PHILADELPHIA – For the second time, a federal judge has denied a motion to dismiss for lack of jurisdiction made on behalf of defendants in the case of an insurance provider against a construction company and a property company.
Senior Judge Robert F. Kelly of the U.S. District Court for the Eastern District of Pennsylvania, denied the motion to dismiss from KP Construction and John Perna on June 15, in an identical fashion to how he denied the same motion from fellow defendant Tepper Properties, Inc. on May 21.
As the parties to the suit are based in different states, diversity of citizenship applies, and as the contested amount exceeds $75,000 according to plaintiff Frederick Mutual Insurance Company, federal court would be the proper venue to hear the case, he ruled.
Kelly has now ruled in agreement with that argument on two separate occasions.
Frederick Mutual of Frederick, Md., initially brought suit in federal court against KP Construction (doing business as Mark Katona Roofing), Tepper Properties, Inc. and John Perna, all of Bala Cynwyd on Feb. 17, seeking a declaratory judgment to determine its rights and obligations under a policy it issued to Katona and Perna.
Underlying this legal proceeding is a civil action now pending in the Montgomery County Court of Common Pleas, filed by Tepper against Katona and Perna. In that lawsuit, Tepper initiated litigation against Katona and Perna in connection with a contract for roofing services related to the replacement of a roof on a multi-family dwelling owned by Tepper.
The state court complaint alleges damages in excess of $50,000. Tepper’s belief is prior to filing the instant action, Katona and Perna noticed Frederick Mutual of the “First-Filed State Action,” resulting in it seeking to disqualify coverage under the insurance policy.
Tepper filed a motion to dismiss the lawsuit from federal court on April 10 citing a lack of proper jurisdiction, which was denied by Kelly on May 21.
In that decision, Kelly noted “simple math” determined the damages sought in the complaint would easily total more than $75,000 – the threshold amount for a case to be heard in federal court.
“The state complaint avers causes of action for breach of contract, breach of express warranty, breach of implied warranty, and breach of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. Under this Act, Tepper alleges entitlement to an award three times the amount of its actual damages,” Kelly wrote May 21.
“In addition, under this claim, Tepper specifically states that it ‘will have to spend an amount in excess of $50,000, plus costs and attorneys’ fees. Overall, we find that Tepper cannot make a convincing argument that the amount in controversy in this case is less than $75,000 when it has asked for treble damages in its state court action and punitive damages as well.”
Now, their fellow defendants’ May 5 motion for dismissal was centered on their argument that the amount in controversy could not exceed $75,000.
“Defendants assert that this Court lacks subject matter jurisdiction because the amount in controversy does not exceed $75,000. Defendants argue that Tepper is not entitled to damages under the UTPCPL, because Tepper did not purchase goods “primarily for personal, family or house purposes,” Kelly said.
“Defendants thus maintain that, ‘as a matter of law Tepper will not ultimately succeed on its UTPCPL claim,’ and is not entitled to an award of treble damages or attorneys’ fees under the UTPCPL. In addition, defendants assert that Tepper’s claim for breach of implied warranty of workmanlike construction fails as a matter of law. For these reasons, defendants argue that the amount in controversy does not exceed $75,000,” Kelly outlined.
This rationale used by KP Construction and Perna did not meet with Kelly’s favor.
“Defendants’ arguments, however, are misplaced. As noted earlier…we denied Tepper’s prior motion to dismiss for lack of jurisdiction finding that the amount in controversy in this action exceeds $75,000. For the same reasons stated in that decision…we again find that the amount in controversy in this matter is in excess of $75,000,” Kelly said.
Kelly concluded by denying the defendants’ motion to dismiss.
“In light of the aforementioned findings, we hold that the amount in controversy in this action exceeds $75,000, and the requirements for federal jurisdiction have been satisfied. Consequently, defendants’ motion to dismiss for lack of jurisdiction is denied,” Kelly said.
The plaintiff is represented by Michael F. Nerone of Pion Johnston Nerone Girman Clements & Smith, in Pittsburgh.
The defendants are represented by Eric C. Milby of Lundy Flitter Beldecos & Berger, in Narberth, and Gregory Creed Littman of Freundlich & Littman, in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-00764
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at email@example.com