In DeLalla v. Hanover Insurance, the insureds were allegedly Defendants in another litigation which was settled.  They filed a complaint that the insurer and the law firm representing the insurer, who agreed to settle the prior case, breached their obligations to the insureds by entering into the settlement agreement on their behalf.  They alleged bad faith and breach of contract against the insurer.

The insurer filed a Motion to Dismiss, correctly alleging that the insureds described no motive and did not explain any plausible reason why the insurer and the law firm representing the insurer would want to conspire together to harm the insureds.  However, the Court denied the Motion to Dismiss, allowing the insureds to amend their complaint to sufficiently plead facts that would result in bad faith and breach of contract causes of action if true.

Date of Decision:  May 26, 2010

Delalla v. Hanover Ins., Civil Action No. 10-858, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 52653 (May 26, 2010) (Baylson, J.).

In Vernon v. Erie Insurance Exchange, the insureds were injured in an automobile accident on June 23, 2007, when they were passengers in a vehicle that was struck by another automobile.  On May 29, 2008, they filed a civil lawsuit, alleging (1) a breach of contract for failure to pay benefits under their Underinsured Motorist Policy (“UIM”) coverage, (2) bad faith for failure to make a reasonable effort to settle the case, and (3) loss of consortium.

After pleadings were closed, the case was scheduled for trial on September 15, 2009. On May 29, 2009, the parties appeared before court on the insureds’ Motion to Compel and the insurer’s Motion to Bifurcate the breach of contract and bad faith claims. On June 1, 2009, Judge Strassburger denied the insureds’ Motion to Compel without prejudice and denied the insurer’s Motion to Bifurcate, ruling that “the bad faith claim will be tried immediately upon the UIM case being sent to the jury, or on the scheduled trial date if the UIM case is settled, unless Plaintiffs within 20 days of this Order file a Motion to Bifurcate.” On July 1, 2009, the insurer filed a Notice of Appeal to the Superior Court from Judge Strassburger’s June 1, 2009 order denying its Motion to Bifurcate.  As required by Pennsylvania’s appellate rules, Judge Strassburger issued an opinion explaining her decision.

In addressing the appeal, Judge Strassburger compared this case to Gunn v. Automobile Insurance Company of Hartford. Connecticut, where the Superior Court held that the trial court's denial of the defendant's motion to Sever and Stay a Statutory Bad Faith claim did not qualify as an appealable collateral order, and recommended that the Superior Court should quash that appeal.  The Superior Court's decision in Gunn is summarized elsewhere on this Blog.
Because the underlying motions in Gunn and Vernon were the same, Judge Strassburger opined that the appeal was not from a collateral order, was interlocutory and should be quashed.
Date of Decision: August 3, 2009
Vernon v. Erie Ins. Exc., GD 08-10406, Common Pleas Court of Allegheny County, Pennsylvania, 2009 Pa. Dist. & Cnty. Dec. LEXIS 220 (Pa.. Aug. 3, 2009) (Strassburger, J.).

In Amitie One Condominium Association v. Nationwide Property & Casualty Insurance Company, the insurer denied coverage for losses to the insured’s property as a result of sinkhole activity.  The insured sued for breach of contract and bad faith seeking monetary damages and a declaratory judgment.  After two years of discovery, the insurer moved to sever and stay the insured’s bad faith claim, and to stay discovery on that claim, until the contract claim was resolved.  The insurer argued that (1) it would be prejudiced and judicial resources would be wasted if the bad faith claim and breach of contract claim were litigated simultaneously; (2) staying discovery on the bad faith claim would moot certain discovery disputes; and (3) allowing discovery to proceed on the insured’s bad faith claim at the same time as the parties are litigating the contract claim “is tantamount to letting the Plaintiff have a copy of the Defendant’s ‘playbook.’” 

The Court granted the insurer’s motion insofar as the court would hear the declaratory judgment action before proceeding with the other issues, but denied the remaining requests.  There was presumably a jury demand for at least the bad faith portion of the case; however, it appears from an Order issued the day after this Opinion that the Court was going to decide the declaratory judgment action on coverage/breach of contract on dispositive motions, staying its pre-trial and trial schedule dates on all other issues (though allowing the case itself to otherwise proceed on discovery and as to both claims).

Thus, the court held that it would resolve the insured’s claim for declaratory judgment prior to trial on the remaining issues.  The court explained that if it resolved the insured’s declaratory judgment in the insurer’s favor, the decision would dictate the resolution of the insured’s bad faith claim as well, thereby conserving judicial resources. The court denied the insurer’s request to sever and stay discovery on the insured’s bad faith claim stating it was not persuaded that the mere existence of discovery disputes warranted a stay.  Additionally, the court held that considerations of convenience and economy outweighed any prejudice to the insurer particularly in light of the significant overlap between the claims. 

Date of Decision: March 22, 2010

Amitie One Condo. Ass’n v. Nationwide Prop. & Cas. Ins. Co., Civil Action No. 1:07-CV-1756, United States District Court for the Middle District of Pennsylvania, 2010 U.S. Dist. LEXIS 26867 (M.D.  Pa. Mar. 22, 2010) (Conner, J.).