In Seward v. Certo, a plaintiff sued her insurer and the insurer’s agent, the agent’s citizenship destroying diversity. The claims included fraud and violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL), as well as bad faith and breach of contract claims against the carrier. The carrier sought to remove the case anyway, claiming that complete diversity was only destroyed because of the agent’s fraudulent joinder as a defendant. While the UTPCPL claimed was barred by Third Circuit precedent that would use the economic loss doctrine to bar UTPCPL claims, the Federal District Court had to determine whether or not plaintiff set forth a colorable claim in front of the State Trial Court; not whether the Federal Judge would have had to dismiss the UTPCPL claim if it were originally brought in Federal Court. Philadelphia State Trial Courts interpreting the UTPCPL have expressly refused to apply the economic loss doctrine to bar UTPCPL claims. Given such refusals, the Federal Judge found that the plaintiff stated a colorable claim against the agent in the original state filing; thus, there was no fraudulent joinder, diversity was destroyed, and all claims against both defendants, including the breach of contract and statutory bad faith claims against the carrier, were remanded to the State Court.
Date of Decision: February 2, 2006
Seward v. Certo
, U.S. District Court, Eastern District of PA, Civil Action No. 05-6363, 2006 U.S. Dist. LEXIS 4038 (E. D. Pa. Feb. 2, 2006) (Buckwalter, S.J.)