Monthly Archive for March, 2007

MARCH 2007 BAD FAITH CASES
COURT ORDERS INSURER TO PRODUCE ALLEGEDLY PRIVILEGED DOCUMENTS FROM LEGAL COUNSEL (Middle District)

    

In Pengate Handling Systems, Inc. v. Westchester Surplus Lines Insurance, the insured brought suit in the Court of Common Pleas of York County against its insurer alleging bad faith and breach of contract.  The case was removed by the insurer to the United States District Court for the Middle District of Pennsylvania.  The insured moved to compel production of documents which the insurer withheld due to the attorney-client privilege and attorney work product doctrines.  The court framed the issues as:  “whether Defendant may withhold the discovery sought by Plaintiff by asserting the attorney-client and work product privileges. The attorney-client inquiry turns on whether Defendant’s attorney was acting in a legal capacity, while the work product inquiry depends upon whether documents were prepared in anticipation of litigation.” The court allowed considerable discovery, finding the insurance carrier failed to show that “the attorney involved was acting solely in his professional capacity as a lawyer at all times and that a number of the communications at issue are not shielded by the attorney-client privilege. However, because the court cannot discern precisely whether or when he might have been acting as a lawyer versus a claims adjuster with respect to certain communications, an in camera inspection of some documents withheld under the attorney-client privilege is appropriate. With respect to the documents withheld under the work product doctrine, the court finds that Defendant fails to show that it reasonably anticipated litigation prior to the date Plaintiff served the Writ initiating the suit.” 

However, on a subsequent motion for reconsideration, the court did find that some documents were subject to the attorney-client privilege.  This later decision is summarized on this site’s May 2007 archive.

Date of Decision:  February 27, 2007

Pengate Handling Systems, Inc. v.  Westchester Surplus Lines Ins. Co., United States District Court for the Middle District of Pennsylvania, No. 06-00993, 2007 U.S. Dist LEXIS 13303 (M.D. Pa. Feb. 27, 2007) (Rambo, J.)
        

MARCH 2007 BAD FAITH CASES
DEFENDANTS MUST BE INSURERS TO BE SUED PURSUANT TO PENNSYLVANIA’S BAD FAITH STATUTE (Philadelphia)

    

In Deborah Jordan v. SEPTA, et. al., Plaintiff, an injured SEPTA employee, brought a claim against SEPTA, the administrator for SEPTA’s worker’s compensation benefits, the attorneys for SEPTA in the worker’s compensation matter and two employees of the attorneys after SEPTA contested Plaintiff’s worker’s compensation claim.  Plaintiff’s complaint alleged bad faith, civil conspiracy/defamation, misrepresentation and punitive damages.  Defendants filed preliminary objections to Plaintiff’s complaint which were  granted by the Court of Common Pleas and the complaint was dismissed with prejudice.  Plaintiff appealed the Order of the Common Pleas Court dismissing the complaint.  In the written opinion issued by the Court of Common Pleas supporting its Order dismissing Plaintiff’s complaint, the Court held that because none of the Defendants were insurers, Plaintiff has no right to relief pursuant to Pennsylvania’s bad faith statute.  In order to be an insurer, an entity must be licensed as an insurer, do business as an insurer, issue insurance policies, collect premiums, or agree to accept the liability of others in exchange for consideration.  Because none of the defendants are insurers pursuant to this definition, Plaintiff’s claims under Pennsylvania’s Bad Faith Statute were properly dismissed.

Date of Decision:  February 21, 2007

Deborah Jordan v. SEPTA, et al., Common Pleas Court of Philadelphia County, Pennsylvania Trial Division, No. 1102, 2007 Phila. Ct. Com. Pl. LEXIS 60 (C.C.P. Philadelphia Feb. 21, 2007)(Glazer, J.)
        

MARCH 2007 BAD FAITH CASES
COURT REMANDS BAD FAITH CLAIM SOLELY FOR PUNITIVE DAMAGES FOR FAILURE TO MEET AMOUNT IN CONTROVERSY WHERE AMOUNT AT ISSUE CANNOT BE DISCERNED (Middle District)

        

In Knauer v. Farmers Insurance Co., the insured asserted a bad faith claim against his insurer in United States District Court for the Middle District of Pennsylvania.  The insured Plaintiff moved to remand the matter to the Court of Common Pleas of Lackawanna County for failure to meet the amount in controversy requirement.  At arbitration, the Plaintiff had been awarded $360,000, which had been paid by Defendant.  The only remaining claim before the court was punitive damages for bad faith.  The court held that because there is no basis to determine a discreet amount of punitive damages, a naked claim for punitive damages is not computable for purposes of determining the amount in controversy.  Because the amount of punitive damages was not discernable from the pleadings the Court could not conclude that the amount in controversy exceeded $75,000.  Therefore, the case was remanded to the Lackawanna County Court of Common Pleas.

Date of Decision:  February 28, 2007

Knauer v. Farmers Insurance Co., United State District Court for the Middle District of Pennsylvania, CV-07-0046, 2007 U.S. Dist. LEXIS 14233 (M.D. Pa. Feb. 28, 2007)(Caputo, J.)