.... Less Than $75,000 Bad Faith Damages.
This issue was addressed in a previous post on October 26, 2006. That post addressed two recent Federal Cases, one of which was decided in the Eastern District of Pennsylvania, Howard v. Allstate Insurance Co. In the Howard case, the Federal Judge grants remand back to State Court whence the lawsuit came. The reasons include that the Complaint filed by the Plaintiff, Mr. Timothy Howard, seeks Damages "not in excess of $50,000" although the Complaint includes a prayer for Punitive Damages too. Further, under Federal Third Circuit Court of Appeals' precedent, remand has to be granted whenever it appears "'to a legal certainty'" that the Plaintiff is not entitled to recover the Federal Diversity Jurisdiction Amount of $75,000.
Within the same Federal Third Circuit, but in the Middle District of Pennsylvania, the Plaintiff's Motion to Remand was Denied in the even more recent Federal Case of Download Carnathan_v. Ohio National Life Insurance Co. and Jefferson National Life Insurance Co. (M.D. Pa., Case No. 1.06-CV-999, Opinion Filed October 18, 2006).pdf. Mr. Paul Carnathan filed that lawsuit seeking a Declaratory Judgment that would interpret and reinstate his disability income insurance policy. The policy, if reinstated, would provide Mr. Carnathan "'a monthly benefit of $2500 a month [sic] for life if plaintiff becomes disabled.'" The Complaint filed by Mr. Carnathan did not seek payment of the disability benefits nor did Mr. Carnathan's Complaint allege that he is presently disabled which he is not, although the Complaint includes a prayer for Punitive Damages.
"It is clear that the amount in controversy has been met," wrote the District Judge in Mr. Carnathan's unwillingly Federal Case (Mr. Carnathan, at least, is unwilling to have his case decided there). The Complaint and the case will stay in Federal Court under this ruling.
Since Mr. Carnathan sought Declaratory Judgment, the demand for relief in his Complaint did not provide a sum of money against which to measure the required Jurisdictional Amount for Federal Diversity. The Federal District Court looked therefore to Third Circuit precedent that "[w]here the validity of an insurance contract is at issue," such as in this Declaratory Judgment action, the amount in controversy can be figured out by taking into account "'the full value of the contract,'" including payments that "'may possibly'" be payable to the Policyholder. No "legal certainty" standard here, which would have required remand if met. No, to the contrary, as noted the standard applied here on these facts and allegations is "'may possibly'" meet the jurisdictional amount: "If a possible award under the insurance policy could exceed the jurisdictional amount, the amount in controversy requirement is met."
After that analysis, the Federal District Court had no problem calculating that if Mr. Carnathan possibly received disability benefits under this policy, then his disability benefits could meet the jurisdictional amount in 30 months. Again, it bears repeating that a major lesson here seems to be that the facts and allegations are crucial to determining the outcome of remand motions in Federal Court, just as the facts and allegations also can often determine the outcome of the entire Bad Faith case in any Court including Federal Court. Another issue arises from even a quick comparison of the Howard v. Allstate decision in Pennsylvania's Eastern District, and this even more recent Carnathan v. Ohio National Life decision in Pennsylvania's Middle District. It looks like the Federal Third Circuit Court of Appeals has some reconciliation tasks ahead of it on legal standards applicable to a Motion for Remand.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
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