Russ v. State Farm Mut. Auto. Ins. Co.

• Court: U.S. District Court — Eastern District of Pennsylvania
• Writing for the Court: Louis H. Pollak
• Citation: Russ v. State Farm Mut. Auto. Ins. Co., 961 F.Supp. 808 (E.D. Pa. 1997)
• Decision Date: 31 March 1997
• Docket Number: Civil Action No. 96-2650.
• Parties: Allan Michael RUSS, Bea Smith and Ann Hall, individually and on behalf of all others similarly situated v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Aetna Casualty and Surety Company and American International Insurance Company.

961 F.Supp. 808

Allan Michael RUSS, Bea Smith and Ann Hall, individually and on behalf of all others similarly situated v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Aetna Casualty and Surety Company and American International Insurance Company.

Civil Action No. 96-2650.

United States District Court, E.D. Pennsylvania.

March 31, 1997.

OPINION

LOUIS H. POLLAK, District Judge.

Plaintiffs have moved that this class action case be remanded to the Philadelphia County Court of Common Pleas, pursuant to 28 U.S.C. § 1447. They state that, although the parties are diverse, the amount in controversy for each plaintiff is less than $50,000 and that therefore this court lacks subject matter jurisdiction. Defendants State Farm Mutual Automobile Insurance Company ("State Farm") and American International Insurance Company ("AIIC") oppose the plaintiffs' motion; defendant Aetna Casualty and Surety Company ("Aetna") joins in these defendants' opposition.¹

As stated in the complaint, the individual plaintiffs seek to become representatives of a class of persons

who were insured by the defendants as part of the `Assigned Risk' auto insurance plan mandated under state law, and were thereafter assigned the "Limited Tort Option" by the defendant insurance companies and their agents, without having all the statutorily mandated information prior to signing the election forms used by the defendants. The election form used by these defendants failed to give the annual premium price for each option choice, i.e. the "full" tort option and the "limited" tort option information which is mandated in the [Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. § 1705 et. seq.]. Without this required information, the defendants failed to afford the individual plaintiffs and members of the Class an opportunity to make a knowing and voluntary waiver of the "full tort" option, which if elected, gives an insured and the members of his/her household covered by the policy, an unrestricted right to seek financial compensation for non-economic damages resulting from an automobile accident.

Complaint ¶ 1. The complaint alleges seven causes of action, with differing remedies under each: (1) violation of the Pennsylvania Unfair Trade Practice and Consumer Protection Law, 73 Pa.S. § 201-1 et. seq., for which the plaintiffs seek the return of their insurance premiums, treble costs, and attorney's fees; (2) bad faith pursuant to 42 Pa.C.S. § 8371, for which the plaintiffs seek attorney's fees, interest, and punitive damages; (3) breach of fiduciary duty, for which the plaintiffs seek compensatory and punitive damages and attorney's fees; (4) constructive and actual fraud, for which the plaintiffs seek compensatory and punitive damages, attorney's fees, the return of plaintiffs' premiums, and treatment of all policies issued wrongfully as full tort option policies; (5) negligent misrepresentation, for which the plaintiffs seek damages, attorney's fees, the return of plaintiffs' premiums, and treatment of all policies issued wrongfully as full tort option policies; (6) breach of implied covenant of good faith and fair dealing, for which the plaintiffs seek compensatory and punitive damages, attorney's fees, and treatment of all policies issued wrongfully as full tort option policies; and (7) money had and received, for which the plaintiffs seek compensatory and punitive damages and attorney's fees, or in the alternative the return of plaintiffs' premiums.

The defendant insurance companies assert that this court has jurisdiction on the basis of diversity of citizenship. Plaintiffs each reside in Pennsylvania, while State Farm is incorporated and headquartered in Illinois, Aetna is incorporated and headquartered in Connecticut, and AIIC is incorporated and headquartered in New York. The question, then, is whether the diversity jurisdiction statute's $50,000 amount in controversy requirement has been met. See 28 U.S.C. § 1332.

On a motion to remand, the burden is on the defendants to establish federal court jurisdiction. See Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir.1990). The court must decide the amount in controversy from the complaint itself. See Angus v. Shiley, Inc., 989 F.2d 142, 145 (3d Cir. 1993). The task in this case is complicated by the complaint's lack of specificity. Indeed, Pennsylvania's rules of civil procedure prohibit plaintiffs from demanding a specific sum. See Penn.R.Civ.P. 1021. Nonetheless, the Third Circuit has instructed that, in a case removed to federal court, "the amount in controversy is ... measured ... by a reasonable reading of the value of the rights being litigated." Angus, 989 F.2d at 146. I will therefore proceed to assess the value of the rights claimed by plaintiffs in this case.

Plaintiff's counsel asserts that even were any of the plaintiffs to recover the premiums they have paid, their full medical expenses from their accidents, and treble damages, their recovery would still not exceed $50,000. Defendants respond that the amount in controversy is met by the plaintiff's claims for punitive damages and attorney's fees. See Bell v. Preferred Life Assurance Society, 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15 (1943) (punitive damages includable in amount in controversy); Missouri State Life Insurance Company v. Jones, 290 U.S. 199, 54 S.Ct. 133, 78 L.Ed. 267 (1933) (same for attorney's fees authorized by law).

I conclude that the amount in controversy regarding plaintiff Allan Russ's claim exceeds $50,000. According to the complaint, Russ was involved in a motor vehicle accident and defendant State Farm failed to recognize and honor his claim for non-economic damages; State Farm asserted that these damages were limited by Russ's election of the limited tort option. Complaint ¶ 30. Plaintiffs' motion for remand states that as a result of his auto accident, Mr. Russ sustained personal injuries with medical bills, or "specials," totaling $8,040.00. See Pls.' Memo of Law at 8; Pl.'s Reply Memo of Law at 5 n. 3. Plaintiffs also add, however, that "because plaintiffs' claims for personal injury are so low, the total monetary value of any claim plaintiffs would ultimately submit to defendants for compensatory damages for the loss of the right to recover in full tort is likewise minimal." Pls.' Memo of Law at 8.

Plaintiffs fail to provide any support for their assertion that the value of a lost claim for pain and suffering is "minimal." Under the limited tort option, Mr. Russ was denied the ability to claim damages for pain and suffering for injuries other than a "serious injury," that is, a "personal injury resulting in death, serious impairment of body function or permanent serious disfigurement." 75 Pa. C.S. § 1702. The record is silent as to Mr. Russ's injury. However, it is not unreasonable to expect that an injury resulting in $8,000 worth of medical bills and potentially causing moderate — if not serious — impairment of body function or permanent moderate disfigurement could result in a jury award of $16,000 for pain and suffering. Pennsylvania's Unfair Trade Practice and Consumer Protection Law — plaintiffs' theory under Count 1 of the complaint — authorizes treble damages and attorney's fees, see 73 Pa.S. § 201-9.2; Neff v. General Motors Corp., 163 F.R.D. 478, 483 (E.D.Pa.1995); Hammer v. Nikol, 659 A.2d 617, 620 (Pa. Commw.Ct.1995). Trebling a $16,000 award for Russ's lost pain and suffering claim, and adding a reasonable attorney's fee, I conclude that "a reasonable jury ... could ... value[] [Russ's] losses at over $50,000." Angus, 989 F.2d at 146.

The same is not true of the other plaintiffs, both named and unnamed. Plaintiffs Bea Smith and Ann Hall were involved in motor vehicle accidents, but "did not pursue [their] rightful remedies" under their insurance policies. Complaint ¶¶ 31, 32. This assertion is too vague to allow me to conclude that these plaintiffs have lost a valuable claim for pain and suffering stemming from their accidents. These plaintiffs — as well as the purported class members who were never involved in any accident — appear to have sustained damages involving no more than the denial of their opportunity to make an informed choice; such damages would likely be small in the absence of evidence of lost claims. Moreover, some class members presumably would have chosen the limited tort option even had they been given the full information the plaintiffs allege was not provided them; these plaintiffs' damages would indeed be minimal. Even adding punitive damages and attorney's fees to these various claims, I find that, for these plaintiffs, a "reasonable reading of the value of the rights being litigated" does not exceed $50,000.

The foregoing establishes (1) that the complaint alleges, with respect to named plaintiff Russ, a claim pursuant to which recovery might be had for a sum in excess of $50,000, thereby satisfying the jurisdictional amount called for by 28 U.S.C. § 1332, but (2) that neither of the claims alleged on behalf of the two other named plaintiffs, nor any of the claims alleged on behalf of the unnamed putative class members, reaches the jurisdictional amount. The question then arises whether, in the exercise of the "supplemental jurisdiction" described in subsections (a), (b) and (c) of section 1367 of the Judicial Code, 28 U.S.C. § 1367(a), (b) and (c),² this court has subject matter jurisdiction of this proposed class action. If section 1367 is parsed literally, the answer would appear to be in the affirmative. But whether such a literal reading of section 1367 is appropriate is a question of some intricacy. In order to address that question fully, it will be useful first to canvass the principal cases antedating section 1367, and second to examine the text and legislative history of section 1367 itself.

I.

In 1939, in Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001 (1939), the Supreme Court had before it an appeal...