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Mordecai v. Progressive Casualty Insurance Co.

United States District Court, E.D. Pennsylvania

November 5, 2019

STEPHEN MORDECAI et al.
v.
PROGRESSIVE CASUALTY INSURANCE COMPANY et al.

          MEMORANDUM

          John Milton Younge Judge

         This case arises out of Defendant Progressive Casualty Insurance Company's alleged failure to pay underinsured motorist (“UIM”) benefits to Plaintiffs Stephen Mordecai and Tasia Mordecai. Presently before the Court are Defendant's Notice of Removal and its Motion to Dismiss Plaintiffs' statutory bad faith claims pursuant to Federal Rule of Civil Procedure 12(b)(6). (Not. of Removal, ECF No. 1; Def.'s Mot., ECF No. 4.) The Court finds this matter appropriate for resolution without oral argument. Fed.R.Civ.P. 78; L.R. 7.1(f). For the following reasons, we conclude that this Court lacks subject matter jurisdiction over this action. Accordingly, Defendant's Motion will be dismissed as moot, and this matter will be remanded to the Court of Common Pleas of Montgomery County.

         I. BACKGROUND

         On or about July 27, 2018, a vehicle driven by Defendant Munirah K. Abdullah struck the rear of another vehicle, which, in turn, struck the rear of the vehicle occupied by Stephen Mordecai and Tasia Mordecai. (Compl. ¶ 9, Not. of Removal Ex. A.) Both Plaintiffs allege that they suffered serious injuries in the collision, including neck and back injuries. (Id. ¶¶ 13-14.) At the time of the collision, the Abdullah vehicle “was not properly insured, ” (id. ¶ 12), and the Mordecai vehicle was insured by Defendant under a policy that included provision of UIM benefits. (Id. ¶ 8.) By letter dated February 19, 2019, Plaintiffs demanded UIM benefits under the Progressive policy.[1] (Id. ¶¶ 20, 22.) Plaintiffs allege that despite their demand and full compliance “with all of the terms and conditions required by the policy, ” Defendant “has refused, without legal justification or cause, and continues to refuse, to pay to Plaintiff[s] monies owed” for UIM coverage under the policy. (Id.)

         On September 13, 2019, Plaintiffs filed suit against Defendant and Abdullah in the Montgomery County Court of Common Pleas. (Not. of Removal ¶ 1.) Plaintiffs' Complaint alleges that they are citizens of Pennsylvania, that Defendant Progressive is an Ohio corporation authorized to conduct business in Pennsylvania, and that Defendant Abdullah is a citizen of Pennsylvania. (Compl. ¶¶ 1-4.) Plaintiffs each assert claims against Defendant Progressive for breach of contract (Counts I, III) and bad faith pursuant to 42 Pa. Cons. Stat. § 8371 (Counts II, IV), and claims for negligence against Defendant Abdullah (Counts V, VI). The ad damnum clauses of Plaintiffs' Complaint seek damages not in excess of $50, 000.[2] Specifically, the ad damnum clauses of the bad faith claims seek judgment in Plaintiffs' favor and an “award of compensatory and punitive damages in an amount not in excess of Fifty Thousand Dollars ($50, 000).” (Compl., ad damnum clauses, Counts, II, IV (emphasis added).) In addition to the ad damnum clauses, the cover sheet to Plaintiffs' Complaint states that the amount in controversy is “$50, 000 or less.” (Compl., Cover Sheet.)

         On September 20, 2019, Defendant Progressive filed a Notice of Removal pursuant to 28 U.S.C. § 1441, et seq., invoking this Court's diversity jurisdiction. Defendant's Notice of Removal asserts that it and Plaintiffs are citizens of different states and that Defendant Abdullah had not been served at the time of removal.[3] (Not. of Removal ¶¶ 4, 7-9.) With regard to the amount in controversy, Defendant Progressive states: “Plaintiffs allege that they are each entitled to underinsured motorist benefits pursuant to an automobile insurance policy that provided a total of $15, 000 per person, $30, 000 per accident underinsured motorist benefits. . . .” (Not. of Removal ¶ 10.) Noting that Plaintiffs seek punitive damages on their bad faith claims, Defendant further asserts that punitive damages are properly considered in determining the amount in controversy, and that because Plaintiffs seek “$30, 000 in [UIM] benefits, as well as punitive damages, interest, and attorneys' fees, the amount in controversy exceeds the jurisdictional requirement of $75, 000.” (Id. ¶¶ 12, 14.)

         On September 27, 2019, this case was reassigned to this Court's docket. (ECF No. 3.) On October 1, 2019, Defendant filed its Motion to Dismiss Plaintiffs' bad faith claims, contending that the Complaint “fails to contain factual allegations sufficient to support a statutory bad faith claim above the speculative level.” (Def.'s Mot. 1.) Plaintiffs filed their Response in opposition to Defendant's Motion on October 15, 2019. (ECF No. 7.)

         II. LEGAL STANDARD

         Under 28 U.S.C. § 1441(a), “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C.A. § 1441(a). A district court may exercise subject matter jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a). As the party asserting jurisdiction, Defendant Progressive has “the burden of showing, at all stages of the litigation, that the case is properly before the federal court.” Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007). “Removal statutes are to be strictly construed, with all doubts to be resolved in favor of remand.” Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009) (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992)).

         “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., 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)). Thus, a district court has authority to remand a case sua sponte if it determines that it lacks subject matter jurisdiction. 28 U.S.C. § 1447(c) (“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”); see also Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d 742, 750 (3d Cir. 1995) (“[T]he general rule that federal courts have an ever-present obligation to satisfy themselves of their subject matter jurisdiction and to decide the issue sua sponte applies equally in removal cases.”) (citations omitted).

         III. DISCUSSION

         A. This Action Lacks Complete Diversity

         When an action has been removed based on diversity, “a proper exercise of federal jurisdiction requires . . . complete diversity between the parties, that is, every plaintiff must be of a diverse state citizenship from every defendant.” In re Briscoe, 448 F.3d 201, 215 (3d Cir. 2006); see also Johnson v. SmithKline Beecham Corp., 724 F.3d 337, 346 (3d Cir. 2013) (noting that complete diversity requires that “no plaintiff can be a citizen of the same state as any of the defendants.” (citation and internal quotation marks omitted)); Janaski v. Dettore, No. 15-572, 2015 WL 1573670, at *2 (E.D. Pa. Apr. 9, 2015) (same).

         Here, federal jurisdiction does not exist because the face of Plaintiffs' Complaint reveals the absence of complete diversity. See Janaski, 2015 WL 1573670, at *2. As noted above, the Complaint alleges that both Plaintiffs and Defendant Abdullah are citizens of Pennsylvania. Contrary to Defendant Progressive's suggestion in its Notice of Removal, the lack of diversity is not overcome by the fact that Abdullah-the non-diverse defendant-had not been served at the time of removal. Defendant Progressive's contention appears to be derived from the “forum defendant rule, ” under which “[a] civil action otherwise removable solely on the basis of [diversity jurisdiction] may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is ...


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