Primer on Amount in Controversy – How Do Court’s Determine It?

Originally published by Patrick McGinnis.

Many insurance cases are filed in state court against out-of-state insurance companies. These insurance companies like to remove the case to federal court because federal courts are seen as a friendly forum for insurance companies. In order to remove a case to federal court there must be complete diversity of citizenship between the plaintiff and the defendant, and the amount in controversy must exceed $75,000. How do you determine “amount in controversy?” In a May 7, 2016 blog I discussed the Cantu1 case where Cantu argued that the amount in controversy was $23,945.43 because that was the amount of actual damages. However, the court found the amount in controversy to exceed $75,000 because Cantu had alleged statutory and common law bad faith damages, which the court found would push the amount in controversy past $75,000. The recent Puente v. State Farm Lloyds2 case from the Brownsville Division of the Southern District shows exactly how the amount in controversy should…

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