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Lambert v. State Farm Mutual Automobile Insurance Co.

United States District Court, E.D. Pennsylvania

October 16, 2019

DAWN LAMBERT, Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

          OPINION

          SLOMSKY, J.

         I. INTRODUCTION

         On January 14, 2019, Plaintiff Dawn Lambert (“Plaintiff”) filed a declaratory judgment action (Doc. No. 1) in the Court of Common Pleas of Philadelphia County against Defendant State Farm Mutual Automobile Insurance Company (“Defendant”), seeking Underinsured Motorist Benefits (“UIM”)[1] pursuant to 75 Pa. C.S. § 1738[2] of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”). On February 25, 2019, Defendant removed this action to this Court based on diversity of citizenship jurisdiction pursuant to 28 U.S.C. § 1332(a).[3] (Doc. No. 1.)

         Before the Court is Plaintiff's Motion to Remand the case to the Court of Common Pleas of Philadelphia County. (Doc. No. 3.) Plaintiff argues that because this case addresses an unsettled and novel issue of Pennsylvania law, this case should be remanded to state court pursuant to the discretionary nature of the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202[4] (Doc. No. 3.) Defendant submitted a Response in Opposition (Doc. No. 4.), arguing that although this case implicates primarily issues of state law, there is no indication that the matter addresses an unsettled and novel issue. (Id.) This Motion is now ripe for a decision. For reasons that follow, Plaintiff's Motion to Remand will be granted.

         II. BACKGROUND

         On April 24, 2017, Plaintiff Dawn Lambert (“Plaintiff”) was a passenger on a motorcycle owned and operated by Edward Nothe (“Nothe”) in Chester County of Pennsylvania. (Doc. No. 1. ¶ 6.) At around 2:00 a.m., Nothe lost control of the motorcycle, causing the vehicle to crash. (Id. ¶ 7.) Plaintiff was thrown from the vehicle and sustained serious injuries. (Id.)

         At the time of the accident, Nothe had an insurance policy issued by Progressive Insurance Company (“Progressive”). This policy had $100, 000 in liability coverage for personal injury. (Id. ¶ 9.) Additionally, Plaintiff's husband had three insurance policies, which also covered liability for a motor vehicle accident, issued by Defendant State Farm Mutual Insurance Company (“Defendant”). (Id.) Each provided coverage of $100, 000 per person/$300, 000 per accident in Underinsured Motorist Benefits (“UIM”). (Doc. No. 3-2 ¶ 3.)

         The first policy, numbered 292 1478-B01-38 (“Policy 1”), covered a Harley Davidson motorcycle. The second policy, numbered 257 5640-B27-38B (“Policy 2”), covered four cars; a 2001 Toyota Highlander, a 1999 Acura Integra, a 1993 Ford F250, and a 1983 Toyota Supra. The third policy numbered 300-9481-E29-38A (“Policy 3”), covered two cars; a 1993 Honda Civic and a 1992 Honda Prelude. (Doc. No. 1. ¶ 4.) Under each policy, Plaintiff was listed as an insured person. (Id.) For each policy, Plaintiff's husband executed a form agreeing that the policies would not stack in the event of an accident[5]. Pursuant to 75 Pa. C.S. § 1738, this form is known as stacking rejection form. (Doc. No. 3-2. ¶ 3.) Defendant charges a lower insurance premium when stacking is rejected.

         Plaintiff sought to recover payment for her injuries from both Progressive and Defendant State Farm. First, Plaintiff made a claim for $100, 000 under the terms of the Progressive insurance policy. (Id. at ¶ 2.) Plaintiff settled this claim through a private agreement with Progressive. (Id. at ¶ 2.)

         Next, Plaintiff made three claims for Underinsured Motorist Benefits (“UIM'') under the terms of Defendant's policies as described above. Defendant settled Plaintiff's first claim for UIM benefits under Policy 1 (covering the motorcycle) for $100, 000. (Id.) Plaintiff then sought to recover an additional $200, 000 by stacking Policy 2 onto Policy 1, and Policy 3 onto Policy 2. (Id. at ¶ 3.) Defendant denied Plaintiff's request to stack coverage under Policies 2 and 3 because her husband rejected and relinquished stacking coverage in exchange for a lower premium. (Id.) The stacking waiver, included in each policy, read:

By signing this waiver, I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage. (Emphasis added.)[6]

(Doc. No. 4 at 22-26.) Plaintiff's husband agreed to the three waivers by signing the bottom of the form. (Id.)

         On January 14, 2019, Plaintiff filed a declaratory judgment action in the Court of Common Pleas of Philadelphia County, seeking the additional $200, 000 in UIM under the two remaining policies. (Id.) Plaintiff alleges that the stacking rejection forms, signed by her husband, merely rejected intra-policy (within one policy) stacking and not inter-policy stacking (between policies), and therefore she is entitled to stack the UIM benefits of the two remaining policies. (Doc. No. 3-2).

         As noted, on February 25, 2019, Defendant removed the action to this Court. Plaintiff now seeks to remand the case to state court, citing the discretionary nature of the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202. (Doc. No. 3.) Before the Court is Plaintiff's Motion to Remand (Doc. No. 3) and Defendant's Response in Opposition. (Doc. No. 4.) For the reasons that follow, Plaintiff's Motion to Remand will be granted.

         III. STANDARD OF REVIEW

         Plaintiff seeks a declaratory judgment on the propriety of stacking the insurance policies in this case. Pursuant to the Federal Declaratory Judgment Act (“DJA”), she asks the Court to declare that she is entitled to a greater amount of coverage by stacking the three policies her husband holds with Defendant. Under the DJA, courts “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). A declaratory judgment is an exception to the general rule that “federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996) (citing Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 821 (1976)). Under the DJA, district courts have “discretionary, rather than compulsory, jurisdiction . . . .” Reifer v. Westport Ins. Co., 751 F.3d 129, 134 (3d Cir. 2014) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942)).

         Accordingly, district courts are authorized “in the sound exercise of [their] discretion, to stay or dismiss an action seeking a declaratory judgment before trial or after all arguments have drawn to a close.” Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995). Further, the Supreme Court has held that district courts have discretion to decide whether and when to entertain an action under the DJA, even when the suit otherwise satisfies subject matter jurisdictional prerequisites. Id. at 282

         Importantly, these principles also apply to a case removed to federal court where a party seeks a declaratory judgment under the state's declaratory judgment act. Reifer, 751 F.3d at 134 n. 4 (stating…the question of whether to exercise federal jurisdiction to resolve a controversy involving a declaratory judgment is a procedural issue to be determined under federal law, even if the action was brought under a state declaratory judgment statute).

         IV. ANALYSIS

         Plaintiff moves to remand this case to the Court of Common Pleas of Philadelphia County, arguing that (1) the Court should decline to exercise jurisdiction over this matter pursuant to its discretionary authority under DJA; and (2) remanding to state court is appropriate because the instant case involves an important unsettled and novel question of Pennsylvania law. (Doc. No. 3 ¶ 5.) In opposition, Defendant argues that although this case implicates primarily issues of state law, there is no indication that the coverage issue would be better settled in state court. (Doc. No. 4 ¶ 3.) In support of its argument, Defendant asserts that this issue is “one which has been resolved in Federal Court multiple times before.” (Id.) The Court agrees with Plaintiff and will remand this case to state court.

         A. Factors to Consider in Determining Whether The Court Should ExerciseJurisdiction Over This Case Pursuant to its ...


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