JANUARY 2015 BAD FAITH CASES: COURT CONDUCTS CLOSE ANALYSIS OF WHETHER BAD FAITH CLAIM SHOULD BE REMANDED, AND FINDS THAT REMAND IS PROPER (Philadelphia Federal)

In Plunkett v. Nationwide Mutual Insurance Company, a federal district court was once again faced with a motion to remand a removed bad faith action, where the insured made representations that the case was not seeking in excess of the $75,000 jurisdictional minimum.  Specifically, the insureds’ complaint in the Philadelphia Court of Common Pleas included an ad damnum clause alleging damages not in excess of fifty thousand dollars, and not in excess of the amount requiring compulsory arbitration under Pennsylvania law on the breach of contract claim.  Similarly, on the separate bad faith claim, the “ad damnum clause also states that she does not seek damages in excess of fifty thousand dollars and not in excess of the amount required for compulsory arbitration.”

The court stated that the removal statute is to be strictly construed against removal, and where a complaint specifically limits the amount in controversy to less than the jurisdictional minimum, the removing defendant must prove to a “legal certainty” that the amount in controversy does in fact exceed the jurisdictional threshold amount. Legal certainty falls above a preponderance of the evidence but below absolute certainty. The court left open the issue of whether this the standard of proof for remands changed with 2012 statutory amendments as neither party addressed a potential change in the law; and as the court’s ruling would not change under the preponderance of the evidence standard.

First, the court found that the two plaintiffs’ claims could not be aggregated.  Next, the court found that under Third Circuit precedent, a plaintiff may limit his or her claims to less than the statutory jurisdictional threshold in a pleading, as the plaintiffs in this case had done.  The court then drilled down in the value of the actual claims, and contemplated the potential of punitive damages and attorneys’ fees under the bad faith statute.  The court found that this still would not meet the legal certainty standard to prevent remand.

The court remanded the case.

Date of Decision:  December 22, 2014.

Plunkett v. Nationwide Mut. Ins. Co., CIVIL ACTION NO. 14-6545, 2014 U.S. Dist. LEXIS 175999 (E.D. Pa. December 22, 2014) (O’Neill, J.)