In Bodnar v. Nationwide Mutual Insurance Company, the carrier used a somewhat innovative to establish a predicate for a later finding that it did not act in bad faith. The carrier brought a motion asking the Court to take judicial notice of three items, under Federal Rule of Evidence 201(a):
1. During all relevant times, there has been a split in case law authority as to the definition of “employee” in Pennsylvania;
2. During all relevant times, there has been no “hard and fast” rule under Pennsylvania law for determining whether a particular relationship is that of employer-employee; and
3. During all relevant times, this Court had determined that the definition of “temporary worker” used in the insurance policy at issue is not ambiguous.
First, the Court found that these were legislative facts and not adjudicative facts; and therefore inappropriate for judicial notice. Rather, these legal issues should be decided through the normal “adversarial process of litigation.”
Second, the Court found that even if it assumed these “facts” to be true, the bad faith issue would yet remain open. Assuming that ambiguity in the law would create a reasonable basis for withholding coverage, the carrier would still have to show that this ambiguity actually influenced its decision. Put another way, if the insurer actually acted unreasonably, it cannot escape bad-faith liability just because an ambiguity exists in a general sense which caused a lack of clarity or predictability in the applicable law. There would have to be a showing that the insurer actually considered the law ambiguous and that such ambiguity motivated or at least substantially influenced its decision regarding whether to afford or deny coverage, and after initially denying coverage, whether to adhere to this decision and to support it through continued declaratory judgment litigation for the period prior to the settlement of the claim.
Such facts remain to be determined, and could not be resolved in whole or in part through a grant of judicial notice. The court stated that this would be true even if the facts the carrier sought to have judicially noticed were actually “adjudicative facts”, which they were not.
Date of Decision: October 15, 2015
Bodnar v. Nationwide Mutual Insurance Company, 3:12-CV-01337, 2013 U.S. Dist. LEXIS 148343 (M.D. Pa. October 15, 2013) (Mariani, J.)