Tuesday, March 5, 2019

Standards For Meeting $75,000 Requirement To Remove Case to Federal Court

In the case of Hutchinson v. State Farm Fire & Cas. Co., No. 18-CV-2588 (E.D. Pa. Jan. 28, 2019 Goldberg, J.), Judge Mitchell S. Goldberg set out useful examples and principles regarding the removal of statutory bad faith claims to the federal court.  

Essential issue in this regard is the degree of certainty required to measure claims made against the federal court jurisdictional requirement that a case has a value of at least $75,000.00.   What follows are some of the examples and principles identified by the court:

1. The sum at issue is determined relative the time the Petition to Remove the Matter Federal Court is filed.

2.  The courts do not look at the low end of an open-ended claim. To the contrary, the test is “a reasonable reading of the value of the rights being litigated.” 

3.  Punitive damages and attorneys’ fees may be considered in statutory bad faith cases.

4. There is no recovery cap on the punitive damages that attorneys’ fees available under the bad faith statute. (However, the attorneys’ fees must reasonable and the U.S. Supreme has placed limits on punitive damages to conform to due process of law requirements).

5.  In a bad faith case, the “amount in controversy exceeds the $75,000.00 threshold where a Plaintiff is able to recover a specified amount of damages, plus punitive damages and attorneys’ fees…”

In this case, where the Plaintiff’s claim was for specified damages of $24,711.11 plus punitive damages was found to meet the $75,000.00 jurisdictional threshold.  

The court otherwise noted that, in contrast, a failure of a Plaintiff to plead specified unpaid benefit amounts in a bad faith claim works against a decision to allow for the removal of the case to federal court.  

The court noted as examples two (2) cases in which the action was remanded where a Plaintiff pled lost benefits in “an amount not in excess of $50,000.00” and punitive damages “not in excess of $50,000.00.”

It is noted that, in this Hutchinson case, although the $75,000.00 jurisdictional threshold was found to have been met, the court still remanded the action back to state court because the removal was untimely.  As such, the carrier’s efforts to remove the case to federal court were denied.   

Anyone wishing to review a copy of this case may click this LINK.

I send thanks to Attorney Lee Applebaum of the Philadelphia law offices of Fineman, Krekstein & Harris for bringing this case to my attention.  Please be sure to check out Attorney Applebaum’s excellent blog entitled the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog. 

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