United States District Court, W.D. Wisconsin
OPINION AND ORDER
STEPHEN L. CROCKER Magistrate Judge
early 2016, a cargo container belonging to plaintiff Robert
Szweda was stolen in the Port of Manilla, Philippines.
Plaintiff made a claim for the stolen cargo under a policy of
insurance through defendant Navigators Management Co., Inc.,
dba Navigators Insurance Co. Defendant refused to investigate
plaintiff’s claim or to pay benefits, causing plaintiff
to file this lawsuit seeking compensatory and punitive
damages. Because plaintiff is proceeding without prepayment
of the filing fee, the court must screen his complaint
pursuant to 28 U.S.C. § 1915(e)(2).
first question is whether this court has subject matter
jurisdiction over plaintiff’s claims. Plaintiff invokes
diversity jurisdiction under 28 U.S.C. § 1332, which
requires that the parties in suit are citizens of different
states and that the amount in controversy is greater than
$75, 000. Plaintiff alleges that he lives in Wisconsin and
that defendant is headquartered in New York, so it appears
that the parties are of diverse citizenship. With respect to
the amount in controversy, plaintiff seeks $38, 500 in
compensatory damages, plus punitive damages for
defendant’s alleged bad faith and unethical business
practices. Because punitive damages can be considered when
assessing the amount in controversy, Hunt v. DaVita,
Inc., 680 F.3d 775, 777 (7th Cir. 2012),
plaintiff’s allegations might be sufficient to
establish the amount in controversy. However, the
availability of punitive damages will likely depend on which
state law governs plaintiff’s claims. Plaintiff did not
submit a copy of the insurance policy with his complaint, and
it is not clear at this stage whether plaintiff’s
claims would be governed by Wisconsin law, New York law or
the law of another state. This matters because it appears
that plaintiff may be able to recover punitive damages under
Wisconsin law, but he likely would not be able to recover
punitive damages under New York law.
Wisconsin and New York recognize breach of contract claims.
Under Wisconsin law, a plaintiff states a breach of contract
claim by pleading (1) the existence of a contract creating
obligations flowing from defendant to plaintiff; (2) a breach
of those obligations; and (3) damages from the breach.
Northwestern Motor Car, Inc. v. Pope, 51 Wis.2d 292,
296, 187 N.W.2d 200, 203 (1971). The elements of a breach of
contract claim under New York law are essentially the same.
See JP Morgan Chase v. J.H. Elec. of New York, Inc.,
69 A.D.3d 802, 803, 893 N.Y.S.2d 237, 239 (2010). Plaintiff
has sufficiently pleaded each of these elements of a breach
of contract claim.
also recognizes a tort cause of action for damages resulting
from an insurer’s bad faith refusal to honor an
insured’s claim. A tort plaintiff may recover punitive
damages. See Anderson v. Cont’l Ins. Co., 85
Wis.2d 675, 686, 271 N.W.2d 368, 374 (1978). “A
plaintiff bringing such a claim must show two things: the
absence of a reasonable basis for denying benefits of the
policy and the defendant’s knowledge or reckless
disregard of the lack of a reasonable basis for denying the
claim.” Advance Cable Co., LLC v.
Cincinnati Ins. Co., 788 F.3d 743, 748 (7th Cir. 2015)
(quoting Brethorst v. Allstate Prop. & Cas. Ins.
Co., 334 Wis.2d 23, 798 N.W.2d 467, 474 (2011)).
Plaintiff’s allegations are sufficient to state a claim
of bad faith under Wisconsin law because he alleges that
defendant denied his insurance claim without any
investigation and without any basis for denial.
York law, in contrast, does not appear to recognize a tort
claim for bad faith denial of insurance coverage, and it does
not generally permit punitive damages for such a claim.
See Polidoro v. Chubb Corp., 386 F.Supp.2d 334, 337
(S.D.N.Y. 2005); Manning v. Utilities Mut. Ins. Co.,
No. 98 CIV. 4790 (RCC), 2004 WL 235256, at *2 (S.D.N.Y. Feb.
9, 2004); New York Univ. v. Continental Ins. Co., 87
N.Y.2d 308, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995).
Accordingly, if plaintiff’s claims are governed by New
York law, then he probably cannot proceed in tort, which
means that he may have no ability to recover punitive
damages. If this is the case, then plaintiff cannot meet the
dollar threshold required for a diversity lawsuit and this
court would lack subject matter jurisdiction over his claims.
court cannot determine whether subject matter jurisdiction
exists without knowing which state law governs
plaintiff’s claims. The court cannot even make a
preliminary ruling on this issue without reviewing the
insurance policy at issue. Accordingly, plaintiff must submit
a copy of the insurance policy to the court, along with a
legal brief explaining why he believes that subject matter
jurisdiction is present in federal court.
ORDERED that plaintiff Robert Szweda may have until August
12, 2016 to submit to the court a copy of the insurance
policy at issue, along with a legal brief explaining how
subject matter jurisdiction exists in this court. If
plaintiff fails to submit such proof by August 12, 2016, then
this case ...