It seems like an allegation made by one party often assists another party in the same litigation on an issue arising later in the lawsuit, whether in Property Insurance litigation or in any other kind of lawsuit. Last Saturday, April 21, 2007, I touched on this during my Powerpoint presentation to the American Bar Association at Amelia Island, Florida on Property Insurance Claims Litigation.
This post provides you with two recent Federal cases involving Homeowners Property Insurance Coverage issues, because together these cases show how allegations can sometimes assist either the policyholders or the Property insurance company.
Both new Federal cases involve a motion to remand after the policyholders' lawsuit was filed in State Court on claims for Insurance Coverage, Bad Faith, and Punitive Damages or "penalties".
In Jack Punzak & Janet Punzak v. Allstate Insurance Co. (E.D. Pa. Case No. 07-1052), on April 16, 2007 the Court granted the policyholders' motion to remand back to State Court in this case of Federal diversity jurisdiction. Among other things the amount in controversy in a diversity case must be in excess of $75,000.00 exclusive of interest and costs.
Although this lawsuit was removed from State Court on the basis of unchallenged 'speaking denials' to requests for admissions, the District Judge held that those denials were trumped by the policyholders' allegations in their State Court Complaint that "[t]hey seek compensation for the property damage, as well as punitive damages, counsel fees and costs, 'in an amount not in excess of $50,000.00.' Compl. at 8." Here is why.
The Federal Judge explained that the policyholders' State Court Complaint was filed in Philadelphia County in the Court of Common Pleas, a Court which provides by local rule for compulsory arbitration in cases where damages are claimed for not greater than $50,000.00. Thus, when the policyholders alleged that their claims were for not greater than $50,000.00, they were required by Pennsylvania law to allege a figure for which they claimed damages at the time they filed their lawsuit in Philadelphia County, if they sought compulsory arbitration short of extended litigation. The Federal Judge pointed out that compulsory arbitration, and authorization for local court rules, is provided by Statute in Pennsylvania involving cases in which such damages are claimed in amounts not greater than $50,000.00.
Accordingly, the Federal Court in this case granted the policyholders' motion to remand: "Pennsylvania law, therefore, gives legal effect to the ad damnum clauses in the Punzaks' complaint." Here is the April 16, 2007 Order in the Punzak case: Download Punzak_v. Allstate Insurance Co. (E.D. Pa. Case No. 07.1052, Order of April 16, 2007)..pdf
In John "Jack" Dee v. State Farm Fire & Casualty Co. (E.D. La. Case No. 06-7984), on April 11, 2007 the Federal Judge denied a policyholder's motion to remand. The policyholder's complaint, said the Court in that Order, was "not clear" and was "vague" to the extent that the policyholder might assert claims for damage for "improper adjustment", i.e., claims handling, under a Flood Insurance Policy issued by the insurance company defendant. The Federal Court did not specifically mention the claims for Bad Faith and "penalties" asserted in the State Court Complaint in that case. The Federal Judge's ruling in denying remand to State Court, was premised on what the Federal Judge saw as an inartfully worded State Court complaint that could affect the administration of Flood Insurance claims: "Therefore, the Court finds original exclusive jurisdiction exists pursuant to the NFIA [National Flood Insurance Act]." Here is the April 11, 2007 Order in Dee: Download John.Jack.Dee v. State Farm Fire and Casualty Co. (E.D. La. Case No. 06.7984, Order of April 11, 2007)..pdf
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