JANUARY 2016 BAD FAITH CASES: COURT AFFIRMS BAD FAITH JUDGMENT AGAINST INSURER THAT FAILED TO ATTEND ARBITRATION HEARING (Superior Court of Pennsylvania – not precedential)

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In Mangan v. Safe Auto Insurance Company, the insured brought claims for breach of contract and bad faith refusal to pay a claim arising from a traffic accident that the insured’s vehicle was involved in. The insurer asserted that it was not required to cover the damage to the vehicle under the terms of the policy.

On the day the complaint was filed, an arbitration hearing was scheduled, which neither defense counsel nor a representative for the insurer attended. Accordingly, the trial court held an ex parte trial, during which it heard testimony from the insured and the insured’s counsel. The trial court entered a verdict against the insurer for $35,000, which included over $24,000 in bad faith damages.

The insurer filed a motion for post-trial relief, asserting that the verdict should be vacated and the case should be scheduled for a new arbitration hearing, as no evidence showed that the insurer’s failure to appear was intentional and the insurer claimed it was not adequately notified of the time of the hearing. The insurer additionally claimed that the trial court erred by failing to “consider any lesser sanctions than imposing an ex parte verdict” and to “limit the non-jury award to $25,000” in violation of a local rule. The motion was denied and the insurer appealed.

In affirming the judgment, the Superior Court reasoned that the trial court thoroughly addressed the insurer’s claims, and determined that the court properly denied the insurer’s request that the verdict be vacated, “as defense counsel did not offer a satisfactory excuse for his failure to appear.”

Additionally, the court found that the transcript revealed clear and convincing evidence of the insurer’s bad faith conduct regarding the insured’s insurance claim, based upon the insured’s testimony, and that the trial court properly exercised its discretion in imposing bad faith damages. However, the court noted that the trial court incorrectly failed to limit the non-jury award to $25,000 pursuant to a local rule, and directed the trial court Prothonotary to modify the $35,000 verdict in favor of the insured to $25,000.

Date of Decision:  December 23, 2015

Mangan v. Safe Auto. Ins. Co., No. 1991 WDA 2014, 2015 Pa. Super. Unpub. LEXIS 4666 (Pa. Super. Ct. December 23, 2015,) (Musmanno, J.)

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