Ribhi Othman and Yusif H. Mashni, Individually, and Doing Business as E-Z Market, a Partnership v. Globe Indemnity Company

Plaintiffs Othman and Mashni (Othman) appeal an adverse directed verdict on their causes of action against Globe Indemnity Co. (Globe) for bad faith denial of insurance coverage, intentional infliction of emotional distress, and punitive damages, all resulting from Globe’s denial of a claim under a fire insurance policy. Because the complaint names “Doe” defendants, we raise sua sponte the issue of whether diversity jurisdiction exists.

Although the district court initially should not have allowed removal, we find that it had jurisdiction over the case at the time of final judgment, and thus, jurisdiction exists in this court. Beaching the merits, we affirm in part and reverse in part,

I

FACTS

Othman’s supermarket was destroyed by fire on October 25, 1976. All of the evidence pointed towards arson. In addition, several facts raised suspicions that Othman had set the fire himself: the burglar alarm was not on the night of the fire; inventory had been increased to an unusually high level and had been purchased with cash; insurance coverage had been recently increased; and Othman had been having financial trouble. Othman made a claim for the loss under a fire insurance and…