Case Bulletin – Federal District Court holds Minimum Financial Requirement for Diversity Jurisdiction Met in UM Bad Faith Action
On May 18, 2017, Judge Conaboy from the United States District Court for the Middle District of Pennsylvania held that the minimum requirement of greater than $75,000 to satisfy diversity jurisdiction was met in an Uninsured Motorist (UM) bad faith claim, even where the policy limits were below this threshold. Koerner v. GEICO Cas. Co., No. 3:17-cv-455 (M.D. Pa. May 18, 2017 Conaboy, J.).
In Koerner, the underlying GEICO policy had UM policy limits of only $15,000. However, the court explained that the diversity dollar amount was met because Plaintiff’s Amended Complaint sought punitive damages for bad faith, which could make the amount controversy in excess of $75,000.00. Id. (citing Golden v. Golden, 382 F.3d 348, 355 (3d Cir. 2004) for the proposition that “a demand for punitive damages generally satisfies the jurisdictional amount for diversity of citizenship purposes.”). The court therefore found that federal court jurisdiction was proper regardless of the amount of UM coverage available under the policy.
Thus, this case stands for the proposition that if a claim for bad faith is filed and punitive damages are requested, the federal diversity jurisdictional requirement may be met “irrespective of the amount of [UM/UIM] coverage in Plaintiff’s insurance policy[.]” Id. However, if a claim is filed for breach of contract only, such diversity jurisdiction may not exist.
