After their living room ceiling collapsed, Heather and David Hutchinson submitted a claim for approximately $25,000 in damages to State Farm Fire & Casualty Company under their homeowners' policy. State Farm denied the claim and the Hutchinsons sued in Pennsylvania state court. In their complaint, the Hutchinsons sought the amount of their insurance claim (~$25,000) for breach of contract plus unspecified compensatory and punitive damages for bad faith denial under Pennsylvania's bad faith statute, 42 Pa. Cons. Stat. § 8371. Five months after the complaint was filed, State Farm removed the case to the Eastern District of Pennsylvania on diversity jurisdiction grounds. The Hutchinsons moved to remand the case to state court, challenging the removal as untimely.
In response to the motion to remand, State Farm argued that removal was timely because it sought removal immediately after receiving a response to a request for admission that explained that while the Hutchinsons' "actual damages" did not exceed the $75,000 jurisdictional threshold, "once punitive damages, interest, and attorneys' fees are factored in, the total damages could very well exceed $75,000." That is, State Farm claimed it could not have known "with legal certainty" that the Hutchinsons’ claim exceeded $75,000 until it received that response.
The district court, in Hutchinson v. State Farm Fire & Cas. Co., No. 18-CV-2588, 2019 WL 357974, at *1 (E.D. Pa. Jan. 28, 2019), noted that other courts in the Third Circuit have found that the amount in controversy exceeds the $75,000 threshold where a plaintiff is able to recover a specified amount of contract damages, plus punitive damages and attorneys’ fees under the bad faith statute. In contrast to the cases cited by State Farm, where complaints included express language that limited claims to amounts that, combined, did not meet the $75,000 threshold, the Hutchinsons’ complaint expressly sought nearly $25,000 in contract damages and did not include any language placing a limit on damages sought under the bad faith statute.
As a result of the Hutchinsons' demand for a specified amount of contract damages plus an open-ended amount of punitive damages, State Farm’s removal several months after the filing of the complaint was untimely and the case was remanded back to Pennsylvania state court.
