MAY 2007 BAD FAITH CASES COURT DISMISSES BAD FAITH CLAIM SUA SPONTE WHERE INSUREDS FAIL TO IMPLICATE FEDERAL RIGHTS AND FAIL TO MEET AMOUNT IN CONTROVERSY REQUIREMENT (Middle District)

In Sieger v. Nationwide Mutual Insurance Company, the insureds sought coverage when their inflatable swimming pool “split suddenly and without warning,” causing 3,000 gallons of water to enter their basement.  The insureds’ homeowners’ insurance policy contained a policy exclusion for damage caused by surface water, and therefore the insurer denied coverage. 

The insureds filed a complaint in federal court alleging breach of contract, violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and violation of the Pennsylvania Insurance Bad Faith Statute.  However, the insureds only alleged damages of approximately $11,000.00.  Therefore, although the insurer did not move to dismiss for lack of subject matter jurisdiction, the court dismissed the insureds’ complaint sua sponte because the claims raised did not implicate federal rights or obligations, and the amount in controversy did not exceed $75,000.00.

Date of Decision:  April 17, 2007

Sieger v. Nationwide Mutual Ins. Co., United States District Court for the Middle District of Pennsylvania, No. 1:06-CV-2228, 2007 U.S. Dist. LEXIS 28246 (M.D. Pa. April 17, 2007) (Conner, J.)