JUNE 2008 BAD FAITH CASES MOTION TO REMAND DENIED WHERE BAD FAITH REQUEST FOR PUNITIVES WHEN COMBINED WITH COMPENSATORY DAMAGES COULD STATE SUM THAT WOULD MEET STATUTORY MINIMUM (Middle District)
The e case arose from an automobile accident involving Plaintiff-driver and another driver. The Plaintiff-driver suffered severe permanent injuries, incurring medical expenses and expecting to incur future medical expenses. The other driver was insured at the time of the accident, but his insurance did not cover all of the damage Plaintiff-driver allegedly suffered. Plaintiff and his wife, also a Plaintiff, sought coverage from their insured, the Defendant, based on an underinsured motorist provision in their policy.
Plaintiffs’ attorney made a demand for arbitration to Defendant. Defendant responded that it did not agree to arbitration and that the policy required mutual consent to arbitration. Plaintiffs’ counsel proceeded to forward Plaintiff-driver’s medical records and subsequently requested that Defendant take a position as to arbitration or suit would be filed.
Plaintiffs filed a complaint in state court setting forth a breach of contract count and a statutory bad faith count, both alleging failure to investigate and failure to offer reasonable value for the claim.
Defendant filed a notice of removal to federal court, and Plaintiff subsequently filed the motion to remand to state court which was the substance of the Court’s opinion. The question for the Court was whether the Court had diversity jurisdiction to hear the case. The Court noted that diversity jurisdiction existed when the amount in controversy exceeds $75,000 and the action is between citizens of different states. Plaintiff argued that the amount in controversy did not amount to $75,000.
The Court noted that the Plaintiff was seeking compensatory damages and punitive damages. The Court stated that, where a plaintiff has authority under state law to seek punitive damages and the claim is not frivolous, the claim will generally satisfy the amount in controversy requirement because it cannot be stated with legal certainty that the plaintiff’s claim is below the statutory minimum.
Still, the court noted that the Defendant bore the burden to establish diversity jurisdiction since it was the party asserting said jurisdiction. The Defendant argued that Plaintiffs were claiming punitive damages under the statutory bad faith count and also claiming the $200,000 policy limit of the policy.
The court agreed with Defendant and denied the Plaintiffs’ motion to remand.
Date of decision: April 17, 2008
Miller v. Progressive Casualty Insurance Company, United States District Court for the Middle District of Pennsylvania, No. 3:08cv138, 2008 U.S. Dist. LEXIS 32074 (M.D. Pa. April 17, 2008) (Munley, J.).