that based on the relief requested in the complaint, the insured did not expressly limit the amount in dispute to less than $75,000.  The court concluded that it could not be stated to a legal certainty that the insured could not recover more than the jurisdictional amount of $ 75,000.  Accordingly, the magistrate judge recommended that the insured’s motion to remand be denied.

Date of Decision: December 8, 2008

Rice v. Allstate Assur. Co., Civil Action No. 3:CV-08-1706, United States District Court for the Middle District of Pennsylvania, 2008 U.S. Dist. LEXIS 111820 (M.D. Pa. December 8, 2008) (Blewitt, U.S.M.J.).

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AFTER REMOVAL TO FEDERAL COURT, INSURED HAS TOUGH BURDEN FOR REMAND BASED ON AMOUNT IN CONTROVERSY REQUIREMENT (Middle District)”


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