Monthly Archive for July, 2009
In Denicola v. Progressive Direct Ins. Co., Plaintiff insured was involved in a motor vehicle accident with an underinsured motorist. Plaintiff had an automobile insurance policy with Defendant insurer which provided $250,000 in underinsured motorist coverage. Plaintiff demanded arbitration, however, Defendant allegedly engaged in delay tactics. A hearing was finally scheduled for April 27, 2007, and at the hearing, Defendant allegedly “engaged in delay, cited fallacious excuses . . . and raised spurious defenses against [Plaintiff insured’s] lawful claim”. The arbitration panel awarded Plaintiff $500,000, but the award was molded to the $250,000 limit.
Plaintiff instituted an action in state court against Defendant for bad faith, which was removed to federal court based on diversity jurisdiction. Plaintiff filed a motion to remand to state court.
Pursuant to the diversity jurisdiction statute “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of interest and costs, and is between . . . citizens of different States[.]” 28 U.S.C. §1332. The parties do not dispute that they are citizens of different states, however, there is an issue as to whether the amount in controversy exceeds $ 75,000. The Court ruled that the amount in controversy exceeds $75,000 because Plaintiff can receive: (1) interest on the amount of the claim from the date that the claim was made by Plaintiff; (2) attorney’s fees; (3) an award for punitive damages. Since these three factors must be considered in determining the amount in controversy, the amount in controversy exceeds the $ 75,000 jurisdictional threshold and, therefore, Plaintiff’s motion to remand was denied.
Date of Decision: June 16, 2009
Denicola v. Progressive Direct Ins. Co., U.S. District Court, Middle District of Pennsylvania, Civil Action No. 3:09cv423, 2009 U.S. Dist. LEXIS 51372 (M.D.Pa. June 16, 2009) (Munley, J.)
In Haines v. State Auto Property & Casualty Insurance Company, the insured sought coverage from the insurer under a homeowner’s insurance policy arising from a golf cart incident that injured a minor. The insurer denied coverage contending that it had no duty to defend or indemnify because the golf cart was not used “solely to service an ‘insured’s’ residence”. The policy contained a general “motor vehicle liability” exclusion barring coverage for occurrences involving motor vehicles, however, the exception to the exclusion provided coverage for motor vehicles “used to service an ‘insured’s residence”. The insureds contend that the golf car was “in the service” of their premises at the time of the incident.
The insured filed this action seeking declaratory relief and asserting bad faith. The insured alleged, among other things, that the insurer materially amended coverage to the detriment of the insured, that the insurer did not provide notification of the amendment, and that the amendment was contrary to the insured’s reasonable expectations. Thereafter the insured sought to amend the complaint to include an claim for violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, which the insurer opposed.
The insurer contended that the insured failed to state a claim for statutory bad faith because the statute “applies only to conduct in connection with the handling of claims brought under an insurance policy”. The insurer argued that a failure to provide notification of a change in the policy language itself does not constitute bad faith.
The Court found that the insurer was narrowly interpreting the statute. The Court noted that the statute also protects the manner by which an insurer discharged its obligations of defense and indemnification. In other words, the statute encompasses those actions an insurer took when called upon to perform its contractual obligations of defense and indemnification.
The Court stated that the insured’s proposed amended complaint did not rely exclusively on the insurer’s alleged failure to provide notice of policy changes. Rather, the insured’s theory of bad faith included the insurer’s alleged improper notification of an amendment to the policy, and the insurer’s frivolous or unfounded refusal to provide coverage for the incident. The Court ruled that, therefore, there was sufficient allegation of a bad faith claim.
Date of Decision: June 22, 2009
Haines v. State Auto Prop. & Cas. Ins. Co., U. S. District Court, Eastern District of Pennsylvania, Civil Action No. 08-cv-5715, 2009 U.S. Dist. LEXIS 52325 (E.D.Pa. June 22, 2009) (Golden, J.)
Under current Pennsylvania Supreme Court interpretation of Pennsylvania’s Bad Faith Statute, 42 Pa.C.S. § 8371, only a judge can hear a statutory bad faith claim. This stands in contrast to Pennsylvania’s federal courts, where juries can hear statutory bad faith cases because of federal constitutional requirements. Pennsylvania Senate Bill 746, now pending, would alter the language of the statute so that judges or juries could here bad faith claims in state courts. The change involves substituting the phrase “trier of fact” for “court” in the statute. There is a vigorous debate between the plaintiffs and defense bars on the proposed change.