JONES v. ALLSTATE INSURANCE COMPANY
MEMORANDUM. SIGNED BY MAGISTRATE JUDGE ELIZABETH T. HEY ON 10/4/2017. 10/5/2017 ENTERED AND COPIES E-MAILED.(amas)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
KENNETH B. JONES, SR.
ALLSTATE INSURANCE COMPANY
MEMORANDUM AND ORDER
ELIZABETH T. HEY, U.S.M.J.
October 4, 2017
This is an underinsured motorist coverage case that was removed from state court
by Defendant. Doc. 1 at 5-7 (ECF pagination) (Notice of Removal). Although not
presented with a formal motion to remand the case to state court, based on my obligation
to independently assess the propriety of exercising jurisdiction, I will order the case
remanded to the state court. Counsel for both sides agree with this conclusion.
At the time of its removal to federal court, the Complaint contained two counts
alleging breach of contract and bad faith, and Plaintiff sought damages in excess of
$50,000 on each count. Doc. 1 at 10-13 (Complaint). Defendant’s notice of removal
invoked federal jurisdiction under 28 U.S.C. § 1332, alleging diversity of citizenship and
an amount in controversy in excess of $75,000. Doc. 1 at 6-7.1
After the case’s removal to the federal court, Defendant filed a motion to dismiss
the Complaint’s bad faith claim. The Honorable Gerald J. Pappert, to whom the case was
originally assigned, dismissed the bad faith claim without prejudice, finding that
In an Arbitration Certification, Plaintiff’s counsel certified that recoverable
damages exceeded $150,000. Doc. 6.
Plaintiff’s allegation that he and Allstate “have failed to agree on the amount of
underinsured motorist benefits that [he] is entitled to recover,” was insufficient to make
out a claim for bad faith. Doc. 13 at 5 (quoting Compl. ¶ 12). On June 23, 2017,
Plaintiff filed an Amended Complaint, in which he did not raise a bad faith claim. Doc.
On July 12, 2017, the parties executed a consent to have the case heard by a
United States Magistrate Judge, and Judge Pappert referred the case to me for all further
proceedings on July 14, 2017. Doc. 23. On August 3, 2017, I held a telephonic
conference with counsel and scheduled a settlement conference, which I held earlier
today, and which did not resolve the matter.
“As courts of limited jurisdiction, federal courts have the duty to examine the
propriety of jurisdiction even when the issue is not raised by the parties.” McDonough v.
Crum & Forster Personal Ins., Civ. No. 92-385, 1992 WL 114951, at *1 (E.D. Pa. May
20, 1992) (citing Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977)).
The current case was removed to the federal court based on diversity jurisdiction, which
requires diverse citizenship and an amount in controversy exceeding $75,000. 28 U.S.C.
§ 1332(a). Although the Amended Complaint alleges damages “in excess of $50,000,”
once Plaintiff filed the Amended Complaint presenting only the breach of contract claim,
the parties agree that the recoverable damages are defined by the insurance contract,
which contains a $50,000 policy limit. As such, without the bad faith claim, the amount
in controversy does not reach the necessary threshold, and the federal court does not have
jurisdiction over the case. In my telephone call with counsel on August 3, 2017, they
were in agreement that the case should be remanded to the state court.
An appropriate Order follows.
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