Archive for the 'Experts' Category

APRIL 2012 BAD FAITH CASES: COURT STRIKES INSURED’S BAD FAITH LIABILITY EXPERT REPORT AS UNTIMELY, BUT DENIES SUMMARY JUDGMENT ON BAD FAITH WHERE MATERIAL ISSUE ON WHETHER CLAIMS UNDERVALUED (Western District)

Published on April 30, 2012 in Claims Handling Procedures and Experts. Closed
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In Craker v. State Farm Mutual Auto Insurance Company, the court heard the carrier’s motion for summary judgment on the insureds’ bad faith claims. The original suit arose from a 2007 car accident in which the insureds were injured. After the carrier refused to pay an additional $200,000 in underinsured motorist coverage (“UIM”), offering at most $113,700.00, the insureds filed suit alleging breach of contract and bad faith.
The carrier argued that the insureds’ bad faith claims were meritless because the dispute merely arose over difference of opinion on the value of the claim. However, the court disagreed, finding that one of the insured parties was fired from his position as a laborer because of the injuries he sustained, preventing him from earning a similar salary elsewhere without a college degree.
Yet, the carrier valued the insured’s lost wages as a total lack of employment for two years, followed by a return to the same type of employment he had before the accident. The court ruled that there was no reasonable basis for this evaluation indicating a decision that may amount to bad faith to a reasonable jury. The court also ruled that the other insured party injured in the accident was unreasonably denied benefits because the carrier refused to adjust the award after she received hip surgery. As such, the court denied the carrier’s motion for summary judgment.
However, the court did grant the carrier’s motion to strike the report and testimony of the insureds’ bad faith expert. At a Post-Discovery Status Conference, the insureds did not indicate that they needed any further experts to move forward with this case. However, they claim that they did not realize the need for such an expert until after the carrier filed for summary judgment. The court disagreed and refused to permit the expert testimony.
Date of Decision: April 4, 2012
Craker v. State Farm Mut. Auto. Ins. Co., No. 11-0225, 2012 U.S. Dist. LEXIS 48029, U.S. District Court for the Western District of Pennsylvania (W.D. Pa. Apr. 4, 2012) (Lancaster, J.)
This case has been previously addressed in this Blog in January 2012, October 2011, and May 2011.

JANUARY 2012 BAD FAITH CASES: JUDGMENT GRANTED TO INSURANCE AGENTS BECAUSE INSURED FAILED TO PRODUCE AN EXPERT REPORT AND COULD NOT ESTABLISH WHAT DUTY WAS OWED AND BREACHED (Philadelphia)

Published on January 30, 2012 in Experts. Closed
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In Randazzo v. National Penn Insurance Company, the court granted summary judgment to the defendants on the insured’s professional negligence and negligent misrepresentation claims. When the insured appealed, the court issued this opinion. It is not wholly clear from the recitation of the facts pleaded whether both sets of defendants were insurance agents and/or whether one of the defendants was also the insurer issuing the policy and/or only that insurer’s agent. The policy in effect at the time of the loss was issued by Penn American Insurance Company, and was brokered by defendant National Penn. The defendant is identified in the caption as National Penn Insurance Company and in the body of the opinion as National Penn Insurance Agency, Inc.
The insured owned real estate in Pennsburg, Pennsylvania. In the early 1990’s the insured contacted Swartley Insurance Agency to purchase insurance coverage for the property. Soon after, Swartley merged with National Penn and, William Griffith, its employee, brokered the insured a policy with a coverage limit of $350,000.00. In 2005, the insured allegedly asked Griffith to increase insurance coverage on the property to $700,000.00 and was assured by Griffith that the change would be effectuated. Griffith denies that this conversation ever occurred.
Plaintiff alleges that he had asked another agent to review his coverage, and was told by that agent that he had $850,000 in coverage. The second agent denied this, but admitted to assisting the plaintiff in obtaining a policy with $840,000 in coverage that would go into effect on October 9, 2007. However, on October 7, 2007, a fire destroyed the insured’s property. At the time of the fire loss, the insured’s property was insured by the carrier for $350,000.00.
On October 10, 2011, the insured filed suit in Philadelphia County, alleging professional negligence and negligent misrepresentation. After the court granted summary judgment to the carrier, the insured appealed, claiming that the trial court erred in granting the motion on the basis of its failure to file an expert report. The insured claims that such a report was unnecessary.
The motion for summary judgment argued that the insured’s failure to provide an expert report to substantiate his claims of professional negligence, misrepresentation, and damages, warranted the dismissal of the complaint. The court stated that the defendants were “insurance companies and/or agents affiliated with the insurance companies. As such, Defendants have a general duty to exercise the skill and knowledge normally possessed by members of the insurance profession and a failure to do so will render the company/agent liable for any loss of coverage.”
The court granted this motion because, even viewing the record in a light favorable to the non-moving party, the insured failed to prove that (1) the carrier owed a duty of care (2) the duty was breached, (3) the breach resulted in his injury, and (4) that the insured suffered an actual loss or damages. After the appeal was filed, the court defended its decision on two grounds.
The court focused on the need for expert testimony, stating that “the testimony of an expert is essential to aid the jury in understanding the complexities of the insurance practice and policies; and determining the facts in issue, the duty owed by Defendants to Plaintiff, the alleged breach of said duty, the adequacy of insurer’s investigation of claim, and the actual loss incurred since the knowledge and assessment of these facts are beyond that possessed by laypersons.” The court looked to law on insurance bad faith by carriers for guidance on the agent’s duties, and stated that “although insurance is not so highly technical a field that the public cannot understand at least the general nature of an insurer’s responsibilities, courts have held that expert testimony on the issue of an insurer’s duty of care is necessary where a plaintiff questions the adequacy of an insurer’s assessment of plaintiff’s insurance needs.”
The plaintiff in this case alleged that defendants failed to use due care in investigating his insurance needs and failed to obtain the coverage that a reasonably prudent insurance agent would have obtained under the circumstances. The court found that “[t]his allegation alone requires expert testimony, which Plaintiff has failed to engage.” “Further, when considering Plaintiff’s negligence claim, a fact-finder would be charged with the responsibility of comparing Defendants’ investigation of Plaintiff’s insurance needs to what the assessment of the average insurance agent and insurance agency would have provided. Such an assessment is well beyond a layperson’s knowledge. Where Defendants’ conduct is being judged by the acceptable insurance investigation standard/practices in the insurance industry, Plaintiff must produce an expert to establish the required standard and the alleged deviation from said standard.”
The court further found the negligent misrepresentation claims were inadequately pleaded, and that “[e]ven assuming that Plaintiff substantially relied on Defendants’ representations and thereby took no other action to increase the policy limits of his insurance policy, Plaintiff has not produced an expert report to substantiate his claim for damages, including, but not limited, to his claims of loss of rents, business income, and personal property damages. The lack of expert testimony also critically adversely affects Plaintiff’s case.”
Date of Decision: December 15, 2011
Randazzo v. National Penn Insurance Company, NO. 03243, 2011 Phila. Ct. Com. Pl. LEXIS 363 (Phila. Ct. Com. Pl. Dec 15, 2011) (Quinones Alejandro, J.)

JANUARY 2012 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED BECAUSE ESTIMATES WERE OBJECTIVELY REASONABLE AND INSURED’S EXPERT REPORT NOT COMPETENT (Western District)

Published on January 16, 2012 in Claims Handling Procedures and Experts. Closed
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In Seto v. State Farm Insurance Company, the court heard a carrier’s motion for summary judgment in response to an insured’s claim for breach of contract and bad faith. The case arose from two fires that destroyed the insured’s home. The insured sought to recover under its homeowner’s insurance policy. After a year of investigation, the carrier proposed $116,321.67 in benefits, which represented the actual cash value (“ACV”). However, the insured’s contractor found that the replacement cost value (“RCV”) was $208,061.01.
Soon thereafter, there was a second fire in the insureds’ home, which caused additional damages. The carrier issued $43,635.02 to the insureds for the damages caused by the second fire. The insureds acquired a second estimate, but did not apprise the carrier until after the suit was filed.
In late 2009, the carrier tendered $157,717.00 to the insureds and also paid additional life expenses (“ALE”) benefits totaling $30,425.01. The insureds then brought suit for bad faith and breach of contract. The carrier moved for summary judgment.
First, the court examined the insureds’ allegation that the carrier delayed in tendering payment under the policy, amounting to bad faith. Specifically, the insureds argue that although the carrier was provided with the second estimate in 2009, it did not respond until 2011. The record, however, indicates that the insureds never personally submitted the second estimate. In fact, the carrier only received a copy when the insureds served their complaint in late 2010. The court, therefore, found that the delay was directly caused by insureds’ failure to personally delivery the estimate to the carrier.
Second, the court analyzed the insureds’ claim that the carrier low-balled its offer that was significantly lower than other estimates the insureds obtained. After the first fire, the carrier immediately inspected the property, created an itemized estimate of damages, and promptly paid $116,321.67 to Plaintiffs. Then, when the carrier received a higher estimate from the insured’s contractor, it agreed to review and consider that estimate. However, before the carrier could consider the estimate, a second fire occurred. Because the second fire appeared to be purposeful, an investigation ensured. Afterwards, the carrier paid an additional $43,635.02 to the insureds for their home. Thereafter, the carrier reviewed and considered the second estimate and issued a supplemental payment of $29,000.00.
In support of their claim for additional benefits, the insureds procured an expert report on the quality of the carrier’s valuation loss, finding it “incomplete in the extreme.” However, the expert’s report was not supported by an affidavit or declaration, and under Third Circuit case law this was required to consider an expert report in the context of a summary judgment motion. As such, the court deemed the report “not competent to be considered.” Even if considered, the court found that the expert report would not have created a material issue of fact on bad faith.
Lastly, the court heard the insured’s argument for additional ALE while they were living in Florida. The court denied this claim, finding the carrier’s denial of additional ALE benefits to be objectively reasonable. Because the insured failed to produce sufficient documentation to support their claim for additional ALE benefits, they were not entitled to their claim. Therefore, the court granted summary judgment to the carrier on all counts.
Date of Decision: January 11, 2012
Seto v. State Farm Ins. Co., No. 2:10-cv-00505, 2012 U.S. Dist. LEXIS 3306, (W.D. Pa. Jan. 11, 2012) (McVerry, J.)

JANUARY 2010 BAD FAITH CASES
TESTIMONY OF INSURED’S PUBLIC INSURANCE ADJUSTER EXCLUDED ON BAD FAITH CLAIM BUT ALLOWED ON INSURER’S ALLEGED VIOLATION OF THE UIPA (Middle District)

Published on January 20, 2010 in Experts. Closed
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In Hered, LLC v. Seneca Insurance Company, the insurer denied the insured’s claim for a fire loss and damage to its business premises on the basis that the insured fraudulently misrepresented the functioning of the sprinklers in the insured building.  The insured sued the insurer for breach of contract and bad faith. The insurer filed a motion to exclude expert testimony of the public insurance adjuster who had been hired by the insured to adjust its fire loss. The insurer argued that a public adjuster should not be allowed to testify that the insurer acted in bad faith in handling the insured’s claim and failing to pay the claim. 

At oral argument, the insured’s counsel conceded that the expert was not qualified and competent to testify that the insurer acted in bad faith. The court held that while expert testimony may be appropriate to establish that an insurer lacked a reasonable basis for denying an insured’s claim, in the present case, the insured could not present expert testimony regarding the bad faith claim.  Accordingly, the court granted the insurer’s motion to exclude expert testimony with respect to the bad faith claim. 

The court denied the insurer’s motion to exclude expert testimony with respect to the expert’s opinion that the insurer had violated the Unfair Insurance Practices Act  (UIPA).  The court found that the probative value of the expert testimony substantially outweighed any danger of  unfair prejudice to the insurer and that any possible prejudice could be cured by an appropriate jury instruction.

Date of Decision: February 21, 2008

Hered, LLC v. Seneca Ins. Co., Civil Action No. 3:CV-06-0255, United States District Court for the Middle District of Pennsylvania, 2008 U.S. Dist. LEXIS 111943 (M.D. Pa February 21, 2008) (Blewitt, U.S.M.J.).

MAY 2009 BAD FAITH CASES
BAD FAITH PROCEDURES AT TRIAL LEVEL OBSERVED BY APPELLATE COURT, INCLUDING BARRING EXPERT TESTIMONY ON BAD FAITH & ORDER OF JURY & BENCH TRIALS (Superior Court)

Published on May 21, 2009 in Experts. Closed
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In Prime Medica Associates v. Valley Forge Insurance Company, the Superior Court did not address any bad faith issues on appeal, but did observe bad faith procedures in the trial court, in setting forth the case background.  The insured sought to put on an attorney as an expert on bad faith.  The trial court granted a motion in limine preventing the lawyer from testifying about bad faith.  The court permitted him the attorney to testify about coverage, but the judge would determine the bad faith issue without the expert at a bench trial, if the jury found there was coverage.  The judge also granted a motion in limine precluding the insured from putting on evidence of bad faith to the jury.  If the jury found no coverage there would be no bad faith determination necessary.  The jury did in fact find coverage, and then at the subsequent bench trial on bad faith, the judge ruled for the insured.  None of these issues were the subject of the appeal, but are useful observations of practice in the trial court.  The trial court’s opinion is out of Philadelphia’s Commerce Court.  In that opinion, in discussing the bench trial on bad faith after the jury verdict, the trial judge stated:  “After much soul searching, this court denied plaintiff’s bad faith claim.”  The appellate court reversed the verdict on the contract claims on the basis that suit was untimely. 

Date of Decision:  March 5, 2009

Prime Medica Assocs. v. Valley Forge Ins. Co., No. 3279 EDA 2006, No. 3331 EDA 2006, SUPERIOR COURT OF PENNSYLVANIA, 2009 PA Super 39; 2009 Pa. Super. LEXIS 48, March 5, 2009 (Gantman, J.)

 

 

MARCH 2009 BAD FAITH CASES
EXPERT WITNESS TESTIMONY BARRED BECAUSE NOT RELEVANT TO REMAINING CLAIM FOR BAD FAITH (Philadelphia Federal)

Published on March 24, 2009 in Experts. Closed
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In Aquila v. Nationwide Mutual Insurance Company, the court granted the insurer’s motions to preclude testimony at trial by two of the insured’s expert witnesses because the witnesses did not have any knowledge or experience relevant to the sole remaining issue of bad faith.

The witnesses had provided reports on how the motor vehicle in this case might have been stolen.  The court acknowledged that the witnesses might have the specialized knowledge required of expert witnesses but found their reports lacked the required reliability and relevancy to the bad faith claim, which is the sole remaining claim.

Date of Decision:  January 9, 2009

Aquila v. Nationwide Mut. Ins. Co., CIVIL ACTION No. 07-2696, 2009 U.S. Dist. LEXIS 1746 (E.D. Pa. Jan. 9, 2009)(Strawbridge, M.J.)

NOVEMBER 2008 BAD FAITH CASES
INSURER HAD NO OBLIGATION TO HIRE EXPERT IN CLAIMS HANDLING PROCESS (Philadelphia Federal)

Published on November 18, 2008 in Experts. Closed
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In Rock-Epstein v. Allstate Insurance Company, a bad faith claim arose from the insurer’s denial of the insured’s claim after her home and personal belongings suffered water damage.  The insured had a homeowner’s policy with the insurer.  The policy provided for dwelling protection for “sudden and direct physical loss to the property” except as limited or excluded in the policy. The policy excluded losses to the property for flood, including but not limited to surface water……whether or not driven by wind.” The policy also covered “sudden and accidental direct physical loss …except as limited or excluded in the policy” to personal property owned or used by the insured.  This personal property coverage included damage caused by windstorm or hail, except for “loss to covered property inside a building structure…..unless the wind or hail first damaged the roof or walls and the wind forces the rain, snow, sleet, sand, or dust through the damaged roof or wall.” 

The insured suffered a covered loss to her home and personal property.  She hired a public adjuster to assist her in filing a claim under her policy.  The adjuster sent a letter to the insurer filing a claim and asserting that a windstorm caused the insured’s loss.  The insurer assigned the claim to a representative who went out and inspected the property with the insured’s adjuster.  At the inspection the insured’s adjuster told the representative that water had run off the roof on the spa cover and then splashed through a window that was left partially open.  The adjuster also told him that water had run off the roof settled on top of the spa and then wind blew it or it ran over and hit the ground and went through the window that was left open.  The insurer later denied the claim based on the exclusion in the policy for flood, including, but not limited to, surface water whether or not driven by wind. 

The insured filed a complaint against the insurer for breach of contract and bad faith in the Philadelphia Court of Common Pleas.  The insurer removed the case to the United States District Court for the Eastern District of Pennsylvania.  The parties filed cross motions for summary judgment.

The insured claims that the insurer’s representative did not believe the explanation of the loss given by her adjuster yet failed to use an expert to determine the cause of the loss.  She also argued that the insurer’s representative lacked evidence to confirm what he believed caused the damage, and denied coverage based on the policy’s exclusion, although he had no basis for his stated conclusion regarding the definition of surface water. 

The court found the insured’s evidence was unsupported and insufficient to show bad faith.  The insurer’s representative investigated the claim by going to the insured’s home and spoke with the adjuster hired by the insured to determine the cause of the loss.  He accepted the representation of the loss given to him by the insured’s adjuster in an effort to find coverage for the insured. The insurer’s representative even discussed his investigation with his supervisor who agreed with him that the facts did not allow for coverage.  It is not bad faith to conduct a thorough investigation into a questionable claim.  Also, the insured provided no evidence that the insurer’s failure to employ an expert to determine the cause of loss rises to the level of bad faith.  At most the insurer erred in not engaging an expert to further examine the damage, but that mistake in judgment falls short of bad faith.  Therefore, since the evidence presented did not meet the clear and convincing standard for bad faith, the court granted the insurer’s motion for summary judgment on the insured’s bad faith claim.

Date of Decision: September 29, 2008

Rock-Epstein v. Allstate Ins. Co., No. 07-2917, 2008 U.S. Dist. LEXIS 76042 (E.D. Pa. Sept. 29, 2008)(Schiller, J.)

J.M.A.

OCTOBER 2008 BAD FAITH CASES
INSURED’S EXPERT OPINIONS FAILED TO CONSIDER ALL CIRCUMSTANCES OF CLAIM (Philadelphia Federal)

Published on October 26, 2008 in Experts. Closed
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In Allstate Property & Casualty Insurance Company v. Vargas, the insured filed a bad faith counterclaim arising from a car accident in which she sustained injuries.  The insured was injured when her vehicle was side swiped by a cab owned by Ali & Amir Cab Company. At that time, the insured was under an Automobile policy which the insurer issued to a third party.  The defendant was identified on the policy as the spouse of the policyholder.

The policy provided for rental reimbursement coverage, collision coverage and UIM coverage with stacking for two vehicles. On the day of the accident, the defendant insured notified the insurer of the collision. In her recorded statement, the defendant stated she was the policyholder’s fiancée.  Subsequently the defendant filed a third party lawsuit against the Cab Company, and defendant’s attorney notified the insurer that defendant intended to seek UIM coverage under the policy. The defendant insured’s attorney also requested that the claim for UIM coverage be sent to arbitration without delay. 

The insurer’s agent handling the claim advised the defendant insured that $200,000 UIM coverage was available.  For approximately the next year, the insurer prepared for the arbitration proceeding. Before the arbitration, the insurer’s agent determined that the defendant insured and the policyholder were not married at the time of the accident  and  therefore advised the defendant insured that she was not entitled to stacked coverage. Accordingly coverage was limited to $100,000.  The insurer made a tender offer to the defendant insured of $100,000 , the unstacked UIM policy limit. 

The insurer filed a declaratory judgment in the United States District Court for the Eastern District of Pennsylvania  seeking a determination of whether the defendant insured was a “resident spouse” under the Policy so as to entitle her to stacking benefits.  The defendant insured’s third amended answer asserted counterclaims for breach of contract, bad faith and fraud/misrepresentation.  The insurer then filed a motion for summary judgment . 

This court found that the defendant insured was not a Class I insured and therefore was not entitled to stacked benefits, and granted the insurer’s motion.  This court also concluded that the insurer’s payment of $100,000 in unstacked UIM benefits fully satisfied its contractual obligations under the policy. Thereafter the insurer moved to dismiss the remaining counterclaims. 

The defendant insured opposed the insurer’s motion to dismiss and asserted new rationales in support of the bad faith claim. All of the defendant’ insured’s counterclaims were dismissed with the exception of the bad faith counterclaim. The defendant insured contends that the insurer acted in bad faith by:  failing to make a reasonable investigation of her UIM claim, delaying in the investigating her claim, delaying in offering the undisputed unstacked limit on the policy, delaying in providing consent to settle with the Cab company, delaying in filing a declaratory judgment and misrepresenting the amount of coverage available under the policy.  

The defendant insured largely relied on expert opinions to support her bad faith claim.  However the court found that both expert opinions failed to create a genuine issue of fact or provide clear and convincing evidence of bad faith.  Both opinions failed to consider any of the unique facts and circumstances relevant to the insurer’s conduct as to defendant’s insured’s UIM claim.

Date of Decision: August 29, 2008

Allstate Prop. & Cas. Ins. Co. v. Vargas, United States District Court For the Eastern District of Pennsylvania No. 2:06-CV- 3368-LDD, 2008 U.S. Dist. LEXIS 67516 (E.D. Pa. August 29, 2008) (Davis, J.)

 

For a more detailed review of the disposition of the bad faith claim, see other entry of this date:  “BAD FAITH CLAIM DISMISSED: NO CLEAR AND CONVINCING EVIDENCE OF BAD FAITH BY INSURER IN INVESTIGATING AND SETTLING UIM CLAIM”

OCTOBER 2007 BAD FAITH CASES
COURT FINDS THAT NEITHER LAWYER NOR DOCTOR GAVE TRULY INDEPENDENT ADVICE, AND CARRIER FOUND TO HAVE ACTED IN BAD FAITH (Fayette)

Published on October 12, 2007 in Experts. Closed
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In Greene v. GuideOne Mutual Insurance Company, the state trial court, in an underinsured motorist’s claim, without providing a summary of the facts as the Opinion supplemented an earlier ruling and was written for purposes of appeal, recommended that its earlier decision finding bad faith been upheld on appeal.

The carrier’s counsel originally recommended settling for $10,000, but later reversed this position and said the claim was worth nothing.  The UIM arbitration panel awarded $75,000.  The Court found that the lawyer’s earlier position was more credible and the later position was taken for reasons that were understandable, but not a basis for supporting the position taken.  The Court observed:  “It is no secret that insurance defense work is a very competitive field, and that a single failure to perform to the company’s expectations and demands can result in the loss of all future legal work for that company.”  The Court found that counsel’s position that the case was worth nothing was not as credible and that another counsel’s testimony on value was credible, which supported a punitive damage award of less than one-half of the arbitrators’ award.  The Court gave some value to the carrier’s claims that it had relied upon the lawyer’s revised opinion that the case had no value, and a medical report from a doctor, but “found it to be very clear that the refusal to make any offer was determined by the desire for profit rather than by a cool, dispassionate and thorough assessment of the actual fair value of [plaintiff’s] underinsured claim.”

The Court also found that the carrier’s investigation was inadequate and outdated, as it relied upon a biased medical report which it should have realized would be treated as incredible by the UIM panel.  This information was given to its counsel, and so undermined the idea that the legal advice was truly an independent professional opinion.  Further, the lawyer’s saying that the carrier was insulated from liability because of an IME failed because of the apparently dubious nature of the IME under the circumstances.  Simply calling a report an “independent” medical examination does not make it so, when the report may be biased and used for biased purposes.  This kind of bias is something that a truly independent legal analysis would have investigated; rather than adopting the report without such independent review or analysis of the issue of the doctor’s bias.

The Court rejected the argument that the carrier was insulated from liability because it used an IME from another carrier’s documents.  First, that other carrier did not even find that medical report credible since that carrier paid 90% of its policy limit.  Further the report was from a single exam five years after the injury, with parameters unknown to the carrier attempting to now use it.  Moreover, the Court was clearly trouble by the absence of any effort to obtain a sworn statement which is nearly a universal practice in such cases. 

The Court found that the adjuster was inexperienced and improperly trained, and required greater supervision. 

The Court was particularly disturbed on the challenge to the attorney’s fee award under the statute, fees which it found necessitated by the bad faith refusal to pay the claim.  It called to mind “the apocryphal story of the man that murdered his parents and sought mercy from the Court because he was an orphan.”

In a final admonishment, the Court cited to the UIPA about how an insurer cannot take the gamble that by fighting on a sufficient number of cases where it should pay, it will achieve reductions in payments on a statistical basis that make some losses worth that endeavor.  However, the question must be raised here as to whether the Court meant 42 Pa.C.S. § 8371, rather than the UIPA, as there is no private cause of action under the UIPA, and the Court did not address to what extent violations of specific UIPA sections can be used in determining bad faith conduct under section 8371.

Date of Decision:  September 13, 2006

Greene v. GuideOne Mut. Ins. Co., Court of Common Pleas, Fayette County, No. 1497 of 2002, 2006 Pa. Dist. & Cnty. Dec. Lexis 478 (CCP Fayette, September 13, 2006) (Leskinen, J.)

L.A.
    

JUNE BAD FAITH CASES
COURT REJECTS BAD FAITH PLAINTIFF’S EXPERT TESTIMONY FOR HIGHER DUTY IN FIRST PARTY CLAIMS AND THAT FIRST PARTY CLAIMS ARE NOT ADVERSARIAL (Pennsylvania Superior Court)

Published on June 18, 2007 in Experts. Closed
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In Zappile v. Amex Assurance Company, the Pennsylvania Superior Court reversed the trial court’s $75,000 judgment entered against the insurer following a non-jury trial on a bad faith claim made by the insureds.  The bad faith claim arose after the insured was struck by an automobile while walking his dog.  He was diagnosed with a torn rotator cuff and underwent arthroscopic surgery.  The insured settled his claim against the tortfeasor for the $15,000 policy limits.  The insured then made a claim against his own automobile insurance policy, for first party benefits, which were paid to the limits of coverage.  The insured then made a claim for underinsured motorist benefits.  The insured had total stacked coverage of $150,000 for three insured vehicles.  He demanded the policy limits.  The insurer, however, offered $32,000.  The case went to arbitration and the insured was ultimately awarded $95,000.  The insured then filed a bad faith claim.  The trial court found that the insurer acted in bad faith by failing to make a partial payment for excess wage loss claims, undervaluing the claim, thereby forcing it to arbitration, never raising the offer and telling trial counsel that plaintiff would not accept anything less than $150,000 to settle. 

On appeal, the Superior Court first found that the insured’s expert’s trial testimony was factually and legally incorrect.  The expert testified on several occasions that a UIM claim is not an adversarial situation and implied that there is some form of heightened duty to a “first party” claimant as opposed to a third party adversarial claimant.  The Superior Court specifically rejected the notion of a higher duty to a first party claimant and held that the duty of the insurer is the same no matter what the party status. 

The remaining issues in this case are discussed in a separate summary in the June 2007 archive.

Date of Decision: June 8, 2007

Richard Zappile and Stephanie Zappile, H/W v. AMEX Assurance Company, Superior Court of Pennsylvania, No. 1274 EDA 2006, 2007 Pa. Super. LEXIS 1580 (Pa. Super. 2007) (Klein, J)