« Back to BG&S in the News

OPENING THE FEDERAL DOOR TO NO-FAULT?
By: MICHAEL A. CALLINAN, ESQ.

FOR THE DEFENSE

OPENING THE FEDERAL DOOR TO NO-FAULT?

BY: MICHAEL A. CALLINAN, ESQ.
Bruno, Gerbino & Soriano, LLP
Melville, New York


The Court of Appeals held in Walton v. Lumbermens Mutual Casualty Company, 88 N.Y.2d 211 (N.Y. 1996) that the purpose of New York’s No-Fault insurance law enacted in 1973 was to serve as a means “to remove the vast majority of claims arising from vehicular accidents from the sphere of common-law tort litigation, and to establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents.” Id. at 214. For those practicing in the lower courts of the City of New York and Long Island, it is evident that the purpose of the No-Fault law has been a failure. In the past few years, the growth in the number of No-Fault suits has been staggering and has overwhelmed the courts to the point that it is no longer possible to efficiently litigate a suit.

The limited resources of the lower courts and the bottleneck-like congestion have lead many plaintiffs firms to seek alternative venues for these suits. One such alternative approach has been the aggregating of dozens of unrelated claims in an attempt to obtain jurisdiction in the supreme courts and federal courts.

In Deajess Medical Imagining a/a/o Jennifer Andino, et al., v. Allstate Insurance Company, No. 03 Civ. 3920 (RWS), 2004 U.S. Dist. LEXIS 13732 (S.D.N.Y. July 22, 2004) plaintiff obtained diversity jurisdiction in a federal court action by aggregating dozens of unrelated No-Fault claims to establish the amount-in-controversy requirement mandated by 28 U.S.C. §1332. In this case, Allstate moved to dismiss plaintiff’s complaint for lack of “subject matter jurisdiction because Deajess, by combining sixty-four separate and distinct claims in one action, has improperly or collusively aggregated these claims in an effort to circumvent the federal courts’ jurisdictional threshold of $75,000, in violation of 28 U.S.C. § 1332.” Deajess/Andino, 2004 U.S. Dist. LEXIS 13732 at *3. Judge Sweet, in denying Allstate’s motion to dismiss, held that pursuant to Rule 18 of the Federal Rules of Civil Procedure, an individual plaintiff “‘may join, either as independent or as alternate claims, as many claims, legal, equitable, or maritime, as the party has against an opposing party’ [and] provided that such joinder is proper, the value of each individual claim may be aggregated for the purpose of satisfying the amount-in-controversy requirement of 28 U.S.C. §1332.” Deajess/Andino, 2004 U.S. Dist. LEXIS 13732 at *6.

At first glance, this decision appears to have opened wide the doors to the federal courts for aggregated No-Fault suits. However, the Southern District has recently issued a series of decisions, some conflicting, with regard to the aggregation of unrelated No-Fault claims. See, Boston Post Road Medical Imagining, P.C. a/a/o Ana Arteaga, et al., v. Allstate Insurance Company, No. 03 Civ. 3923 (RCC), 2004 U.S. Dist. LEXIS 13243 (S.D.N.Y. July 14, 2004); Deajess Medical Imaging, P.C. a/a/o Agostini Barry, et al., v. Geico General Insurance Company, No. 03 Civ. 7388 (DF), 2004 U.S. Dist. LEXIS 13164 (S.D.N.Y. July 15, 2004); see generally, Preferred Medical Imagining, P.C. a/a/o Senatus Cilvain, et al., v. Allstate Insurance Company, 303 F. Supp. 2d 476 (S.D.N.Y. 2004)(holding that the aggregation of No-Fault claims arising from forty automobile accidents are distinct and do not individually meet the jurisdictional threshold of the Court to establish subject matter jurisdiction); but cf. Boston Post Road Medical Imagining, P.C. a/a/o Manuel Acevedo, et al., v. Allstate Insurance Company, No. 03 Civ. 6150 (SAS), 2004 U.S. Dist. LEXIS 6583 (S.D.N.Y. April 12, 2004)(holding that the joinder of multiple No-Fault claims is proper under New York law and aggregation of the claims is permitted in the federal courts to invoke subject matter jurisdiction)

Most of the decisions issued from the Southern District stand for the proposition that the federal rules of civil procedure allow for the aggregation of unrelated No-Fault claims to meet the jurisdictional requirement of 28 U.S.C. §1332. However, the aggregation of these claims does not necessarily lead to the conclusion that the courts are willing to litigate suits involving dozens of unrelated automobile accidents. Boston/Arteaga, 2004 U.S. Dist. LEXIS 13243 at *6. As an alternative to holding dozens of “mini-trials” that would be required to litigate an aggregated action, the courts are severing the unrelated claims pursuant to Rule 21 of the Federal Rules of Civil Procedure, which allows for any claim against a party to be “severed and proceeded with separately”. Once severed, the unrelated claims fail to meet the threshold requirement of 28 U.S.C. §1332, and are then dismissed. In Deajess/Barry, the Court, after holding the aggregation of unrelated No-Fault claims valid, invited the defendant to make a motion to sever pursuant to Rule 21. The Court in Deajess/Andino, in denying Allstate’s motion to dismiss, specifically noted that Allstate did not move to sever the unrelated claims.

In Boston Post Road Medical Imaging, P.C. a/a/o Sherifat Akinosho, et al., v. Geico General Insurance Company, No. 03 Civ. 7390 (JCF), 2004 U.S. Dist. LEXIS 16015 (S.D.N.Y August 11, 2004) the Court, in quoting In re Merrill Lynch & Co., Inc. Research Reports Securities Litigation, 214 F.R.D. 152 (S.D.N.Y 2003), held that in “evaluating whether to sever, the court considers: (1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement of the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required for the separate claims.” Boston/Akinosho, 2004 U.S. Dist. LEXIS 16015 at *10. In granting Geico’s motion to sever, the Court found that four of the five above-mentioned criteria were met, thus, necessitating the need to disaggregate the claims and dismiss the action for failure to satisfy the amount-in-controversy requirement for diversity jurisdiction under 28 U.S.C. §1332. Boston/ Akinosho, 2004 U.S. Dist. LEXIS 16015 at *14.

Even though the aggregation of unrelated No-Fault claims may be proper to establish subject matter jurisdiction, it appears that the courts are willing to sever the unrelated claims so as to avoid the complexity of litigating an aggregated suit involving dozens of unrelated automobile accidents. In short, the prudent course of action in countering a potential federal court action involving an aggregated No-Fault suit would be to move to sever the unrelated claims utilizing the factors set forth by the Court in Boston/Akinosho.

« Back to BG&S in the News