Many insurance cases are filed in state court against out-of-state insurance companies. These insurance companies like to remove the case to federal court because federal courts are seen as a friendly forum for insurance companies. In order to remove a case to federal court there must be complete diversity of citizenship between the plaintiff and the defendant, and the amount in controversy must exceed $75,000. How do you determine “amount in controversy?” In a May 7, 2016 blog I discussed the Cantu1 case where Cantu argued that the amount in controversy was $23,945.43 because that was the amount of actual damages. However, the court found the amount in controversy to exceed $75,000 because Cantu had alleged statutory and common law bad faith damages, which the court found would push the amount in controversy past $75,000. The recent Puente v. State Farm Lloyds2 case from the Brownsville Division of the Southern District shows exactly how the amount in controversy should be determined. Just because the Plaintiff alleges exemplary damages does not mean that the amount in controversy is automatically in excess of $75,000.

Continue Reading Primer on Amount in Controversy – How Do Court’s Determine It?

Insurance disputes often are tried in federal court. The usual reason is that federal courts have jurisdiction over controversies where parties are from different states and there is a sufficient monetary amount in controversy. I have often questioned the logic of allowing insurance companies voluntarily licensed in a state to remove disputes from that state