In Becker v. Farmington Casualty Company, Plaintiff filed a declaratory judgment action in state court to determine Defendant insurer’s duty to defend and indemnify, and also raised claims for breach of contract and bad faith.  Defendant insurer removed the case to federal court based on diversity jurisdiction.  Plaintiff filed a motion to remand contending that two other Defendants were non-diverse parties.  Defendant insurer argued that the two Defendants were fraudulently joined and, therefore, their citizenship must be ignored when evaluating diversity jurisdiction. 

The Court found that the two Defendants were fraudulently joined because there were no claims brought against them in the action;  all the claims asserted in the Complaint were against Defendant insurer.  The Court ruled that the two Defendants were fraudulently joined and their citizenship for purposes of diversity jurisdiction must be disregarded.  Consequently, the Court denied Plaintiff's motion to remand.

Date of Decision:  June 25, 2009

Becker v. Farmington Cas. Co., U.S. District Court, Middle District of Pennsylvania, Civil Action No. 1:08-cv-2228, 2009 U.S. Dist. LEXIS 53967 (M.D.Pa. June 25, 2009) (Conner, J.)

In Denicola v. Progressive Direct Ins. Co., Plaintiff insured was involved in a motor vehicle accident with an underinsured motorist.  Plaintiff had an automobile insurance policy with Defendant insurer which provided $250,000 in underinsured motorist coverage.  Plaintiff demanded arbitration, however, Defendant allegedly engaged in delay tactics.  A hearing was finally scheduled for April 27, 2007, and at the hearing, Defendant allegedly "engaged in delay, cited fallacious excuses . . . and raised spurious defenses against [Plaintiff insured’s] lawful claim”.  The arbitration panel awarded Plaintiff $500,000, but the award was molded to the $250,000 limit. 

Plaintiff instituted an action in state court against Defendant for bad faith, which was removed to federal court based on diversity jurisdiction.  Plaintiff filed a motion to remand to state court.

Pursuant to the diversity jurisdiction statute "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of interest and costs, and is between . . . citizens of different States[.]"  28 U.S.C. §1332.  The parties do not dispute that they are citizens of different states, however, there is an issue as to whether the amount in controversy exceeds $ 75,000.  The Court ruled that the amount in controversy exceeds $75,000 because Plaintiff can receive: (1) interest on the amount of the claim from the date that the claim was made by Plaintiff; (2) attorney's fees; (3) an award for punitive damages.  Since these three factors must be considered in determining the amount in controversy, the amount in controversy exceeds the $ 75,000 jurisdictional threshold and, therefore, Plaintiff’s motion to remand was denied.

Date of Decision:  June 16, 2009

Denicola v. Progressive Direct Ins. Co., U.S. District Court, Middle District of Pennsylvania, Civil Action No. 3:09cv423, 2009 U.S. Dist. LEXIS 51372 (M.D.Pa. June 16, 2009) (Munley, J.)