FEBRUARY 2016 BAD FAITH CASES: BAD FAITH CLAIM BASED ON DENIAL OF UIM BENEFITS FAILS WHERE WAIVER IS VALID, EVEN THOUGH INSURED HIMSELF DID NOT WRITE IN THE DATE OF HIS SIGNING (Third Circuit)

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In Lieb v. Allstate Property and Casualty Insurance Company, the Third Circuit Court of Appeals determined that the insured’s waiver of underinsured motorist coverage was valid, and affirmed the dismissal of the claims for underinsured motorists benefits and bad faith.

In May 2012, the insureds purchased an insurance policy on their car. As part of that transaction, the insured signed a waiver of underinsured motorist coverage, but did not handwrite a date on the waiver form. He then faxed the form back to insurer. When the insurer received the executed form, it contained a machine-written legend at the top, which included a timestamp, date, a fax number, and the insured’s employer’s name.

A little over a year later, the insureds were rear-ended by an underinsured driver, and claimed to have suffered permanent and disfiguring injuries. Thereafter, the insureds sued the carrier in Philadelphia’s Court of Common Pleas for underinsured motorist benefits and bad faith.  They alleged that the waiver of underinsured motorist coverage was invalid under the Motor Vehicle Financial Responsibility Law (MVFRL), because the insured did not date the waiver form himself.

The case was removed the case to the Eastern District of Pennsylvania. The insureds moved to amend their Complaint and remand the case back to state court. After permitting the insureds to amend their Complaint, the District Court denied the insureds’ motion to remand, and granted the insurer’s motion to dismiss.

On appeal, the Third Circuit affirmed the District Court’s denial of the insured’s request for remand finding that the parties were diverse and that the amount in controversy exceeded $75,000 when viewing the insureds’ claims for statutory damages, punitive damages, and attorneys’ fees.

The Court reviewed § 1731(c.1) of the MVFRL, relied on by the insureds. That provision mandated the precise language that must appear in a waiver form, stating that the form “must be signed by the first named insured and dated to be valid.” This did not, however, support the insured’s position.

The Third Circuit concluded that, given the plain reading of the provision, the law does not require that the waiver form be signed and dated by the insured; rather it must only be signed by the insured. The Court went on to state that consumer protection regulations should be applied in “a common sense manner to effectuate their purpose without giving an insured a windfall in circumstances where the reasons for the protection afforded are not implicated.”

The Court concluded that the insureds’ interpretation would allow “wily insureds to file undated waiver forms in the hope of duping an inattentive insurer, only to later demand coverage if an accident were to occur.” Ultimately the Court held that the machine-written timestamp on the waiver sufficed for the form to have been “dated” in accordance with Pennsylvania law.”

Date of Decision: January 6, 2016

Lieb v. Allstate Prop. & Cas. Ins. Co., No. 14-4788, 2016 U.S. App. LEXIS 287 (3d Cir. Jan. 6, 2016) (Fuentes, Jordan, and Vanaskie, JJ.)

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