April 2006 Bad Faith Cases Bad Faith Claim Initiated By Writ Of Execution/Garnishment Is Removable To Federal Court (Middle District)

In Scanlin v. Utica First Insurance Company, Judge Edwin Kosik of the United States District Court for the Middle District of Pennsylvania synthesized prior federal case law to test the propriety of removing bad faith actions brought by way of garnishment and writ of execution based on a judgment against the insured. These are cases where the insured has often settled with the underlying plaintiff, and the bad faith claims are assigned to that plaintiff.  The Court stated that this required a flexible analysis asking:  (1) is “the issue sought to be resolved in the garnishment proceeding … separate from the issues presented in the prior state court action”; and (2) was “the true defendant in the garnishment proceeding … also a defendant in the related state action.” “Unity of either issue or defendant in the prior state action and subsequent garnishment proceeding will favor the conclusion that the garnishment proceeding is merely ancillary to, or a continuation of, the prior state case. The presence of disparate issues and defendants supports a holding that the garnishment proceeding is a distinct ‘civil action,’ subject to removal under 28 U.S.C. §1441(a).” Fineman, Krekstein & Harris were counsel successfully removing action.

Date of Decision:  April 5, 2006

Scanlin v. Utica First Ins. Co., U.S. District Court, M. D. Pa., No. 6-CV-385, 2006 U.S. Dist. LEXIS 21093, 426 F. Supp. 2d 243 (M.D.Pa. April 5, 2006) (Kosik, J.)