MAY 2015 BAD FAITH CASES: COURT REFUSES TO REMAND CASE, EVEN WHERE PLAINTIFF PLEADS RELIEF IN A SUM “NOT IN EXCESS OF $50,000”, WHERE PUNITIVE DAMAGES AND ATTORNEYS FEES UNDER BAD FAITH STATUTE WERE CONSIDERED AS ALLOWING THE PLAINTIFF TO GO ABOVE THE $50,000 FIGURE (Philadelphia Federal)

In Sloan v. Liberty Insurance Corporation, the court denied a motion to remand the case to the Court of Common Pleas based on a disputed amount in controversy. Plaintiff had filed suit against her insurer, alleging breach of contract and bad faith with regards to a loss covered under her insurance policy. The insurer removed the case to federal court and the insured filed a motion to remand, claiming that the “defendant could not carry its burden of establishing that the minimum jurisdictional requirements had been met.” As the parties were both from different states, the real dispute was the amount in controversy.

In determining whether the amount in controversy could potentially exceed $75,000, the court began its analysis with a review of the complaint originally filed in state court. The court ultimately found that it was impossible to decide with legal certainty that the plaintiff could not recover more than $75,000. Plaintiff sought an award in an amount not in excess of $50,000, plus interest and costs, for her breach of contract claim. As for the bad faith claim, Plaintiff asked for “compensatory damages, punitive damages, counsel fees and costs, together with interest on plaintiff’s claim in an amount equal to the prime rate of interest plus three percent, in an amount not in excess of $50,000.”

The court observed that punitive damages are considered part of the amount in controversy, and that an award of punitive damages just over twice the amount of compensatory damages would place the plaintiff’s claim above the $75,000 threshold.

The court also reasoned that potential attorney’s fees should be considered in calculating the amount in controversy. Ultimately, the court determined that after combining the potential attorney’s fees, punitive damages, compensatory damages, and statutory interest, Plaintiff could ultimately recover over $75,000, and consequently denied the motion to remand.

Date of Decision: April 29, 2015

Sloan v. Liberty Ins. Corp., CIVIL ACTION NO. 15-1025, 2015 U.S. Dist. LEXIS 56666 (E.D. Pa. April 29, 2015) (Stengel, J.)