Nicholas Malfitano Jul. 7, 2016, 3:36pm


PHILADELPHIA – On June 28, a federal judge denied a motion to sever and dismiss claims from an insurance subrogation case tied to damages in seven separate incidents resulting from faulty lawnmowers.

Judge Gerald J. Pappert of the U.S. District Court for the Eastern District of Pennsylvania said the issues present in the case between State Farm Fire & Casualty Company and MTD Products, LLC did not necessitate such a separation.

Per the litigation, State Farm made insurance payments on seven property damage claims arising from six different lawnmower fires, over the course of 15 months. All the fires were allegedly caused by similar malfunctions in the exhaust systems of lawn mowers manufactured by MTD.

“After making payments to its insureds on the underlying claims, State Farm became subrogated to its insureds’ rights,” Pappert explained. “On April 20, 2016 State Farm filed suit against MTD in the Philadelphia County Court of Common Pleas. State Farm seeks reimbursement for the amount it paid to its insureds as a result of the allegedly defective lawnmowers.”

MTD then removed to federal court on May 10 and filed its motion to sever and dismiss the following week, on May 17.

“MTD contends that the Court should sever State Farm’s claims pursuant to Federal Rules of Civil Procedure 20, 21 and 42; it also asserts that once severed, the claims should be dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) [for lack of subject matter jurisdiction],” Pappert said.

Pappert said since dismissal rests directly upon the severance issue, that would be addressed first in his decision.

“MTD asserts that State Farm cannot join its seven subrogated claims because it ‘stands in the place of its subrogor-insureds’. MTD argues that State Farm is not one plaintiff with seven claims, but seven separate plaintiffs with one claim each,” Pappert said.

Pappert clarified MTD’s argument was based on “an incorrect premise” of believing the real parties in interest are the seven insureds, not State Farm.

“An insurer that pays for the entire loss suffered by an insured party and subsequently takes on the rights of the insured is a real party in interest. Here, State Farm made payments on seven claims and took on the rights of its insureds as a subrogee,” Pappert stated. “As a subrogee, State Farm is a real party in interest ‘entitled to recover the amount paid in its own name’ and “the Insureds…are not to be considered separate plaintiffs.”

Pappert said State Farm’s joinder of the claims against MTD was therefore proper, and rejected MTD’s argument that the plaintiff’s claims should be separated due to “numerous different models of products that have different component parts, different suppliers and possibly different theories of defect with corresponding defenses.”

In contrast, State Farm averred the fires “resulted from related exhaust system malfunctions.”

“At this juncture, the issues do not appear to be so significantly different from each other to warrant severance or bifurcation. Moreover, hearing these claims together will help to eliminate redundancy in filing fees, discovery requests and court documents,” Pappert said.

“The Court declines to sever or bifurcate State Farm’s claims and it accordingly does not address MTD’s motion to dismiss for lack of subject matter jurisdiction given that the amount in controversy clearly exceeds the $75,000 requirement,” Pappert concluded.

The plaintiff is represented by Daniel J. deLuca and Kenneth T. Levine of deLuca Levine, in Blue Bell.

The defendant is represented by Douglas M. Grimsley and Frederick W. Bode III of Dickie McCamey & Chilcote in Pittsburgh, plus Richard T. Coyne of Wegman Hessler & Vanderburg, in Cleveland, Ohio.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-02242

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

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