The insureds were involved in a motor vehicle accident with another car, the driver of which was an underinsured motorist (“UIM”). The insurer covered the insureds in a policy that allegedly provided UIM benefits of $300,000. Both insureds claimed that they suffered serious and permanent neck, back, and leg injuries as a result of the accident, which they alleged was caused by the other driver’s negligence. The insurer failed to pay the $300,000 under the policy, and the insureds filed suit.
In its answer to the insureds’ Complaint, the insurer admitted that it had a policy including $300,000 in UIM coverage, but it claimed that it did not have the information necessary to evaluate the extent of the insureds’ injuries or the other driver’s negligence. In addition to a breach of contract claim concerning the UIM coverage, the Complaint contained a bad faith claim, and the insureds requested “all records, documents, writings, or other materials…used in the preparation and drafting of the [insureds’] policy…” as part of their bad faith discovery. The insurer promptly filed a Motion for Emergency Protective Order and Stay, seeking protection against the bad faith discovery until the resolution of the underlying UIM claim.
The main issue in this opinion was whether and for how long bad faith discovery should be delayed while the underlying underinsurance benefits contract claim was litigated. The court first recognized that while an inquiry in a UIM claim focuses on issues external to the insurer, a bad faith claim focuses on internal company issues. Bad faith insurance litigation often involves a thorough and costly analysis of the insurer’s practices, and it exposes many procedures to the public that the insurer may wish to keep confidential.
Because of the implications of discovering insurers’ internal policies, the court felt that the “door to bad faith discovery should not be immediately opened to every Plaintiff who pays the $100 filing fee and includes a bad faith count in his/her Complaint.” It required some threshold that an insured must overcome to open the door to bad faith discovery, and the insured in this case had not opened that door at this stage of the trial. It decided that the best option here would be to sever the bad faith claim from the underlying UIM cause of action, allowing the parties to first fully litigate the UIM claim before handling the bad faith claim. The court therefore determined that the insureds must wait until the uninsured motorist claim has been fully litigated to a verdict before a jury to begin discovery for their bad faith claim.
Date of Decision: January 24, 2011
Dunkelberger v. Erie Ins. Co., 21 Pa. D. & C.5th 52, No. 2010-01956, Court of Common Pleas of Lebanon County, (Jan. 24, 2011) (Charles, J.)