Plaintiffs get to choose litigation venue by filing a complaint in any court that meets jurisdictional rules – State or Federal. While defendants have limited means to select venue, one consideration is whether a matter can be removed to federal court. Particularly where an out of State defendant is involved in an action meeting diversity requirements, federal court may provide a more favorable venue. However, the decision must be made quickly as the rule requires removal in thirty days from service of the complaint.
In JUDITH KOERNER v. GEICO, the defendant insurer removed a UIM claim to Pennsylvania Middle District Court only after the plaintiff amended the complaint some eight months into the State court litigation. The insurer contended that the only after the amended complaint did the amount in controversy exceed the jurisdictional requirement of $75,000. The plaintiff sought remand on the grounds that the removal came well after the allotted 30 days.
The plaintiff, Judith Koerner (“Korner”) alleged that she was injured in an auto accident, when objects from an unidentified vehicle were thrust into the roadway and forced her into a guardrail. As a result, she sustained injuries for which she sought uninsured motorist benefits from her insurer, Geico, which denied the claim.
Koerner filed her original complaint in Pike County Court of Common Pleas, without a quantification of damages, but demanded an unspecified judgment in the amount to cover damages she sustained in the accident. Nearly a year later, Koerner amended her complaint, adding individual counts for breach of contract and bad faith against Geico. Notably, Koerner alleged that Geico was liable for Pennsylvania common law and statutory bad faith damages, including punitive damages (which under Pennsylvania jurisprudence can be up to ten times the compensatory award).
Subsequent to Koerner’s amended complaint, Geico filed a notice to remove the case to federal court, based on diversity jurisdiction. In support of its notice, Geico stated that the policy’s UIM limit was $15,000, noting that the demand for punitive damages in Koerner’s amended complaint satisfied the jurisdictional requirement of a $75,000 amount in controversy. Geico argued that the removal was timely because it was not until the filing of the amended complaint that it could ascertain the amount in controversy as meeting the threshold for removal.
Koerner counter-argued that Geico’s petition to remove the case was untimely because Geico should have filed for removal within 30 days of filing the original complaint. Koerner relied on 28 U.S.C. § 1446(b)(3), which states:
(3) Except as provided in subsection (c), if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.
Although the original complaint did not allege damages in excess of $75,000, Koerner argued that under 28 U.S.C. § 1446(b)(3), Geico could surmise that the amount in controversy exceeded $75,000 prior to her amended complaint, based on “other papers” including medical reports.
The Middle District denied plaintiff’s motion reasoning that the use of the word “ascertain” in § 1446(b)(3) means that the thirty-day removal period is triggered only when the documents “make it `unequivocally clear and certain’ that federal jurisdiction lies.” Because Koerner provided no basis to conclude that medical records supplied in response to a request for production of documents makes the amount in controversy ascertainable—the documents did not “make it unequivocally clear and certain that federal jurisdiction lies.” This was particularly so when the operative complaint at the time only alleged with specificity that Koerner was entitled to uninsured motorist benefits from Geico and those benefits under the policy were $60,000 shy of the amount in controversy required for federal jurisdiction. Only when bad faith was alleged did Pennsylvania’s Bad Faith statute make punitive damages in issue and, in theory, increase the amount in controversy in excess of $75,000. Therefore, federal court jurisdiction was proper.
Thanks to Sathima Jones for her contribution.