District Court Finds Bad Faith Claim Against Claims Adjuster Fraudulently Joined
The United States District Court for the Eastern District of Pennsylvania recently denied the insureds’ motion to remand their lawsuit for breach of contract and statutory bad faith against an insurer and a claims adjuster on the basis that Pennsylvania law does not recognize a claim for bad faith against a claims adjuster, such that the claims adjuster was fraudulently joined to defeat diversity jurisdiction. Mariano v. Liberty Mut. Ins. Corp., 2019 WL 78957 (E.D. Pa. 2019).
In Mariano, the plaintiffs sued their insurer and the claims adjuster assigned to their claim for breach of contract, bad faith and loss of consortium in state court. The insurer subsequently filed a notice of removal to federal court on the basis of diversity jurisdiction. The plaintiffs filed a motion to remand. In opposition to the motion to remand, the insurer argued that the plaintiffs improperly named a regional office as the insurer’s principal place of business, and plaintiffs fraudulently joined the adjuster to defeat diversity.
In denying the plaintiffs’ motion to remand, the Court agreed that “the mere fact that defendant may have a registered office within the Commonwealth of Pennsylvania is not sufficient to deny that diversity of citizenship exists,” and concluded that diversity was present because the insurer’s principal place of business was in Massachusetts. The Court further agreed that the plaintiffs could not support their statutory bad faith claim against the adjuster and that the adjuster was fraudulently joined, noting that “it is well-settled that Pennsylvania’s bad faith statute…applies only to insurance companies…. In fact, this Court has flatly held that the statute does not apply to insurance adjusters.”