OCTOBER 2008 BAD FAITH CASE
POTENTIAL INTEREST, ATTORNEYS’ FEES AND PUNITIVE DAMAGES PREVENTED REMAND OF CASE (Middle District)

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The court was faced with a motion to remand an action to state court, the issue being whether the claim could exceed $75,000.  In making that determination, the court had to evaluate the potential damage claims under plaintiff’s bad faith count.  The court first focused on the statutory interest, i.e. prime rate plus 3%.  It observed that the statute does not provide a date from which the interest begins to accrue or how to calculate it.

The court projected that it might begin to accrue prior to suit, when the plaintiff’s UIM claim was made to the carrier, and that simple interest applied, although Pennsylvania courts have used compound interest on statutory bad faith claims, citing  Colyer v. Nat’l Grange Mut. Ins. Co., 62 Pa. D.&C. 4th 565, 575 (C.C.P. Centre County 2001).  The court then projected that the statutory punitive damages could be at least double the breach of contract claim, and that the statutory attorneys’ fees permitted could be in the thousands or tens of thousands.

Thus, the claim exceeded $75,000 and the motion was denied.  In applying some of its analyses, it was clear the court was attempting to err on the low side, and if the issue were what interest calculation actually applied and when it started to run to a judgment amount, the analysis could have differed.

Date of Decision:  August 18, 2008

Hook v. Progressive Cas. Ins. Co., United States District Court for the Middle District of Pennsylvania, No. 08-738, 2008 U.S. Dist. LEXIS 68985 (M.D.Pa. Aug. 18, 2008)

L.A.

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POTENTIAL INTEREST, ATTORNEYS’ FEES AND PUNITIVE DAMAGES PREVENTED REMAND OF CASE (Middle District)”


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