APRIL 2007 BAD FAITH CASES AMOUNT IN CONTROVERSY CANNOT BE CREATED FOR FEDERAL JURISCTION BY INSURED’S REFUSAL TO SIGN INSURER’S FORM OF STIPULATION WHERE INSURED DECLARED CLAIM LESS THAN $75,000
In Jenkins v. Texas International Life Insurance, the plaintiff insured brought a claim against the defendant insurer pursuant to the Pennsylvania Bad Faith Insurance statute, 42 Pa. Cons. Stat. Ann. § 8371. The case was removed from the Court of Common Pleas of Allegheny County to the U. S. District Court for the Western District of Pennsylvania. The sole basis for federal jurisdiction was diversity of citizenship. Subsequently, the plaintiff filed a motion to dismiss for lack of subject matter jurisdiction. In support of the motion, the plaintiff filed a Declaration stating that the amount in controversy can not reasonably be expected to meet or exceed the jurisdictional amount of $75,000, even with attorney fees under the bad faith statute. The court granted the dismissal.
Because it was not satisfied with the plaintiff’s representations in the motion and supporting Declaration, the defendant insurer prepared a “stipulation” that it requested plaintiff sign. The plaintiff refused. Thereafter, the defendant moved before the federal court, arguing that the plaintiff’s refusal to sign the stipulation created federal jurisdiction. The court disagreed. “Regardless of counsel for defendant’s attempts to create federal jurisdiction, plaintiff’s refusal to sign defendant’s form of stipulation does not create federal jurisdiction.” The court noted that by filing the Declaration with the court, the plaintiff limited her recovery to less than $75,000, and the defendant insurer could use the Declaration to prevent plaintiff from seeking a greater amount in state court.