SEPTEMBER 2012 BAD FAITH CASES: COURT REMANDS BAD FAITH CASE WHICH WAS DESIGNATED FOR COMPULSORY ARBITRATION AND CAPPED AT $50,000 IN DAMAGES (Philadelphia Federal)

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In Coates v. Nationwide Ins. Co., the court heard a motion to remand in an action for bad faith and breach of contract brought by an insured party that was severely injured in a car accident. The insured’s policy provided only $100,000 in coverage, which her expenses exceeded. She therefore requested UIM benefits under her policy, but was denied. As a result, the insured filed this action in state court, where the case was designated for compulsory arbitration, which caps damages at $50,000. The carrier thereafter removed to federal court.

The court initially expressed confusion as to the amount in controversy, but the insured filed an amended complaint stating that all damages and fees would not exceed $50,000. The carrier argued that this figure was incorrect because the insured’s sought-after damages and fees would exceed the $75,000 jurisdictional amount. However, the court disagreed and remanded the case because the carrier could not prove this figure with legal certainty.

Date of Decision: September 14, 2012

Coates v. Nationwide Ins. Co., No. 12-4031, 2012 U.S. Dist. LEXIS 132305, U.S. District Court for the Eastern District of Pennsylvania (E.D. Pa. Sept. 14, 2012) (Baylson, J.)

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