Federal Court Remands Case To State Court After Finding Diversity Jurisdiction Defeated by Joinder of Store Manager as a Defendant

In the case of Jones v. Wal-Mart Stores East, LP, No. 2:24-CV-05521-KNS (E.D. Pa. Feb. 4, 2025 Scott, J.), the court granted a Plaintiff’s Motion to Remand this case from federal court back to the Philadelphia Court of Common Pleas.

According to the Opinion, this case arose out a trip and fall case that occurred at a Wal-Mart store.

The Plaintiff filed the lawsuit in the Philadelphia Court of Common Pleas. The Plaintiff sued Wal-Mart and the store manager.

Wal-Mart removed the case to federal court asserting that the store manager Defendant was fraudulently joined and that, therefore, the requirements for a federal diversity jurisdiction were satisfied.

The federal court disagreed and held that remand was required where complete diversity jurisdiction did not exist in light of the fact that the Plaintiff had asserted a valid negligence claims against an individual store manger who, like the Plaintiff, was a Pennsylvania citizen.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed at this LINK.


Source: The Legal Intelligencer Federal Case Alert, www.Law.com (March 7, 2025).

Federal Court Denies Motion To Remand To State Court, But Grants Motion To Transfer Venue

In the case of Farmington Cas. Co. v. HP Inc., No. 2:23-CV-01022-KBH (E.D. Pa. Nov. 21, 2023 Hodge, J.), the court addressed a Motion to Remand and venue issues in a fire loss subrogation claim by an insurance company.

In this case, the court declined to remand the case back to the state court given that there was diversity of the parties and the Defendant’s reference to a state court action involving other parties did not compel a decision that the case be remanded. In other words, the Plaintiff’s efforts to rely upon non-parties, who were involved in the related state court action, did not support the request for a remand in this federal court case in terms of an allegation of lack of diversity of jurisdiction.

In denying the Motion to Remand, the court further held that it could not consider discretionary factors like arguments of judicial economy in evaluating whether or not a case should be remanded.

The Eastern District Federal Court otherwise ruled that the case would be transferred to the Middle District Court of Pennsylvania given that that was where the fire occurred and where the homeowners had purchased the alleged computer that allegedly caused the fire and where the Plaintiff’s daughter, who was the executrix of the Plaintiff’s estate resided.

The court additionally noted that only one (1) corporate witness and none of the expert witnesses resided in the Eastern District, which offered further support of a transfer of the case to the Middle District.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Dec. 14, 2023).

Court Reviews Standard of Review For Motion to Amend Complaint in Federal Court

In the case of Moravia Motorcycle, Inc. v. Allstate Ins. Co., No.2:21-cv-01274-PLD (W.D. Pa. Oct. 19, 2022 Dodge, Mag. J.), the court addressed a Plaintiff’s Motion for Leave to Amend Complaint and join an additional party which was opposed by the Defendant carrier in this breach of contract and bad faith claim. The court denied the Motion.

According to the Opinion, this case involved a claim by the Plaintiffs against the Defendant carrier in which they sought benefits under an insurance policy for damage to their motorhome.

The court noted that the Plaintiff was relying upon F.R.C.P. 15(a)(2) in seeking to amend their Complaint. Under that Rule, it is provided that, when a party moves to amend a pleading, “the court should freely give leave when justice so requires.”

However, the magistrate judge in this case noted that the Third Circuit Court of Appeals has held that a party seeking to amend after the deadline in a Case Management Order is required to meet the good cause standard of F.R.C.P. 16(b)(4), and not the more liberal standard of Rule 15(a)(2).

In reviewing the record before it, the court noted that there was evidence that the Plaintiff was aware of the possible need to join in another party before the deadline to amend actually expired. In the end, the court found that the Plaintiff had not met the good cause standard.

The court also went on to state that, even if the Plaintiff had met the good cause standard, because their motion sought to add a non-diverse party, the Plaintiffs would have been required to meet other factors in order to be allowed to amend to join a non-diverse party.

The court noted that some of the factors which may be considered by a court when faced with a Motion to Add a Non-Diverse Party would include the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether the Plaintiff had been dilatory in requesting the amendment, whether the Plaintiff would be significantly injured if the amendment is not allowed, and other equitable factors. The court in this matter noted that it did not appear that these particular factors had yet been adopted in the Third Circuit but had been utilized in other federal circuits.

Nevertheless, after reviewing the factors as applied in this case, the court ruled that the factors weighed against allowing the joinder of the non-diverse Defendant in any event.

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

I send thanks to Attorney Joseph Hudock of the Pittsburgh office law firm of Summers, McDonnell, Hudock, Guthrie & Rauch, P.C. for bringing this case to my attention.

Federal Court Keeps Case in Federal Court After Plaintiff Joins Defendants In Apparent Attempt to Destroy Diversity

In the case of Testa v. Broomall Operating Company, L.P., No. 2:21-CV-05148-KSM (E.D. Pa. May 26, 2022 Marston, J.), the court addressed a Defendant’s Motion to Strike a Plaintiff’s Amended Complaint and a Plaintiff’s Motion to Remand the Case to State Court in a matter arising out of a rehabilitation and nursing home negligence case.

According to the Opinion, it was alleged that the Plaintiff’s decedent passed away after contracting COVID-19 at the facility.

After the suit was filed, the Defendants removed the action to federal court on the grounds of diversity and federal question jurisdiction.

Thereafter, the Plaintiff amended her Complaint as of right and clarified that she was not bringing claims under a Federal act and the Plaintiff additionally added the claims of negligence and wrongful death against individual Defendants. The individual Defendants were residents of Pennsylvania and thereby defeated complete diversity.

In response, the Defendants moved to strike the Amended Complaint. The Plaintiff opposed the motion and moved to remand the case back to state court.

The Defendants argued that the joinder of the individual Defendants was impermissible. 

The court exercised its power to review the joinder under F.R.C.P. 21. The court additionally applied federal law and found that, based upon the timing of the filings and Plaintiff’s counsel’s concessions at oral argument, it appeared to the court that the Plaintiff was aware of the identity of the added individual Defendants at the time the case was initiated. 

The court additionally stated that the lack of any “John Doe” Defendants in the original Complaint made it more likely that the individual Defendants were added for the purpose of destroying diversity. 

It was additionally noted that an email Plaintiff’s counsel sent to defense counsel shortly before amending the Complaint supported that theory.

The court additionally restated that the Plaintiff waited over three (3) months from the time she allegedly learned of the individual Defendants’ identities to name them as parties to the action. It was also noted that the Plaintiff did not offer up any legitimate justification for the delay in the joinder.

The court was also influenced by the fact that the Plaintiff would not be prejudice by the absence of the individual Defendants from the lawsuit.

As such, the court found that the applicable factors to be considered weighed in favor of striking the joinder. Accordingly, the court struck the claims brought against the individual Defendants, which restored the complete diversity in the case.

Given that there was complete diversity in the case, the court denied the Plaintiff’s Motion to Remand the case to state court.


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

Motion To Remand Denied After Federal Court Finds that Complete Diversity Exists

The standards for a federal court Motion to Remand a Case were recently addressed in the matter of Gentry v. Sikorsky Aircraft Corp., No. 15-1326 (E.D. Pa. April 22, 2019 Pratter, J.).   According to the Opinion, the corporate Defendants in this matter removed the case from Pennsylvania state court where the Defendants were citizens of Delaware and Connecticut and had complete diversity from the Plaintiff, who was a citizen of Tennessee, and were all of the real and substantial Defendants to the action had consented to the removal. 

The Plaintiff had filed a Motion for Remand which was denied.   The court found that there was complete diversity between the parties such that the removal was proper.  As such, the Plaintiff’s Motion to Remand was denied.  

Anyone wishing to review a copy of court's Opinion in this case may click this LINK.  

Source: “Digest of Recent Cases.”  The Legal Intelligencer (Online Edition) (May 23, 2019).

Motion To Remand Case Back to State Court Denied

In the case of Pisanchyn v. Progressive Direct Ins. Co., No. 3:18-CV-01215 (M.D. Pa. Aug. 2, 2018), Judge A. Richard Caputo of the Federal Middle District Court of Pennsylvania addressed a Plaintiff’s Motion to Remand a case back to state court.

The Plaintiff asserted that a remand was required because the parties were not diverse and/or given that a forum selection clause in the insurance policy allegedly waived the Defendant’s right to remove the action to federal court in the first place.

The court held that, because diversity jurisdiction over the action existed and given that the Defendant did not waive its right to remove under the forum selection clause, the Plaintiff’s Motion to Remand would be denied.  

According to the Opinion, the UM/UIM policy in this matter included a provision with a forum selection clause requiring that any suit by the insured against the carrier be brought “in the county in which the person seeking benefits resides, or in the United States District Court serving that county.”  

The court initially rejected the lack of diversity argument.   The Plaintiff asserted that there was no diversity because his suit was a “direct action” against his carrier and, therefore, his carrier should be deemed to also be a citizen of Pennsylvania under §1332(c)(1).   

Judge Caputo noted that every Circuit that has considered  “direct action” argument, including the Third Circuit, has held that an action by an insured against his or her  own carrier is not a “direct action” within the meaning of §1332(c)(1).  

The Plaintiff also argued that the insurance company had waived the right to remove by virtue of the forum selection clause.  More specifically, the Plaintiff asserted that the carrier had agreed to “submit” to, and stay in, the forum chosen by the Plaintiff.  

With respect to the waiver argument, the court found that the policy language did not contain any agreement by the carrier to “submit” to any chosen court or to litigate there.

Anyone wishing to review this Opinion may click this LINK.  The companion Order can be viewed HERE.

Claims Reps Cannot Be Sued Under Pennsylvania's Insurance Bad Faith Statute

The excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog recently highlighted the case of Reto v. Liberty Mutual Insurance, No. 18-2483 (E.D. Pa. Aug. 8, 2018 Savage, J.), in which the court confirmed that a bad faith action under the bad faith statute cannot be brought against a claims representative.

In this matter, the Plaintiff brought a UIM breach of contract, loss of consortium, and bad faith action against both the claims representative and the carrier. 

The carrier argued that the claims representative was “fraudulently joined” by the Plaintiff in an effort to defeat Federal Court diversity jurisdiction. The carrier additionally asserted that bad faith actions against claims representative are not permissible. 

The Eastern District Federal Court agreed with the carrier’s position and noted that the claims asserted against the claims representative were “wholly insubstantial and frivolous.”   

The court stated that, as a matter of law, there is no basis to support a claim against the claims representative because only the carrier may be held liable under the claims presented.   The court noted that the claims representative, who was only an agent of the carrier, did not have a separate contract with the insured.

The court additionally held that a bad faith claim could not be asserted against a claims representative as the bad faith statute only applies to insurance companies.  

As such, the court held that the Plaintiff had improperly joined the claims representative in this lawsuit.  As such, the claims representative was dismissed from the case and the Plaintiff's motion to remand was denied.

Anyone wishing to review this decision may click this LINK.

I send thanks for Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris, and the writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog, for bringing this case to my attention.

Western District Federal Court Remands Bad Faith Claim to State Court

In the case of Sciulli v. GEICO, No. 16-1907 (W.D. Pa. Feb. 26, 2018 Flowers Conti, C.J.), the court remanded a case back to State Court under the below circumstances.

According to the Opinion, the carrier had removed the case to Federal Court based upon diversity jurisdiction. At the time of removal, there was diversity and “there was a good faith belief that the amount in controversy exceeded $75,000 because [the insured] could recover punitive damages under the Pennsylvania Bad Faith statute.”

However, the insured later agreed to voluntarily dismiss the insurance bad faith claim leaving only an $18,000 breach of contract claim.

The court applied 28 U.S.C. § 1447(c), which provides that “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”

Applying section 1447(c), the court found the case no longer involved a dispute in excess of $75,000, and the insurer agreed that remand was proper.

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Lee Applebaum of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention.  Click HERE to visit that Blog (Highly Recommended!).

Amount in Controversy for Federal Court Jurisdiction Found in Bad Faith Punitive Damages Claim

In the case of Koerner v. GEICO, No. 17-455 (M.D. Pa. May 18, 2017 Conaboy, J.), the court refused to remand a post-Koken UIM/bad faith litigation to state court.  

In part, the court found that the diversity minimum dollar amount was met because the Complaint sought punitive damages for bad faith which the court found, in theory, makes the amount controversy in excess of $75,000.00.   The court therefore found that federal court jurisdiction was proper regardless of the amount of uninsured motorist coverage available under the policy. 

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris, and the writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog, for bringing this case to my attention.  

Third Circuit Issues Important Decision on Federal Court Jurisdiction Over Insurance Coverage Questions

In what the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog is describing as one of the Third Circuit’s most important decisions on the exercise of federal jurisdiction in insurance declaratory actions in recent times, the court in the case of Reifer v. Westport Insurance Corporation, No. 13-2880 2014 W.L. 1674112 (3d Cir. April 29, 2014 Van Antwerpen, J.), revisited the issue of whether or not a federal court could reject an insurance company's effort to bring a declaratory judgment action against an insured on an issue of coverage in the federal courts of Pennsylvania.  

While the Third Circuit in the Reifer decision sympathized with the District Court’s “apparent frustration over the volume of such cases,” the Third Circuit stated that it was not aware of any authority to support a proposition that an insurance company was barred from bringing declaratory judgment actions on the issue of coverage in federal court.  

After reviewing the law on the issue of abstention in this regard, the Third Circuit stated that there is no bright line rule permitting the District Courts to automatically abstain from hearing such cases unless there was a total absence of any federal legal question presented.  

This Reifer decision is to be distinguished from the Third Circuit's prior decision in the case of State Auto Insurance v. Summy, 234 F.3d 131 (3d Cir. 2000), in which the Court greatly limited the circumstances under which a federal district court would exercise jurisdiction over a declaratory judgment action concerning insurance coverage.   A factual distinction between these two cases is that, in Reifer, there was no pending parallel state action, as was the case in the matter of State Auto vs. Summy. 

The court in Reifer found that the absence of a parallel state proceeding would weigh significantly in favor of the federal court exercising jurisdiction over an insurance coverage question.   The Reifer court rejected any reading of the Summy case that would support an argument for an automatic declining of jurisdiction in every case where state law was firming established.   In this more recent Reifer Opinion, the Third Circuit clarified the factors a district court should consider in ultimately determining whether or not to exercise jurisdiction.  

Anyone wishing to review the Reifer Opinion by the Third Circuit Court of Appeals may click this LINK.

I send thanks to the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog by the law firm of Fineman Krekstein & Harris for bringing this case to my attention along with Attorney Brian C. Bevan, Esquire of the Pittsburgh law firm of the DiBella, Geer, McAllister & Best, P.C.  

United States Supreme Court Adopts Headquarters Test for Diversity Jurisdiction

In its 9-0 decision issued earlier this week on February 23, 2010 in the case of Hertz Corp. v. Friend, the United States Supreme Court addressed the confusion among state courts regarding the appropriate standard to establish a corporate or company defendant's place of business in a diversity case. The Court ruled that a company should be considered a citizen of a state where its “nerve center” is located.

Justice Stephen G. Breyer wrote that "In practice it should normally be the place where the corporation maintains its headquarters."

It is anticipated by legal commentators that the “nerve center” test will be used to establish diversity jurisdiction, allowing more lawsuits to be tried in federal rather than state courts. Thus, it is expected that this decision will serve to hamper forum shopping efforts by plaintiffs.

In this case, the Court rejected arguments by Hertz employees in a wage-and-hour suit that Hertz’s principal place of business was in California, where more of its business activities take place, even though its headquarters is in New Jersey.

In his opinion, Breyer noted that there will still be cases that are difficult to under the “nerve center” test for diversity jurisdiction. “For example, in this era of telecommuting, some corporations may divide their command and coordinating functions among officers who work at several different locations, perhaps communicating over the Internet,” he wrote. “That said, our test nonetheless points courts in a single direction, towards the center of overall direction, control, and coordination.”

The opinion (PDF) of Hertz Corp. v. Friend can be viewed by clicking this link:
http://www.supremecourtus.gov/opinions/09pdf/08-1107.pdf.

Source: Debra Cassens Weiss, ABA Journal Law News Now (Feb. 26, 2010) http://www.abajournal.com/weekly/article/supreme_court_adopts_headquarters_test_hampering_forum-shopping_plaintiffs (citing Reuters and The Wall Street Journal).