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Remove Now Or Forever Hold Your Peace
March 31, 2022
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<p style="text-align: justify;">In Florida, plaintiffs often ask the state court to grant leave to amend to assert an insurance bad faith claim upon successful conclusion of their breach of policy claim against an insurer. More often than not, the case is more than one-year old when the amendment is made.</p>
<p style="text-align: justify;">Under federal diversity of jurisdiction rules, a citizen of one state, who is sued by a citizen of another state in state court, may, within one-year of the lawsuit being brought, remove the lawsuit to the US District Court.</p>
<p style="text-align: justify;">Until recently, Florida’s US District Courts inconsistently enforced the one-year limitation on removal when dealing bad faith claims. That inconsistency was recently resolved in <em>Vachon v. Travelers Insurance,</em> 2021 U.S. App. LEXIS 36999, 20 F.4th 1343 | 29 Fla. L. Weekly Fed. C 633 (11th Cir. December 14, 2021).</p>
<p style="text-align: justify;">In <em>Vachon</em>, plaintiff sued Travelers for breach of insurance policy but did not sue for bad faith. Travelers could have but did not remove the case to the US District Court. Plaintiff prevailed and then asked for, and was granted, permission to amend his lawsuit to add a bad faith claim.</p>
<p style="text-align: justify;">Travelers removed the new bad faith claim to the US District Court. Plaintiff, arguing that the lawsuit was more than one-year old, asked the US District Court to remand the case back to state court. Travelers argued that removal was proper because the original claim had been completed and that the new bad faith claim restarted the one-year clock. The US District Court disagreed, remanded the case to state court, and Travelers appealed.</p>
<p style="text-align: justify;">On appeal, the Eleventh Circuit Court of Appeals dismissed on the grounds that an order remanding a case to state court is not an appealable order. Chief Judge Pryor, by separate opinion, explained that remand was proper because, even if it could appeal, Travelers could not win because plaintiff’s lawsuit was filed more than one-year before the removal and the addition of a new bad faith claim did not restart the one-year limitation.</p>
<p style="text-align: justify;">The end result is, Travelers is now litigating a million-dollar bad faith claim in a Florida state court rather than its preferred venue, the US District Court. Chief Judge Pryor’s opinion drives home the old adage: Speak now or forever hold your peace.</p>
Thanks to Charles "Chip" George for this post. Please contact <a href="mailto:Cgeorge@wcmlaw.com">Chip</a> with any questions.