NOVEMBER 2009 BAD FAITH CASES NO REMAND WHERE REASONABLE VALUATION OF PLAINTIFF’S CLAIMS DOES NOT CREATE A LEGAL CERTAINTY THAT CLAIM IS WORTH LESS THAN $75,000 (Western District)

In Friel v. State Farm Automobile Insurance Company, the U.S. District Court for Pennsylvania’s Western District was asked to remand a case where there were damages pleaded in excess of $30,000, and where attorneys’ fees and punitives were sought under the bad faith statute.  Plaintiff’s position was unclear on whether the claims could be in excess of $75,000, never amending the Complaint to commit to any position one way or the other.  Following Third Circuit precedent the Court looked at the value of the claim at the time the Complaint was filed, to determine the reasonable reading of the value.  The Plaintiff’s stipulation of value after removal is of no legal significance, and the only meaningful act would be an actual amendment to the Complaint that capped damages.  Further the Third Circuit applies the “legal certainty test” in weighing a remand, i.e., “it must be evident to a legal certainty that the Plaintiff cannot recover an amount greater than the [$]75,000 required for diversity jurisdiction.” In this case, because of the severity of the injuries and the claims for punitives, the Court found that a reasonable reading of the damages exceeded $75,000 and absent a legal certainty that it would be less than $75,000, there would be no remand.

Date of Decision:  November 4, 2009

Friel v. State Farm Mut. Auto. Ins. Co., U. S. District Court, Western District of Pennsylvania, No. 09-cv-1253, 2009 U.S. Dist. LEXIS 102536  (McVerry, J.)