Archive for the 'PA - Standing, Assignment or Outside Scope' Category
The insured’s boyfriend was at a family reunion with his daughter. The boyfriend was listed as an additional driver on the policy. His daughter went to retrieve some items from the insured’s car, and decided to move the car, resulting in injury to the underlying plaintiff.
The injured plaintiff sued the daughter, who claimed she was an insured. The insurer disagreed, and refused to defend or indemnify the daughter on the basis she was not an insured under the policy. The injured plaintiff, as assignee, sued for breach of contract and bad faith after settling with the daughter.
After a close look at the facts, the court agreed that the daughter was not an insured or a permissive user. Thus, the insurer had no duty of any kind to her. Further, no bad faith claim could exist where the person denied coverage was not an insured.
The assignee-plaintiff argued that the insurer still had a duty to defend because he had alleged facts in the underlying tort complaint implying she was an insured. Therefore, on the theory that the four corners of the complaint controls the duty to defend, the allegation that the defendant was an insured overcame the actual facts and policy language under which she was not insured.
The court found this issue had never been decided by Pennsylvania’s courts, and so the judge had to predict what the Pennsylvania Supreme Court would do. He found “the Pennsylvania Supreme Court would hold that an insurer is not required to defend someone it has determined is not an insured under the policy even if a subsequent third-party complaint suggests the person is an insured.” The complaint does not control because “the duty to defend stems directly from the insurance policy and should not apply where there is no possibility of coverage.” The court also cited case law from other jurisdictions supporting its conclusion.
The court granted summary judgment. Plaintiff appealed the following day.
Date of Decision: January 10, 2019
Myers v. Geico Casualty Co., U. S. District Court Eastern District of Pennsylvania CIVIL ACTION No. 17-3933, 2019 U.S. Dist. LEXIS 5093 (E.D. Pa. Jan. 10, 2019) (Rice, M.J.)
After an auto accident, the insured submitted a (first-party) UIM claim to its insurer. The tortfeasor in the accident had a policy with the same insurer. Thus, the insured was also a third-party claimant with respect to the tortfeasor. The insurer assigned the same claim representative to manage both the first-party claim and the third-party claim. The insured eventually sued for bad faith as to the handling of both claims.
The insurer moved to dismiss aspects of the bad faith claim on the basis that Pennsylvania law precludes a third-party claimant from bringing a cause of action for bad faith against a tortfeasor’s insurer. The Court denied the motion in part and granted in part.
The Court found the insured sufficiently pleaded facts regarding the interplay between the claims handling of first-party and third-party claims to make out a plausible bad faith claim. However, where the insured only pleaded bad faith against the insurer solely for its actions regarding his third-party claim, the Court dismissed these allegations under Pennsylvania law.
Date of Decision: April 23, 2018
Vella v. State Farm Mutual Automobile Insurance Co., United States District Court, Middle District of Pennsylvania, Civil Action No. 17-1900 (SHR), 2018 U.S. Dist. LEXIS 67419 (M.D. Pa. Apr. 23, 2018) (Rambo, J.)
The decedent-insured took out a life insurance policy and paid premiums on it for roughly six years, before cancelling the policy just ten months before her death. The decedent-insured’s husband, as executor of the estate, then submitted a claim under the policy. The insurer denied the claim, citing the decedent-insured’s cancellation as its justification. The husband sued for breach of contract and bad faith, and the insurer moved for summary judgment.
The husband argued benefits were owed because the decedent-insured meant to cancel her auto insurance policy with the insurer and not the life insurance policy. After listening to an audio recording of a telephone call, the Court was unconvinced, and ruled “no contract existed between the parties at the time of the decedent’s death.” Because no contract exited between the parties, the insurer had a reasonable basis for denying the claim, and the Court granted summary judgment in favor of the insurer on both the bad faith and breach of contract claims.
Date of Decision: January 29, 2018
Plaintiff is the beneficiary to two life insurance policies issued to her late husband. After the insured’s death, the insurer issued a check to the plaintiff, made payments to a funeral home, and withheld funds for purportedly outstanding debt. The plaintiff argues that the insurer owes her at least $70,000 in additional benefits under the two policies. After the insurer refused to pay further benefits, the plaintiff sued the insurer and three of its employees for breach of contract, violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), and bad faith.
The action was removed to federal court, and the insurer and two of the employees argue that plaintiff fraudulently joined various non-diverse defendants to evade federal jurisdiction. The plaintiff moved to remand the action back to state court for lack of subject-matter jurisdiction, and the insurer moved to dismiss the UTPCPL claim per Rule 12(b)(6).
The Court first addressed the fraudulent joinder issue. The Court stated, “if there is a possibility that a state court could find that the complaint states a cause of action against any one of the non-diverse defendants, remand is necessary.” It held that none of the plaintiff’s claims could succeed against any of the non-diverse defendants.
There can be no breach of contract claim against the non-diverse defendants because the plaintiff only alleges a contract with the insurer, not its employees. No UTPCPL claim exists against the non-diverse employee defendants because the complaint contains no allegations of deceptive conduct committed by them. Lastly, regarding the bad faith claim, the non-diverse employee defendants are not “insurers” within the meaning of Pennsylvania’s bad faith statute. The Court thus denied the plaintiff’s motion to remand, dismissed the claims without prejudice against the non-diverse defendants, and retained jurisdiction to hear the insurer’s 12(b)(6) motion.
“As a matter of law, an insured may not bring a UTPCPL claim based on an insurer’s failure to pay a claim.” The complaint essentially alleged that the insurer did not pay benefits in an amount owed to the plaintiff. Because this allegation is not proper to allege a UTPCPL violation, the Court granted the insurer’s motion to dismiss the UTPCPL claim while giving the plaintiff leave to amend.
Date of Decision: January 16, 2018
This action originated from a bad faith suit filed in the Philadelphia County Court of Common Pleas. The insured alleged that the insurer refused to defend and indemnify in a separate Lehigh County action which resulted in a judgment of $500,000 against the insured. The insured assigned its rights against the insurer to the instant plaintiff-assignee.
The insurer removed the matter to federal court. Plaintiff filed a motion to remand, arguing that the insurance policy contained a “Service of Suit Amendment” whereby the insurer agreed to litigate in any forum chosen by the insured. The insurer argued that the Service of Suit Amendment pertains only to the original insured party, and not to an assignee.
The insurer further argued that the policy contained an anti-assignment clause, which further limits the plaintiff-assignee’s rights to enforce the forum selection clause.
Courts in the Third Circuit had not previously decided the question of whether an assignee could enforce a forum selection clause against an insurer. The Court held that “where an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of his rights.”
The Court further ruled that per Pennsylvania law, “an insurer may not limit an insured’s ability to assign his or her rights under a policy after the occurrence of the event which gives rise to the insurer’s liability.” Because the assignment here occurred after the event that created liability, the plaintiff-assignee could enforce the forum selection clause against the insurer, despite the presence of an anti-assignment clause in the policy.
Lastly, the Court denied plaintiff-assignee’s request for attorneys’ fees, because the insurer did not lack an objectively reasonable basis for seeking removal.
Date of Decision: August 25, 2017
Wimberly v. First Fin. Ins. Co., No. 5:17-cv-02952, 2017 U.S. Dist. LEXIS 137380 (E.D. Pa. Aug. 25, 2017) (Leeson, Jr., J.)
An injured plaintiff attempted to assert bad faith claims against the tortfeasor’s insurer and its adjuster. In his Report and Recommendation, the Magistrate Judge observed that third-party claimants do not have a contractual relationship with such insurers, and thus have no standing to assert a bad faith claim. The District Court Judge agreed, and dismissed the putative bad faith failure to negotiate claim.
Dates of Decision: June 20, 2017 and August 9, 2017
Starrett v. Coe, No. 3:16-cv-02272, 2017 U.S. Dist. LEXIS 95793 (M.D. Pa. June 20, 2017) (Saporito, M.J.) (Report and Recommendation)
Starrett v. Coe, No. 3:16-cv-02272, 2017 U.S. Dist. LEXIS 126348 (M.D. Pa. August 9, 2017) (Caputo, J.)
This case involved at least claims for breach of contract, breach of fiduciary duty, and breach of the contractual duty of good faith and fair dealing. The court also stated there was a statutory bad faith claim.
Two related insurers were named as defendants. One of the insurers did not issue the policy, but was alleged to have been involved in bad faith claims handling.
First, the court dismissed the breach of fiduciary duty claim under the gist of the action doctrine. The court found that any duty solely arose from the contract, so there could be no separate tort claim outside of the contract.
Date of Decision: July 20, 2017
Golon, Inc. v. Selective Insurance Co., No. 17cv0819, 2017 U.S. Dist. LEXIS 113385 (W.D. Pa. July 20, 2017) (Schwab, J.)
In 2007, the insured was involved in a motor vehicle accident, injuring another driver. The injured party filed a negligence action against the insured. The insurer sent a 2007 letter declining to defend or indemnify the insured. In 2008, the insurer filed a declaratory judgment action, claiming that it did not have a duty to defend or indemnify the insured. The court entered a consent order that the insurer owed no duty to defend or indemnify.
Around the same time-period, the injured party separately filed her own declaratory judgment against the insurer, arguing that the insurer was obligated to defend and indemnify the insured. This second declaratory judgment action did not assert claims for breach of contract or bad faith, and there was no assignment of such claims by the insured to the injured plaintiff. In February 2009, the injured party was given leave to withdraw this second declaratory judgment action, without prejudice.
The insured passed away in 2015. In 2016, after trial, the court entered judgment in favor of the injured party in the original 2007 negligence action, for a sum in excess of $1 Million. The estate assigned the injured party any and all of its rights, claims, demands, and causes of action against the insurer, including claims for breach of contract and bad faith.
The injured party subsequently filed an action against the insurer. The claims included breach of contract and statutory bad faith claim, as well as a request for declaratory relief. The court granted summary judgment on the assigned breach of contract and bad faith claims, though not as to the injured party’s own declaratory judgment count.
An assignee stands in the assignor shoes. Any causes of action the insured had for breach of contract and bad faith accrued when the insurer conveyed a letter denying any duty to defend and indemnify the 2007 negligence action (or, at the latest, in 2008, when the court entered the consent order). The court stated that any bad faith claim had to be raised no later than 2009 (under the two year statute of limitations governing statutory bad faith claims) or by 2011 for the breach of contract claim.
The court concluded: “In order to advance timely claims for breach of contract/bad faith, under the facts here, [the insured] would had to have filed suit and challenged that coverage denial in the 2008 ‘second’ declaratory judgment suit by seeking an assignment to include the breach of contract/bad faith claims at that time. Instead, [the insured] brought only a declaratory judgment action.”
As the bad faith claim was not filed within two years after the initial denial of coverage, the court found that the claim was time-barred.
Date of Decision: May 22, 2017
In this case, the plaintiff attempted to bring various claims against an insurer, including a bad faith claim. Pennsylvania is not a direct action state. The pleadings revealed that the insurer defendant did not insure the plaintiff. The plaintiff thus had no claims against the insurer, and all claims against the insurer were dismissed.
Date of Decision: June 20, 2017
Three brothers owned interests in a single property, but arguably only one of them insured his interests. Their tenants (the insured brother’s daughter and son-in-law), brought suit against her father and uncles for mold exposure. The father’s carrier provided a defense, and the case against him was dismissed on preliminary objections.
The uncles hired private counsel, who filed preliminary objections as well, but before those were decided, the uncles entered a joint tortfeasor release. The uncles assigned their contribution claims against the father and a bad faith claim against his insurer to their niece and nephew.
Subsequently, the attorney representing the niece entered appearances for the uncles (one was deceased, so his estate), and there was ultimately a $5.1 Million judgment entered against the uncles. Efforts to enforce that judgment against the father were denied by way of summary judgment. Still, the father later assigned any bad faith claims he might have against his insurer to his daughter and son-in-law, and they released the father from any claims arising out their original law suit.
The children brought bad faith claims against their father’s insurer. The resolution was simple because the $5.1 Million judgment obtained was not a judgment against the father. The father was both dismissed from the original case, and won a summary judgment motion that the judgment could not be enforced against him. Moreover, that judgment could not be enforced against any party in light of the releases.
As to the assigned claim, the Court concluded: “Since Appellants cannot enforce the [$5.1 Million] Judgment against [father], [father] suffered no harm and, therefore, had no bad faith claim to assign to Appellants.”
Date of Decision: April 26, 2017
Schriner v. One Beacon Ins. Co., No. 852 MDA 2016, 2017 Pa. Super. Unpub. LEXIS 1602 (Pa. Super. Ct. April 26, 2018) (Dubow, Lazarus, Stabile, JJ.) (Not Precedential)
