Insurance Claims – Personal Jurisdiction & Subject Matter Jurisdiction

Most insurance lawyers understand the distinction between “personal jurisdiction” and “subject matter jurisdiction”.  A recent case from the Northern District of Texas, Dallas Division, explained the difference.  The case is styled, Yakimas Payne, Carmenisha Payne, and Mar’Keyona Ford v. Government Employees Insurance Company.

The Plaintiffs sued GEICO in State Court for uninsured motorist benefits.  GEICO removed the case to Federal Court and the Plaintiffs filed a motion to remand, arguing that diversity jurisdiction existed but that GEICO had “continuous and systematic contacts with the state of Texas sufficient to establish general jurisdiction.

GEICO argued that Plaintiffs have confused personal jurisdiction with diversity jurisdiction.  The Court set forth standards for the two types of jurisdiction.

A Federal Court has subject matter jurisdiction over civil cases that arise under the U.S. Constitution, laws, treaties of the U.S., and other civil cases where the amount in controversy exceeds $75,000, and in which diversity of citizenship exists between the parties.  This is the law in 28 U.S.C. Sections 1331 and 1332.

Section 1441(a) allows subject matter jurisdiction cases to be removed to the Federal Courts.

Personal jurisdiction is established by the plaintiff by presenting a prima facie case that personal jurisdiction is proper.  Proof by a preponderance of the evidence is not required.

A Federal Court has jurisdiction over a nonresident defendant if the long-arm statute confers personal jurisdiction over that defendant and the exercise of that jurisdiction is consistent with due process.  The Federal Court must determine whether defendants have established “minimum contacts” with the forum state and whether the exercise of personal jurisdiction over the defendants would offend traditional notions of fair play and substantial justice.

In this case, the determination as to the existence of diversity jurisdiction depends on the existence of complete diversity of citizenship between the Plaintiffs and GEICO and the presence of damages exceeding $ 75,000.  Whether the court has personal jurisdiction over GEICO is not the test because GEICO has not asserted that this court lacks personal jurisdiction over it.  Specifically, a defendant’s contacts with the forum state play no part in a court’s ruling on a motion to remand.  The pleadings and Notice establish that there is complete diversity of citizenship between the parties, because Plaintiffs are citizens of Texas, and GEICO is a citizen of Maryland because it is incorporated in and has its principal place of business in Maryland.  Further, the face of the Plaintiffs’ pleadings alleges damages for each Plaintiff of more than $ 1,000,000, which far exceeds the jurisdictional threshold of $ 75,000.  As the relevant documents and law establish that diversity jurisdiction exists, the Court determines that this action is one initially brought in a state court of which a federal district court has original jurisdiction; therefore, GEICO’s removal of this action was proper; and GEICO acknowledges that the court has personal jurisdiction over it, which defeats the argument Plaintiffs advanced as a basis to remand this action.