Federal judge relinquishes jurisdiction in insurance declaratory judgment case, remands to state court

Citing the circumstances surrounding the relatively unique situation, a federal judge in

Philadelphia has declined to take up jurisdiction in a case originally filed in state court by a doctor who maintains that an insurer should indemnify him in a separate medical professional liability action.

U.S. District Judge Michael Baylson, sitting in the Eastern District of Pennsylvania, granted a plaintiff’s motion to remand a case against Darwin Select Insurance Company to the Bucks County Court of Common Pleas.

Richard Purse filed suit against the insurer seeking a declaration that under state law, Darwin owed him a duty to defend against claims of medical malpractice.

The specifics of the professional liability complaint in which Purse is a defendant were not immediately discussed in the federal judge’s June 26 ruling.

In the present case, Baylson said he looked to the 2000 U.S. Third Circuit Court of Appeals Case of State Auto Ins. Cos. v. Summy for guidance, a case that courts in the Third Circuit’s district have applied when declining to exercise federal jurisdiction when underlying state law questions have been unsettled.

In the Purse case, Baylson wrote, there appears to be an unsettled question of whether an insurer like Darwin owes a duty to defend and/or indemnify under Pennsylvania law since Purse was an employee of a company with which Darwin had an insurance policy, but Darwin canceled the policy when the company for which Purse worked went out of business.

“Whether Darwin owes Plaintiff a duty to defend and/or indemnify in these circumstances does not appear to be squarely answered by any outstanding Pennsylvania authority,” Baylson’s ruling states.

In his motion to remand, Purse pointed out that there is no case law in Pennsylvania that speaks to this exact issue.

Baylson noted that he recently applied the Summy Third Circuit case when he declined to exercise jurisdiction in a federal declaratory judgment action, when the underlying state law question was just “relatively” settled.

And while there is no pending state court action in the Purse case as there was in Summy, Baylson wrote, the reason for that is because Darwin removed the state court action that Purse filed in Bucks County Court to the federal court.

In the end, Baylson relinquished jurisdiction, and granted Purse’s motion to remand the case to state court.