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Trial Strategy: Using "Other Paper" in a Motion to Remand a Coverage Action to State Court

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A recent decision by a federal district court in Pennsylvania highlights the importance of understanding the phrase “other paper” – for both insurance companies and policyholders – to decide the …

A recent decision by a federal district court in Pennsylvania highlights the importance of understanding the phrase “other paper” – for both insurance companies and policyholders – to decide the timeliness of a notice of removal.

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  • 1. The following article is from National Underwriter’s latest online resource, FC&S Legal: The Insurance Coverage Law Information Center. The Insurance Coverage Law Information Center TRIAL STRATEGY: USING “OTHER PAPER” IN A MOTION TO REMAND A COVERAGE ACTION TO STATE COURT December 30, 2013 Steven A. Meyerowitz, Esq., Director, FC&S Legal A recent decision by a federal district court in Pennsylvania highlights the importance of understanding the phrase “other paper” – for both insurance companies and policyholders – to decide the timeliness of a notice of removal. The Case Anthony and Maryann Minissale alleged that water damaged the granite flooring of their home on June 7, 2011 and that their homeowner’s insurance policy covered the replacement cost of the floor. Their counsel provided their insurance company, State Farm Fire & Casualty Company, with an estimate of $55,315 to replace the floor on April 4, 2013. State Farm refused to pay and the homeowners sued State Farm in a state court in Pennsylvania on June 6, 2013. On August 20, 2013, State Farm served the homeowners with a request for admission that the total damages they sought did not exceed $50,000, that the total damages they sought did not exceed $75,000, and that the total damages they sought did not exceed $150,000. The homeowners responded that they reserved their right to amend or supplement their response, and “specifically denied” that their total damages did not exceed $75,000. State Farm received the homeowners’ response on September 19, and filed a notice of removal to federal court on October 7, 2013. The homeowners moved to remand, contending, among other things, that State Farm’s notice of removal was untimely. State Farm contended that it had filed its notice of removal within 30 days of receiving the homeowners’ response to its request for admission and, therefore, it was timely. The Removal Rules A defendant may remove: any civil action brought in a State court of which the district courts of the United States have original jurisdiction. 28 U.S.C. § 1441. Moreover, The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—(1) citizens of different States. 28 U.S.C. § 1332(a). In addition, Removal of the action is proper on the basis of an amount in controversy asserted under subparagraph (A) if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds the amount specified in section 1332(a). 28 U.S.C. § 1446(b)(2)(B). Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
  • 2. A notice of removal must be filed: within thirty days after the receipt by the defendant ... of a copy of the initial pleading setting forth a claim for relief upon which such action or proceeding is based. 28 U.S.C. § 1446(b). the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after [I]f 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. 28 U.S.C. § 1446(b)(3). The Court’s Decision The court granted the homeowners’ motion to remand. In its decision, the court pointed out that State Farm had received a copy of the $55,315 estimate from the homeowners’ attorney in a demand letter seeking reimbursement for the costs of replacing the floor on April 4, 2013. In the court’s view, a settlement demand letter prior to the filing of a complaint “appear[ed] to serve the same purpose as a post-complaint demand letter.” The court added that, in this case, the attorney’s demand letter was “not merely an attorney’s estimate of the value of his clients’ claims” or “posturing,” but “provided an estimate of actual damages from the contractor.” The court explained that the homeowners’ complaint sought compensatory damages to repair the floor, estimated at $55,315, in addition to interest, punitive damages, and attorneys’ fees for their bad faith claim. State Farm had all of this information on June 6, 2013 when the homeowners filed their complaint, the court said. Accordingly, it ruled, even if the homeowners’ response to State Farm’s request for admission did provide some information regarding the amount in controversy, service of this response was not when State Farm “first ascertained” that the homeowners’ claims could exceed $75,000. The case is Minissale v. State Farm Fire Casualty Co., No. 13–5912 (E.D. Pa. Dec. 20, 2013). FCS Legal Comment Federal courts in Pennsylvania have interpreted the phrase “other paper” widely to include requests for admission, Broderick v. Dellasandro, 859 F.Supp. 176 (E.D.Pa.1994), correspondence between counsel, Efford v. Milam, 368 F.Supp.2d 380 (E.D.Pa.2005), answers to interrogatories, Cabibbo v. Einstein/Noah Bagel Partners, L.P., 181 F.Supp.2d 428 (E.D.Pa.2002), and a demand letter from the plaintiffs’ attorney, White v. Gould, No. 91–6531 (E.D.Pa. Jan. 9, 1992) (finding a demand letter from the plaintiffs’ attorney was “other paper”). But see Sfirakis v. Allstate Insurance Company, No. 91–3092 (E.D.Pa. July 24, 1991) (finding a demand letter for $300,000 to settle a complaint seeking damages not in excess of $20,000 was not such “other paper” because it was “nothing more than posturing by counsel seeking to stake out a position for settlement purposes”). A few unreported cases have found a plaintiff’s refusal to deny that the amount in controversy exceeded $75,000 was “other paper” triggering the 30 days to file notice of removal. See Brown v. Modell’s PA II, Inc., No. 08-1528 (E.D.Pa. July 1, 2008) (“Plaintiffs’ admission that there was an excess of $75,000 in controversy, through their failure to deny the request for admissions by February 29, 2008, gave defendant actual notice that the amount in controversy requirement was met and the case was removable.”); Bishop v. Sam’s E., Inc., No. 08–4550 (E.D. Pa. June 23, 2009) (agreeing “plaintiff’s failure to deny the request for admission gave the defendant notice of an amount in controversy in excess of $75,000, triggering the removal period.”). One might wonder, however, how a refusal to provide information can be “information relating to the amount in controversy.” See TJS Brokerage Co. v. CRST, Inc., 958 F.Supp. 220 (E.D.Pa.1997) (remanding because a refusal to stipulate the amount in controversy was less than $75,000 did not prove the jurisdictional amount). Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
  • 3. For more information, or to begin your free trial: • Call: 1-800-543-0874 • Email: customerservice@SummitProNets.com • Online: www.fcandslegal.com FCS Legal guarantees you instant access to the most authoritative and comprehensive insurance coverage law information available today. This powerful, up-to-the-minute online resource enables you to stay apprised of the latest developments through your desktop, laptop, tablet, or smart phone —whenever and wherever you need it. NOTE: The content posted to this account from FCS Legal: The Insurance Coverage Law Information Center is current to the date of its initial publication. There may have been further developments of the issues discussed since the original publication. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought. Copyright ©The National Underwriter Company. All Rights Reserved. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com

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