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Sherer v. Federated Mutual Insurance Co.

United States District Court, E.D. Pennsylvania

October 23, 2019

JEFFREY SHERER, Plaintiff,
v.
FEDERATED MUTUAL INSURANCE COMPANY, Defendant.

          MEMORANDUM

          DUBOIS, J.

         I. INTRODUCTION

         This case arises out of the denial of underinsured motorist (“UIM”) benefits. Plaintiff, Jeffrey Sherer, seeks declarations that the denial and disclaimer of coverage by defendant, Federated Mutual Insurance Company, violated the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) and the public policy of the Commonwealth of Pennsylvania. Presently before the Court is plaintiff's Motion to Remand (Document No. 2, filed June 14, 2019). In his Motion, plaintiff requests that the Court decline to exercise its discretionary jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. (“DJA”), because the case raises unsettled issues of state law. For the reasons set forth below, the Court grants plaintiff's Motion to Remand.

         II. BACKGROUND

         On April 10, 2017, Sherer was operating a vehicle owned by his employer, Peter J. Radocha & Sons, Inc. (“Radocha”), when it was struck by another vehicle. Compl. ¶¶ 6-7. At the time of Sherer's accident, defendant provided insurance coverage for the Radocha vehicle. Compl. ¶¶ 16, 18. The policy issued by defendant provided the following UIM coverage:

(a) $500, 000.00 for Directors, Officers, Partners or Owners of the named insured and their family members qualifying as insured; and (b) no coverage for other persons qualifying as insureds.

Compl. ¶ 19.

         Following the accident, plaintiff made a claim upon the other driver and her insurance provider, State Farm Mutual Automobile Insurance Company, seeking compensatory damages. Compl. ¶ 20. State Farm tendered the $25, 000 liability limit under the driver's policy, which plaintiff contends was “insufficient to compensate . . . for the injuries and damages sustained in the . . . accident.” Compl. ¶¶ 21-22.

         Plaintiff then sought to recover UIM benefits from defendant under the policy issued to Radocha. Compl. ¶ 23. Defendant denied the claim on the ground that plaintiff's employer had properly waived UIM coverage for him pursuant to the requirements of the MVFRL. Compl. ¶ 24, 29.

         Plaintiff filed a Complaint in the Court of Common Pleas of Philadelphia County on May 21, 2019, seeking declarations that the Rejection of Underinsured Motorist Protection used by defendant failed to comply with the MVFRL (Count I); the denial of UIM benefits to employees who otherwise qualify as insureds violates the MVFRL (Count II); and that, because the MVFRL “contemplates a knowing and voluntary waiver of underinsured motorist coverage, ” the failure of defendant or plaintiff's employer to notify plaintiff of the waiver of coverage violated “the MVFRL and the public policy of the Commonwealth of Pennsylvania” (Count III). Pl.'s Mot. Remand Ex. A 5-12. Pursuant to 28 U.S.C. § 1332 and § 1441, defendant filed a Notice of Removal on June 10, 2016.

         On June 14, 2019, plaintiff filed a Motion to Remand on the ground that the Court should decline to exercise its discretionary jurisdiction under the DJA. Plaintiff contends that remand is appropriate because the action seeks only declaratory relief and Counts II and III raise issues of state law that have not yet been resolved by Pennsylvania appellate courts. Pl.'s Mot. Remand 13. Defendant filed its response on June 28, 2019. The Motion is thus ripe for review.

         III. LEGAL STANDARD

         Under the DJA, federal 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). “The Supreme Court has long held that this confers discretionary, rather than compulsory, jurisdiction upon federal courts.” Reifer v. Westport Ins. Corp., 751 F.3d 129, 134 (3d Cir. 2014) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942)). As a result, district courts “possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995).

         While federal courts exercise “substantial” discretion in declaratory actions, this discretion is nonetheless “bounded and reviewable.” Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274, 282 (3d Cir. 2017) (citing Reifer, 751 F.3d at 140). The Third Circuit has set forth a ...


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