Merlin Law Group clients often have their insurance claim disputes settled with no lawsuit filed. Pre-litigation settlement is frequently in the client’s best interest. Sometimes, filing a lawsuit is the best alternative.

Even when filing suit in state court, insurance companies sometimes invoke their right to have the case heard by a federal court instead of a state court. There are a variety of reasons an insurance company might want to litigate in federal court. First, federal courts often have greater resources to move a case to completion. For example, most federal judges have a full staff of law clerks—lawyers that help the judge research legal issues, delve into the evidence, and draft opinions. Second, federal courts frequently decide cases without oral argument, relying solely on the litigant’s written work product. Third, the civil procedure rules in federal court are well-established, and lead to predictable results on important pretrial issues. Finally, some insurance defense lawyers may think that federal court gives them an advantage to win the case.

Just because the insurance company removed your case to federal court does not mean that the case is guaranteed to stay there. Insureds can seek to return their cases to state court when there are defects in the court’s ability to enter judgment under the Constitution, or if a procedural hurdle under federal law is not complied with by the insurance company. Of course, if the law requires the federal court to keep the case, there is little that can be done to send it back to state court.

Once in federal court, many policyholders are surprised to learn that two judges are often assigned to their cases. The first judge assigned to the case is the United States district judge. District judges have the authority to enter final judgment and possess the full power to make all decisions in a case. Usually, the federal district judge will preside over the trial, rule on evidentiary objections and pretrial motions, and determine the law that should apply.

The second judge assigned to the case is a federal magistrate judge. United States magistrate judges might help the federal district judges resolve pretrial motions, discovery issues, and other pretrial litigation matters. Unlike district judges, federal magistrate judges are not nominated by the president or confirmed by the senate, and do not have life tenure.

Many times, magistrate judges render their rulings in opinions called reports and recommendations. If a party believes that the federal magistrate judge got the decision wrong in the report and recommendation, the party can file an objection and have the federal district judge review the magistrate judge’s opinion. Also, if all parties consent, the magistrate judges can preside over civil cases and enter final judgment. Depending on the case, consenting to a federal magistrate’s jurisdiction might be an excellent choice for insureds, because it is sometimes easier to receive a position on the court’s trial calendar from a federal magistrate judge than a district judge.

Ian Dankelman graduated cum laude from the University of Florida Levin College of Law. While in law school, he was named to the National Order of the Barristers, served as a vice president of the moot court team, and earned the highest grades in Legal Research and Writing and Trial Practice. After law school, he gained valuable litigation and trial experience as an assistant state attorney. Before joining Merlin Law Group, he served from October 2016 to September 2018 as a law clerk for a United States District Judge in the Middle District of Florida.

  • shirley heflin

    Dear Mr. Dankelman:

    I’m no Lawyer, but it sounds like an Insured – in addition to fighting with its own insurance company for benefit payments rightfully due – is also faced with the task of figuring out which Court – State or Federal – serves its best interest. If the Insured determines that State Court is in their best interest, they may be faced with a defense attorney who’s going to fight like hell to keep it in Federal Court because it’s advantageous to their client to keep it there.

    Agreed that it’s in the Insured’s best interest to settle without litigation, but, in my opinion, cases are settled faster in State Court – even if their best interest is in Federal Court. That’s just my opinion. Further, assuming that the Insured is a residential policyholder and not a commercial client (with greater financial means to sustain during litigation), the former has more to lose because the length of time to resolve their claim in either scenario could be several years. Nobody wants and/or can live in an inhabitable home for several years.

    Finally, sometimes justice is served but she sure can be slow sometimes and that doesn’t serve everyone.

    Tampa, FL

  • Jim Johnson

    Thank you for the very informative blog!

  • An industry consultant and expert witness I know claims that another reason insurers seek to move litigation into the federal courts is that it is more expensive and time consuming than state courts which can wear down a policyholder and their attorney who is working on a contingency basis. Here is a recent report I’m sure you’re aware of:

  • Jim Johnson

    From what I have observed in my time spent in property claims, each party will try to get the case tried in the most advantageous location. In my state and many others, the state and each county within the state has a record of being sympathetic or hostile to insurers in rulings and awards.

    If the state and/or county has a reputation being anti-insurer, and especially if the case has potential to change case law, of course they will try to move it to federal court. Likewise, based on Dankelman’s comments that federal courts can be more predictable in procedures and rely less on oral arguments, which can take emotion out of the equation.

    Again, a good article provided by Mr. Dankelman.

  • Edward Fako

    Welcome to the esteemed Law Firm of MLG Attorney Dankelman. Congratulations on your impressive beginning of a hopefully lengthy resume.

    I have a sincere question, since so often it seems as if the Federal Court Cases are cited in the MLG Blog. Which Courts hold more Precedential Value, Federal or Appellate, providing they care both based on the same States Laws?

    It seems as if opposing Appraisers give no recognition to the Illinois Federal Decision in Windridge Condominiums v Philadelphia Indemnity Insurance Company, which has Ruled that Matching is an Appraisable issue, yet the Insurers Appraisers still state that it is a Coverage Issue not to even be considered in Appraisal.

    Besides small Home Owner Claims needing to use litigation to enforce there rights, what other options do they have?

    Should the PH consider seeking a Declaratory Judgment to compel those already Ruled on decisions be included in their Appraisals?

    They don’t have the same funds as the many Condominium Associations I see prevailing.


    Edward Fako