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Federal Trial Court Rules that New Mexico Lawsuit Seeking Recovery from Insurance Company is to Proceed in State Court

On Behalf of | Mar 30, 2020 | Insurance Bad Faith

Recently the U.S. District Court for the District of New Mexico was presented with a dispute concerning whether an insurance coverage case presented to it for adjudication should be sent back to the state court in which the plaintiff had first filed the case.  The federal court trial court presented with this dispute ruled in favor of allowing the case to proceed in the plaintiff’s forum of choice.  The court concluded that it lacked jurisdiction and sent the case back to state court.

Underlying the dispute was a hit and run accident.  Allegedly a person was injured when the vehicle he was driving was struck by a pick up truck that did not stop at a stop sign.  The driver of the pick up truck drove off after the accident.  The injured person whose vehicle had been struck in the hit and run accident sought to recover money from the insurance company that insured his vehicle, based on uninsured motorist coverage.  The insurance company refused to pay out after being presented with a police report, medical records and bills.  The injured person, through counsel, filed a case against the insurance company in Bernalillo County.

The insurance company, via its counsel, removed the case the plaintiff had filed in state court to the U.S. District Court for the District of New Mexico.  The removal papers included an affidavit from counsel observing that, in his experience, the type of action at issue involves more than $75,000.  The plaintiff responded with a motion to remand the case to state court on the basis that the amount in controversy was less than $75,000.

The parties’ dispute was limited to whether the amount in controversy exceeded $75,000.  As the District Court explained, its jurisdiction could be premised on diversity of citizenship if the amount in controversy was over $75,000, pursuant to section 1332 of the U.S. Code.  The District Court further explained that the burden of proof was on the insurance company to prove, by a preponderance of the evidence, that the amount in controversy may exceed $75,000.  The District Court then turned to the record before it.  The District Court faulted the insurance company for not including in the record information concerning the plaintiff’s injuries or medical costs, after the insurance company had been provided medical records and medical bills when the plaintiff pursued an insurance coverage claim.

The District Court rejected the insurance company’s argument that the amount in controversy could potentially be increased by an award of treble or punitive damages or attorney fees because the record lacked the more basic information about the extent of personal injury damages, including medical damages.  Most helpful to the plaintiff analytically was that the plaintiff had a maximum of $75,000 in coverage available to cover an accident caused by an uninsured motorist and stipulated, after the insurance company removed the case, that the amount at issue was less than $75,000.  While these facts were not in and of themselves conclusive, they suggested that less than $75,000 was in controversy and that the case should be sent back to state court for adjudication.  Based on the record before it the District Court was satisfied that the case should be remanded to state court, and granted the plaintiff’s motion to remand.

If you or a loved one was injured in an accident, there may be grounds for an award of damages from parties including insurance companies.  An award of monetary damages can assist people who are injured and their families with the medical costs, lost wages, and pain and suffering caused by accidents.  To understand more about your case and how it can be pursued to maximize recoveries, call New Mexico car accident lawyer Matthew Vance at the Law Office of Matthew Vance, P.C.  We provide a free consultation and can be reached at 505-445-1604 or online.