FEBRUARY 2010 BAD FAITH CASES
INSURER PROVES AMOUNT IN CONTROVERSY EXCEEDED STATUTORY MINIMUM FOR FEDERAL JURISDICTION BASED ON DAMAGES FOR BAD FAITH CLAIM (Western District)

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In Stehle-Rosellini v. Allstate Corp., the insured sued the insurer for breach of contract and statutory bad faith under 42 Pa. C.S. § 8371.  In the complaint, the insured did not specify an amount for compensatory damages but included two ad damnum clauses seeking: (1) damages in an amount subject to the policy limits of the contract, plus interest and court costs totaling less than $75,000.00 for the breach of contract claim and (2) an amount equal to the prime rate of interest plus three percent, punitive damages, attorneys’ fees, court costs, and any other relief that the Court may deem proper in excess of $30,000.00 for the statutory bad faith claim.

The insured filed a notice of removal based on diversity of citizenship, and the case was removed to federal district court.  The insured filed a motion to remand the action to state court, and the insurer filed a brief in opposition. The dispute was over whether the $75,000.00 amount in controversy requirement of 28 U.S.C. § 1332(a)(1) was satisfied.

The court stated that legal standard for meeting the $75,000.00 requirement depends on whether a plaintiff expressly limits the amount in controversy to an amount lower than the jurisdictional requirement.  Where, in the complaint, the plaintiff expressly limits the amount in controversy to less than the jurisdictional minimum, the defendant has the burden of proving to a legal certainty that the claim is in excess of $75.000.00.  Where the plaintiff has not expressly limited the amount to less than the jurisdictional minimum, the case must be remanded if it appears to a legal certainty that the plaintiff cannot recover the jurisdictional amount.

The court found that the insurer had the burden to prove to a legal certainty that the claim was in excess of $75.000.00 because the complaint expressly limited the amount in controversy to an amount below the jurisdictional minimum.  The court stated that since the insured did not specify an amount for compensatory damages, the insured’s two ad damnum clauses must be considered in conjunction.  The court found that while the first ad damnum clause sought less than the $75,0000.00, the second ad damnum clause contained an open-ended demand, which included attorneys’ fees and punitive damages.  The court denied the insured’s motion to remand, holding that the insurer successfully proved to a legal certainty that the insured could recover the jurisdictional amount.
Date of Decision: January 25, 2010

Stehle-Rosellini v. Allstate Corp., Civil Action No. 09 – 895,Doc. No. 8, United States District Court for the Western District of Pennsylvania, 2010 U.S. Dist. LEXIS 5709 (W.D. Pa. January 25, 2010) (Lenihan, U.S.M.J.).

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INSURER PROVES AMOUNT IN CONTROVERSY EXCEEDED STATUTORY MINIMUM FOR FEDERAL JURISDICTION BASED ON DAMAGES FOR BAD FAITH CLAIM (Western District)”


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