FEBRUARY 2009 BAD FAITH CASES INSUREDS’ MOTION TO REMAND TO STATE COURT GRANTED DUE TO LACK OF JURISDICTION (Western District)

In Sadler v. State Farm Fire and Casualty Co., a bad faith claim arose out of the insureds’ claims to cover damages to their homes as a result of an explosion. The insureds are two married couples whose homes were damaged by an explosion at another nearby house. Both houses were insured by the insurer.  Both couples made claims with the insurer to cover the damages to their respective houses. 

The insureds’ jointly filed a complaint which included claims for breach of contract and bad faith for the insurer’s failure to reasonably pay all of the damages claimed by each couple.  Each of the couple’s set of claims in the complaint demanded damages in an indeterminate amount in excess of $20,000, plus punitive damages and attorney fees.  The insurer filed a notice of removal asserting diversity jurisdiction based on diversity of citizenship of the parties and an amount in controversy in excess of the $75,000 threshold.  The insureds’ filed a motion to remand to the Court of Common Pleas of Lawrence County.  The insureds’ motion is predicated solely on their contention that the amount in controversy does not meet the $75,000 threshold. 

The insureds’ complaint was for an indiscriminate amount and the court found that the insurer did not meet its burden of showing that at the time of the filing of the complaint, it was a legal certainty that the amount in controversy was at least $75,000.  The court considered the insureds’ affidavits to be judicial admissions by the insureds’ that each set of claims cannot equal the threshold amount of $75,000, even if punitive claims and attorney’s fees were aggregated for each set.  Therefore since the insurer failed to show to a legal certainty that the amount in controversy exceeds the statutory minimum the court granted the insureds’ motion to remand for lack of jurisdiction. 

Date of Decision: November 19, 2008

Sadler v. State Farm Fire & Cas. Co., No. 08cv0951,2008 U.S. Dist. LEXIS 94339 (W.D. Pa. Nov. 19, 2008) (Schwab, J.).

 

J.M.A.