Nicholas Malfitano Apr. 20, 2016, 1:07pm


PHILADELPHIA – A breach of insurance contract and statutory bad faith case will not be headed back to the Philadelphia County Court of Common Pleas, a federal judge ruled Monday.

U.S. District Court for the Eastern District of Pennsylvania Judge Michael M. Baylson issued a decision stating Norristown resident John Corley’s lawsuit against National Indemnity Company and Sterling Claim Services, Inc. would remain in the District Court, while Sterling itself was dismissed from the complaint and National Indemnity won a motion to strike certain allegations from the complaint.

National Indemnity is based in Omaha, Neb., while Sterling is considered a citizen of both Pennsylvania (where it is incorporated) and New Jersey (where it is based).

Corley suffered injuries in a motor vehicle accident while operating a van on behalf of his then-employer in August 2008. At that time, Corley, through his employer, was an insured person on National’s underinsured motorist benefits policy.

After settling the motor vehicle claim in 2011, Corley made a claim to National for benefits under the policy, but National refused to pay. In Corley’s complaint, he alleges Sterling has acted as an agent of National in processing his claim.

Corley filed a Writ of Summons in the Philadelphia County Court of Common Pleas on Feb. 18, 2015 followed by an initial complaint on April 15, 2015, alleging two counts against National and Sterling, for 1) breach of contract for failure to pay benefits under the policy, and 2) statutory bad faith.

“When plaintiff provided discovery to Sterling, plaintiff’s responses established that Sterling never issued an insurance policy to plaintiff and is not obligated to provide coverage under National’s policy,” Baylson said.

The defendants removed the case to the District Court on Feb. 4, and Corley timely filed for remand on Feb. 19.

Corley made four arguments in his argument for remanding the case, which included: “Alleged procedural deficiencies in removal, the forum defendant rule, the voluntary-involuntary rule and the defendants’ alleged litigation misconduct.”

The Court found none of these arguments “persuasive”.

“Plaintiff fails to offer any reason why this case should be remanded. Accordingly, plaintiff’s motion to remand shall be denied,” Baylson said.

With respect to Sterling’s motion to dismiss, Sterling asserts it is not a party to Corley’s insurance contract with National and also that Sterling is not an “insurer” for purposes of bad faith claims.

Baylson agreed with Sterling’s logic.

“Sterling is not an insurer…it is not included as a party to plaintiff’s insurance contract with National. Nor does the sixth amended complaint even plead that Sterling acted as plaintiff’s insurer. Accordingly, there is simply no basis for a bad faith claim against Sterling,” Baylson said.

In their motion to strike, National said the inclusion of Sterling’s articles of incorporation have “no relevance to any claim” and allegations about National and its counsel’s conduct during the litigation do not “bear on a claim for statutory bad faith.”

“All of defendants’ arguments are well grounded. Plaintiff’s justifications for amending the complaint six times, claims regarding Sterling’s articles of incorporation and accusations regarding National’s conduct during the litigation have no relevance to any remaining causes of action. Therefore, the Court shall grant National’s Motion,” Baylson stated.

“For the reasons detailed above, plaintiff’s motion to remand shall be denied, Sterling’s motion to dismiss shall be granted, and National’s motion to strike shall be granted,” Baylson concluded.

The plaintiff is represented by Jay Lawrence Fulmer, in Philadelphia.

The defendants are represented by Bryan M. Shay and Richard L. McMonigle of Post & Schell, also in Philadelphia.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-00584

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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