Pennsylvania Record

Wednesday, September 18, 2019

$500K Allstate indemnification case headed to compulsory arbitration

By Nicholas Malfitano | Dec 31, 2015

U.S. District Court Judge Gerald J. Pappert

PHILADELPHIA – A complaint brought against Allstate Insurance Company for alleged lack of indemnification for $500,000 in damages is headed to arbitration instead of back to state court, per the U.S. District Court for the Eastern District of Pennsylvania.

Judge Gerald J. Pappert designated the case brought by Mary Lou Doherty, James Doherty and John Doherty of Haverford for arbitration, after first deciding on Dec. 22 that the case would not return to its place of origin in the Philadelphia County Court of Common Pleas. 

The Dohertys own a pair of rental properties in Bryn Mawr, which they claim earn them a total monthly rental income of between $3,000 and $3,200. On Aug. 27, 2014, the plaintiffs claimed to suffer “physical loss and damage” to their units, which allegedly resulted in loss of rent in excess of $69,382.

Then, on July 2, 2015, they suffered a second event of physical loss and damage event to the units, which then allegedly resulted in loss of rent in excess of $430,809.

The two events combined for a total alleged loss of $500,191 in rental income for the plaintiffs, who provided Allstate with written notice after each event had taken place.

Despite supposedly possessing coverage insuring against both events, the plaintiffs believe Allstate breached its contract by failing to issue them coverage for the two events and filed suit in state court in August. In response, Allstate removed the litigation to federal court in September. 

However, the plaintiffs motioned to remand the case to state court in October, an action opposed by Allstate due to diversity of jurisdiction between the parties. The plaintiffs are based in Haverford, while Allstate is based in Northfield Township, Ill.

The suit says the plaintiffs do not contest the U.S. District Court for the Eastern District of Pennsylvania as the proper jurisdiction, but they assert Allstate used a subpoena with the state court caption after removal, which the plaintiffs believe outright waived the defendant’s right to remove the case.

According to the defendant’s notice of removal, Allstate’s monetary policy limits for claims as sought by the plaintiffs is between $369,981 and $376,777. 

In order to support their claim, the Dohertys cite a prior case, Sacko v. Greyhound Lines, Inc., where a plaintiff argued a defendant’s notice of removal was untimely after service of a writ of summons, in addition to the accompanying filing of a motion for preliminary objections and a joinder complaint in the Court of Common Pleas waived their removal right.

However, Pappert found this rationale to work against the case brought by the plaintiffs. In Sacko, Pappert explained the trial court found the complaint was the initial pleading, not the writ of summons – and further found state court filings did not show a “clear and unequivocal” waiver of the right to remove the suit.

Sacko undermines, not supports, the Dohertys’ position,” Pappert said.

“For Allstate to have waived its right to removal, it must have done so in a ‘clear and unequivocal’ fashion. Such a waiver is found when a defendant experiments with the merits of the case in state court and then seeks to remove the case to federal court, often after receiving an adverse decision. Allstate’s serving of a subpoena with the state court caption one day after removal falls far short of any ‘clear and unequivocal’ waiver,” Pappert added.

The plaintiffs are represented by Mary Lou Doherty, in Haverford.

The defendants are represented by Brian James Madden of Donnelly & Associates, in Conshohocken.

U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-05165

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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