SEPTEMBER 2007 BAD FAITH CASES EXCERCISING REMOVAL JURISIDICTION FOR CLAIM BELOW $75,000 BECAUSE OF PUNITIVES CLAIM, COURT FINDS INSURER HAD REASONABLE BASIS TO DENY CLAIM (Philadelphia Federal)
Plaintiffs filed a claim under their homeowners insurance policy issued by State Farm for property damage to a concrete floor in their garage. After inspecting the property, a representative from State Farm concluded that the cracks in the concrete floor were due to settling of the earth below the floor and also by groundhog activity. Soon thereafter, State Farm denied plaintiffs’ property damage claim because their policy specifically excluded coverage for losses due to settling of the foundation or the activity of vermin.
Plaintiffs (pro se) filed a Complaint in state court against State Farm alleging, inter alia, that State Farm had acted in bad faith in denying their claim. State Farm removed the case to the United States District Court for the Eastern District of Pennsylvania on the basis of diversity.
As a procedural matter, even though plaintiffs’ Complaint only alleged $55,615 in compensatory damages the Court held that when computing the amount in controversy both actual and punitive damages may be considered and therefore found that the amount in controversy had been satisfied. Nevertheless, having ruled that it had jurisdiction over the matter, the Court found that plaintiffs’ claim was excluded under the exclusion for settling, cracking and the activity of vermin.
The Court also held that plaintiffs had presented no evidence in support of their bad faith claims and dismissed plaintiffs’ Complaint.
Date of decision: August 13, 2007
Hanna v. State Farm Fire and Casualty, United States District Court for the Eastern District of Pennsylvania, No. 06-3242, 2007 U.S. Dist. LEXIS 59650 (E.D.Pa. Aug. 13, 2007) (Baylson, J.)
