OCTOBER 2013 BAD FAITH CASES: CASE REMANDED WHERE COMPENSATORY DAMAGES SOUGHT WERE A LITTLE OVER $11,000 AND ALL ARGUMENTS THAT CASE COULD EXCEED $75,000 WERE FOUND SPECULATIVE AND COLLECTING REMOVAL CASES (Philadelphia Federal)

In Mazza v. Peerless Indemnity Insurance Company, plaintiff sought a little over $11,000 in damages in the Court of Common Pleas of Montgomery County.  Plaintiff’s ad damnum clause stated that plaintiff was not seeking in excess of $50,000.  The carrier removed the case to federal court on the theory that because plaintiff had also claimed bad faith, punitive damages, attorney’s fees and interest could take the damages of the $75,000 diversity jurisdiction limit.

The court stated that the insurer must show the potential damages met the jurisdictional amount to a legal certainty, that a plaintiff may limit its damages to avoid federal jurisdiction if permitted by state law, and that even if a plaintiff claims its demand fall below that limit, the court may aggregate the plaintiffs’ demands to see if they do exceed the jurisdictional limit, in sua sponte raising the issue of subject matter jurisdiction.

The court cited prior case law favoring remand where the plaintiff’s ad damnum clauses declared that plaintiffs were not seeking in excess of a sum below the jurisdictional minimum and where it was speculation to assume that there would be punitive damages awarded at all, and that those damages would be many multiple times the compensatory damage claims.  The court likewise found the potential for an appeal above $50,000 from an arbitration award to be speculation and not a “legal certainty”.   Nor did plaintiff’s non-response to the carrier’s request to sign a stipulation that she would not claim in excess of $75,000 sufficient to meet the legal certainty standard, of the caliber of legal certainty; rather it was speculation.  As all arguments advanced were speculative, the case was remanded.

For a few examples of other cases on this Blog where the Courts remanded under similar circumstances, see Coates v. Nationawide Ins. Co., Cruz v. State Farm, Croft v. Nationwide Insurance Company of America

For a few examples of cases on this Blog where the Courts refused to remand on the basis of the jurisdictional minimum of $75,000 not being met, see Hatchigian v. State Farm, Morris v. Banker’s Life & Casualty Company, Vinski v. State Farm Mutual Automobile Insurance Company

Date of Decision:  Aug. 7, 2013

Mazza v. Peerless Indem. Ins. Co., CIVIL ACTION No. 13-3225, 2013 U.S. Dist. LEXIS 110951 (E.D. Pa. Aug. 7, 2013) (Schiller, J.)