ARTICLE: Superior Court Leaves Big Post-Koken Questions Unanswered

The below article of mine appeared in the November 19, 2013 edition of the Pennsylvania Law Weekly and his republished here with permission from the publisher, American Law Media:

Superior Court Leaves Big Post-Koken Question Unanswered

By

Daniel E. Cummins

Pennsylvania Law Weekly

November 19, 2011

 

In previous articles, I have referred to the new post-Koken era of Pennsylvania motor vehicle accident litigation as "Hurricane Koken" given its stormy and meandering path. This new era of automobile accident law has been overrun with a wide variety of important novel issues that have created splits of authority at the trial court level all across the state.

To date, the issues have been compounded by the lack of opportunities for the appellate courts to weigh in and offer much desired guidance and predictability.

Now, post-Koken cases are finally are climbing up the appellate ladder. On Oct. 15, the Superior Court handed down its much anticipated decision in the automobile accident case of Stepanovich v. McGraw and State Farm, PICS Case No. 13-2987 (Pa.Super. Oct. 15, 2013 Ford Elliott, P.J.E., Ott, J., Musmanno, J.)(Opinion by Ott, J.)(Concurring and Dissenting Op. by Ford Elliott, P.J.E.).

In Stepanovich, the Pennsylvania Superior Court finally had a chance to weigh in on a post-Koken issue of importance: whether or not it was a denial of due process to a plaintiff in a post-Koken case not to identify the underinsured motorist carrier as a party defendant to the jury and yet allow that defendant's attorney to participate in the trial along with the third-party tortfeasor's defense attorney.

While the Stepanovich decision serves to answer some novel post-Koken questions, it unfortunately leaves hanging open the all-important question of how trial court judges should handle the issue of references to "insurance" at trial.

Double-Team Defense

The Superior Court in Stepanovich held that there was no violation of the plaintiff's due process rights by the trial court's decision to allow the tortfeasor's counsel and the UIM carrier's counsel to "double-team" the plaintiff in the defense of a post-Koken jury trial.

More specifically, at the trial of this third-party UIM matter, the case was identified to the jury as Stepanovich v. McGraw—without reference to State Farm as a UIM carrier defendant. Nevertheless, the defense counsel for the third-party tortfeasor and the attorney for the defendant UIM carrier were both permitted to participate in all aspects of the trial from jury selection to closing arguments.

The trial court allowed both defense attorneys to participate as long as there was no duplication in the questioning of the witnesses. It is also important to note that, according to the opinion, the plaintiff elected to proceed in this fashion rather than agreeing to a bifurcation of the claims into two separate trials.

The jury returned a 10-2 defense verdict in favor of the tortfeasor defendant, McGraw, after a finding that the tortfeasor was not negligent. The verdict was molded to reflect a verdict in State Farm's favor as the UIM carrier defendant.

At the post-trial motions stage, Allegheny County Court of Common Pleas Judge Timothy P. O'Reilly, upon further reflection of the matter, took the rare step of overturning his own decision. O'Reilly granted the plaintiff a new trial after finding that the failure to identify State Farm as a party defendant while allowing two defense counsel to participate in the matter, in hindsight, had resulted in a violation of the plaintiff's due process rights to a fair trial.

As noted, on appeal, the Superior Court in Stepanovich reversed the trial court's decision allowing for a new trial. The case was remanded with the direction that judgment be entered in favor of all defendants.

Reliance Upon Pa.R.E. 411 Misplaced

In its appellate opinion, the Stepanovich court noted that references to Pa.R.E. 411's prohibition against the mentioning of insurance at trial in this case was misplaced. The Superior Court stated that the rule specifically refers only to the preclusion of any mentioning of the available "liability" insurance, and does not reference UIM insurance as was at issue in this case. Accordingly, the court noted that a course of action identifying State Farm as the UIM carrier would not "run afoul" of Rule 411.

Notably, the Superior Court was not presented with, or did not address, the long-standing Pennsylvania common-law prohibition against the mentioning of any forms of insurance at a civil trial. It has been repeatedly held that the adoption of Rule 411 did not serve to affect the pre-existing and still valid rule of law generally prohibiting the mentioning of insurance in any regard during civil trials, including at motor vehicle accident trials, as in Henery v. Shadle, 661 A.2d 439 (Pa.Super. 1995).

Under this common-law prohibition, references to other forms of insurance at trial, including first-party insurance, have been precluded as being prejudicial to the defendant since such references may distract the jury from the central issues of liability and damages to be decided based upon the evidence presented in the courtroom, as in Henery; Price v. Guy, 735 A.2d 668, 671-72 (Pa. 1999); DeVita v. Durst, 167 Pa.Cmwlth. 105, 647 A.2d 636 (1994); Bonavitacola v. Cluver, 619 A.2d 1363, 1370 (Pa.Super. 1993); and Greenwood v. Hildebrand, 515 A.2d 963, 968 (Pa.Super. 1986).

This common-law principle that the mention or evidence of insurance is impermissible has been held to apply regardless of whether the proposed evidence concerns liability insurance coverage of a defendant or insurance coverage that may instead apply to a plaintiff, as in Bonavitacola and Greenwood.

Moreover, separate and apart from Rule 411's preclusion of any reference to liability insurance, under Rules 402 and 403, a defendant remains capable of arguing that evidence of insurance should be precluded given that any alleged probative value of evidence of insurance is outweighed by the danger of unfair prejudice or may confuse the jury, as in Nigra v. Walsh, 797 A.2d 353, 360 (Pa. Super. 2002).

Due Process Claim Rejected

The Superior Court in Stepanovich ultimately ruled that, even accepting for purposes of argument that the plaintiff may have been entitled to inform the jury of State Farm's participation in the trial, the plaintiff was still not entitled to a new trial, as neither the plaintiff nor the trial court provided any legal support for the finding of a due process violation in this regard was per se prejudicial.

Accordingly, it was held that the failure to identify State Farm as a defendant at trial, in and of itself, was not reversible error that would require the granting of a new trial.

In her concurring and dissenting opinion in Stepanovich, President Judge Kate Ford Elliott joined in the majority's reasoning that Rule 411's prohibition against the mentioning of liability insurance was inapplicable in this UIM context.

However, Ford Elliott reasoned that it was the trial court judge who was the one who sat through and witnessed the trial proceedings firsthand and who had thereby determined that the double-teaming of the plaintiff by the defense counsel was prejudicial. Ford Elliott felt that this exercise of discretion by the trial court judge should not be disturbed and that his decision to allow for a new trial should have, therefore, been affirmed.

An Unclear Precedent

At least two things can be gleaned from a reading of the decision in Stepanovich.

First, Stepanovich clearly supports the proposition that Rule 411, which precludes the referencing of liability insurance at trial, cannot be relied upon to support an argument that references to UIM insurance should be precluded.

Secondly, the Stepanovich decision stands for the proposition that the failure to identify a UIM carrier as a defendant at trial is not, in and of itself, prejudicial or reversible error that would require the granting of a new trial. As such, the issue of how to handle the UIM carrier defendant at a post-Koken trial still, unfortunately, remains somewhat unclear.

The Other End of the Pendulum

A recent decision at the opposite end of the spectrum finding that essentially any and all insurance information should be allowed in a post-Koken case on all of the issues presented is U.S. District Judge James M. Munley for the Middle District of Pennsylvania's decision in the case of Noone v. Progressive Direct Insurance, PICS No. 13-1220 (M.D.Pa. May 28, 2013 Munley, J.).

In Noone, the court denied an insurance carrier's motion to preclude at trial evidence of (1) the amount of premiums paid by the plaintiff for the UIM policy, (2) the amount of the limits of UIM coverage available, (3) the amount of the tortfeasor's third-party liability coverage and (4) the amount received by the plaintiff from the tortfeasor.

Munley felt that such evidence was not "overly prejudicial" and, even as mere background information, should be allowed to assist the jury in evaluating the breach-of-contract claim against the UIM carrier defendant in a post-Koken trial.

More Appellate Guidance Desired

Thus, the central issue of a post-Koken trial—how to handle the mentioning or silence on insurance issues and parties—unfortunately remains somewhat unsettled. While the Stepanovich decision appears to answer some questions, it still leaves others open, and fails to provide the concrete guidance that the trial court bench and bar craves in the brave new world of Pennsylvania automobile law litigation. 

Daniel E. Cummins is a partner and civil litigator with the Scranton, Pa., law firm of Foley Comerford & Cummins. His civil litigation blog, Tort Talk, may be viewed at www.TortTalk.com.

Summary Judgment Granted to Mall in Criminal Assault/Premises Liability Claim

In a recent Lackawanna County decision by Senior Judge Richard Saxton in the case of Young v. Prizm Asset Management Company, No. 2010-CV-8445 (C.P. Lacka. Co. Nov. 4, 2013, Saxton, J), the court granted summary judgment in favor of the Defendant landowner in a case in which the Plaintiff alleged personal injuries as a result of a criminal assault upon the Plaintiff in the parking garage of the Steamtown Mall in Scranton, Pennsylvania.  

According to the Opinion, the Plaintiff, was an employee of a store in the mall and was reporting to work during the afternoon of February 6, 2009, when she was attacked by an unknown, unidentified assailant, who is alleged to have attempted to steal her car.   The assault left the Plaintiff with various injuries for which she alleged that the Steamtown Mall was liable.

After the completion of discovery, the Steamtown Mall filed a Motion for Summary Judgment.   The mall argued that it did not breach any duty to the Plaintiff by allegedly failing to ensure her safety from an unanticipated criminal assault in an area open to the general public and that no act or omission on behalf of the mall was the cause of the Plaintiff’s injuries.  

In its ruling granting the motion, the court relied, in part, on the Restatement (Second) of Torts, §344 which covers liability for a possessor of land who holds a property open to the public for physical harm caused by intentional harmful acts of the third persons.   The court noted that, under the Restatement, a possessor of land is not an “insurer” of safety, but does have a duty to exercise “reasonable care” in affording protection for its business invitees.  

However, under the Restatement, the duty upon the landowner is only created where the landowner knows, or has reason to know that the acts of a third person are occurring or are about to occur which are likely to endanger the visitors safety.   Under this standard, the court was required to determine, as a matter of law, if the landowner knew or should have known that this criminal activity was likely.  

The Steamtown Mall asserted that the assault upon the Plaintiff was the first, and only, such assault of this kind to occur in its history.  

After reviewing the records before it, the Court ultimately ruled that there was no evidence to establish a genuine question of material fact as to any alleged duty owed or breached by the Steamtown Mall.  As such, the summary judgment motion was granted.  

Anyone wishing to review this Opinion in the Young case may click this LINK.. 

 I send thanks to Attorney Daniel D. Stofko, Esquire and David Heisler, Esquire of the Scranton, Pennsylvania office of the law firm of Cipriani and Werner, P.C. for bringing this case to my attention. 

Corrected LINK To "Bad-Faith Setup" Defense Decision

Several readers noted difficulty with yesterday's Link to the "Bad-Faith Setup" affirmative defense decision in the case of Shannon v. New York Central Ins. Co. by Judge Conaboy of the Federal Middle District Court of Pennsylvania.

I apologize for any inconvenience in that regard and note that I have fixed the link.  You can get to an online copy of the Shannon decision HERE. 

Insurance Company's "Bad-Faith Setup" Affirmative Defense Recognized by Pennsylvania Federal Court as a Valid Pleading

According to a December 2, 2013 article in The Legal Intelligencer by Zack Needles entitled "Judge Allows Insurer's 'Bad-Faith Setup' Defense," Federal Middle District Judge Richard P. Conaboy issued a ruling in the case of Shannon v. New York Central Mut. Ins. Co., No. 3:13-CV-1432 (M.D.Pa. Nov. 20, 2013 Conaboy, J.), allowing an insurance company defendant in a bad faith case to move beyond the pleadings stage with its affirmative defense alleging the attorneys for the plaintiff in the underlying automobile accident litigation purposefully orchestrated a “bad-faith setup” in an attempt to garner a punitive damages award.

According to the Opinion, the insurance company defendant "define[d] this 'bad faith set-up' as 'a quick settlement demand, followed by a quick closing of the window before important information is provided so that any subsequent limits offers by the insurer are bemoaned as too late.'”

This case came before the court, in part, by way of a motion by the Plaintiff to strike certain allegations from Paragraph 120 of the carrier's Answer and Affirmative Defenses in the bad faith action.

More specifically, New York Central Mutual Insurance Company asserted in Paragraph 120 of its Answer and Affirmative Defenses that plaintiffs counsel in the underlying matter had engaged in a “bad-faith setup” by “making unreasonably early and/or accelerated time limit settlement demands, the actual goal of which was to make compliance with such demands impossible” and by “refusing to accept offers of the policy limits, making settlement of the underlying claim impossible.”

As also pointed out by Mr. Needle in his article in The Legal Intelligencer, the insurance company also averred in Paragraph 120 that the plaintiffs counsel in the underlying car accident case made settlement demands beyond the maximum allowable contractual policy limit in an attempt to create “a pre-textual settlement demand which the defendant could not possibly satisfy consistent with its insuring obligation(s), and which the defendant was not required to satisfy, under the terms of the insuring agreement."

  The carrier also asserted as part of its "bad-faith setup" defense noted in Paragraph 120 of its Answer and Affirmative Defenses that plaintiffs counsel attempted to “take unfair advantage of claims representatives through the use of intimidation and threat” and failed to provide records, evidence and other documentation that would have allowed the insurer to evaluate the plaintiff’s injury. 

In their motion to strike Paragraph 120, the plaintiff argued that the allegations contained therein constituted “scandalous and defamatory allegations” and further argued that such assertions were “inappropriate defenses not contemplated by Federal Rule of Civil Procedure 8(c).”

In his Memorandum Opinion, Judge Conaboy rejected these contentions of the Plaintiff, noting that Rule 8(c) states that a party must set forth affirmative defenses along with “‘any other matter constituting an avoidance or affirmative defense.’”

In his ruling, Judge Conaboy stated, “The court finds that, for the most part, the allegations contained in Paragraph 120 would, if proven, assist in establishing an ‘avoidance’ under the terms of Rule 8 (c).” 

While the court allowed the "bad-faith setup" defense to proceed beyond the pleadings stage in this federal court case, the judge did also state, in a footnote, that the insurance company defendant failed to cite any Pennsylvania appellate case law confirming the existence of a “bad-faith setup” defense was valid or could ultimately prevail in the litigation.

Notably, the court did also strike portions of Paragraph 120 in which the insurance company defendant generally asserted, without specific citation to any statutes or criminal code provisions, that the underlying plaintiff's attorney's actions amounted to violations of unspecified state and federal criminal statutes.

Anyone wishing to review Judge Conaboy's Memorandum Opinion may click this LINK.

The actual Order is a separate document which I was unable to locate a link to online.

Judge Mannion of Middle District Precludes Bad Faith Expert As "Unnecessary"

In his recent Opinion in the case of Scott v. GEICO, No. 3:11-CV-1790 (M.D. Pa. Nov. 15, 2013 Mannion, J.), Judge Malachy E. Mannion of the United States District Court of the Middle District of Pennsylvania addressed a series of Motions In Limine filed the parties to preclude the introduction of various pieces of evidence at a bad faith trial.  

More specifically, GEICO filed Motions In Limine to preclude the Plaintiff’s bad faith expert witness from testifying, to preclude anticipated new testimony, to preclude evidence of alleged punitive damages, attorneys’ fees, costs, interest, and GEICO’s net worth, to preclude evidence of the arbitration award and post-arbitration memorandum, and to preclude evidence of claimed activity during and after the arbitration.  

The Plaintiff filed a Motion In Limine to preclude any reference to settlement negotiations that occurred after the arbitration award.   The court noted that the Defendant filed a Certificate of Concurrence with regard to the Plaintiff’s motion and, as such, the Plaintiff’s motion was granted.  

With respect to the issues raised by the defense, the court noted that, although the Plaintiff did not concur with the Defendant’s Motion to Preclude Claim Activity that occurred during and after the arbitration, the Plaintiff did not file a Brief in Opposition.  As such, that particular motion was deemed to be unopposed pursuant to the Middle District of Pennsylvania local rule 7.6 and was, therefore, granted.  

Judge Malachy E. Mannion
Federal Middle District Court

Significantly, with respect to the remaining Motions In Limine, Judge Mannion granted the Defendant’s Motion In Limine to preclude the Plaintiff’s bad faith expert witness.   

After reviewing the legal precedent on this issue from both the federal and state courts of Pennsylvania, including the recent cases of Smith v. Allstate Insurance Company and Schifino v. GEICO (both out of the Western District of Pennsylvania), Judge Mannion followed those cases and concluded that a bad faith expert was “unnecessary” as a “reasonable juror is capable of determining what the Defendant [insurance company] knew, how the claim was evaluated, and whether, in light of that information, the Defendant’s actions constituted bad faith.”  See Op. at 8-9.  

Also of note was the court's additional granting of the Defendant’s Motion In Limine to preclude the introduction into evidence of the arbitration award and post-arbitration memorandum.  However, the court denied that motion in part with respect to the introduction of the Defendant carrier's pain and suffering valuation of $219,000.00 contained in its arbitration memorandum as that information was relevant to the question of whether the carrier's previous, lower offers amounted to bad faith conduct.  

Anyone desiring a copy of this Opinion may click this LINK.

To review the Tort Talk post with Links to the Schifino case and the Smith v. Allstate case, click HERE.

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this Scott case to my attention.  

Is Tort Talk Worthy of Being on ABA Journal's Blawg 100 List?

The ABA Journal just issued its Annual Blawg 100 in its most recent edition but, unfortunately, Tort Talk was not selected by the panel of judges to be included in its initial list even though it made the cut last year.

However, according to the ABA's website, there is what the magazine calls a Blawg Amici aspect to the selection process. These friend-of-the-blawg submissions, or votes, are short testimonials from fans in support of particular blogs.

If you wish to nominate Tort Talk (www.TortTalk.com) in this regard, please use this LINK.  I note that, in order to avoid voting irregularities, the ABA Journal does require voters to register (at no charge) to its website in order to vote.  I have read that, all you have to do is enter a username, email address, and password to register, and submit a write-in vote for Tort Talk.

If you have any trouble, click HERE for the "Contact Us" page to send an email to the magazine for assistance.

I THANK YOU VERY MUCH for your time and consideration in this regard.

BLACK FRIDAY TIPS FROM TORT TALK

Here's a LINK to a recent article of mine entitled "Holiday Book Gift-Giving for Lawyers" (originally entitled "'Hone' for the Holidays") that was recently published in the Pennsylvania Lawyer magazine providing suggestions for holiday gifts for lawyers in the form of a variety of book suggestions to assist attorneys in honing their lawyering and people skills, or for otherwise reading for enjoyment.