Continuing Consolidation of Post-Koken Cases

It has now been about four years since the Pennsylvania Supreme Court handed down its decision in the case of Insurance Federation of Pennsylvania v. Commonwealth, Department of Insurance (Koken), 889 A.2d 550 (Pa. 2005), holding that automobile insurance carriers were not required to include arbitration clauses in their policies for the resolution of underinsured and uninsured motorists claims.

Some carriers that have altered the language of their arbitration clauses to require the consent of both parties to submit the case to arbitration include AMICA, GEICO, Allstate, Harleysville, and Progressive. Carriers that appear to have totally eliminated the arbitration clause altogether include Nationwide, Erie, Liberty Mutual, Donegal, Keystone, and USAA, requiring claims against those carriers to be resolved by way of a lawsuit. State Farm has changed its arbitration clause to specifically mandate that all underinsured and uninsured motorist claims be resolved by way of a lawsuit filed in the court of common pleas.

Now as these cases involving many different types of claims that can arise out of a single car accident (third party, UIM, UM, first party benefits claims, bad faith, etc.) begin to work their way through the court system in Pennsylvania, many novel issues are arising and causing great uncertainty for the courts and the bar.

At least one issue has been clarified. Based on numerous decisions by various courts of common pleas in different counties, it can be safely stated that the trial courts will favor, and allow to stand, the consolidation of UIM claims with any bad faith claims against the involved insurance company along with any claims against the individual defendants who actually caused the accident, all under one lawsuit.

A number of the cases addressing this issue of consolidation of claims have come out of the Lackawanna County and Allegheny County Courts Court of Common Pleas. In Lackawanna County, Judge Carmen Minora allowed for the consolidation of a Koken-type case under Rule 213 in Decker v. Nationwide Insurance Co., 83 Pa.D.&C.4th 375 (2007). Senior Judge Harold A. Thomson, Jr., then sitting in Lackawanna County, offered a similar opinion in the case of Moyer v. Harrigan and Erie Ins. Exchange, No. 1684-CV-2008 (2008). Judge Robert Mazzoni also allowed for a UIM claim to proceed in a consolidated fashion with a bad faith claim in Augustine v. Erie Ins. Exchange,2006-CV-416 (2008).

Similarly, in Allegheny County, consolidation of various first party and third party claims has been approved by Judge Eugene B. Strassburger in Collins v. Zieler and State Farm, No. G.D. 08-014817 (2008) and Judge R. Stanton Wettick in the case of Gunn v. Automobile Ins. Co. of Hartford, PICS No. 08-1266 (2008).

These cases were reviewed in detail in my prior columns that appeared in the Pennsylvania Law Weekly entitled “Here Comes Hurricane Koken,” 31 PLW 1165 (October 27, 2008), and the 2008 year-end review of auto cases in “Negligence is in the Air…and on the Road,” 31 PLW 1380 (December 22, 2008).

Generally speaking, a review of the above cases indicated that the trial courts of Pennsylvania would be allowing for the joinder of these separate claims under Pa.R.C.P. 2229(b) (“Permissive joinder”) or Pa.R.C.P. 213 (“Consolidation….”). The underlying rationale is that since these post-Koken claims arise out of the same “transaction or occurrence,” i.e. the same motor vehicle accident and involve similar factual and legal issues, they should be consolidated under one lawsuit. It also appeared from these cases that the overriding principle of judicial economy, i.e. how the already overburdened trial courts would need to handle the impending glut of these new types of claims, would be an additional driving force influencing the courts’ decisions in the post-Koken cases.

More recently, on April 1, 2009, Judge Gregory H. Chelak of the Pike County Court of Common Pleas, issued a three page Order that reads like an opinion in the case of Jannone v. McCooey and State Farm, 2320-2008-Civil in which he joined the growing number of decisions allowing for the consolidation of the multiple claims available in a post-Koken automobile accident case.

In Jannone, the Plaintiff was involved in a motor vehicle accident in a school parking lot on February 15, 2008. At the time, the Plaintiff was covered by a post-Koken automobile insurance policy issued by State Farm. As noted above, that carrier had done away with the UIM arbitration clause and instead required the filing of a lawsuit for the pursuit of a UIM claim.

As such, the Plaintiff filed suit against the third party tortfeasor and State Farm as the UIM carrier under as single caption in the Pike County Court of Common Pleas. The third party tortfeasor, not wanting to be lumped in the same case with an insurance company in front of a jury, filed preliminary objections.

Judge Chelak quickly dismissed the defendant tortfeasor’s first assertion that the claims asserted against her should be dismissed in that they were “misjoined” with those claims asserted against the UIM carrier. Noting that there did “not appear to be any controlling appellate case law specifically addressing whether claims against a tortfeasor and UIM insurer may be joined in the same cause of action pursuant to Rule 2229(b),” Judge Chelak stated that the joinder of the claims would be allowed to stand under that Rule as the court was satisfied that the causes of actions against the defendant tortfeasor and State Farm arose out of the same occurrence of a single motor vehicle accident and involved similar factual questions. In denying this preliminary objection,, the Jannone court also alluded to the overriding principle of judicial economy and noted that the joinder of these claims would save judicial resources and avoid delays and expenses to the litigants.

Judge Chelak also rejected the alternative argument of the defendant tortfeasor that the claims against her should be dismissed because trying them along with the Plaintiff’s claims against State Farm would be unduly prejudicial as it would require the introduction into evidence of her own insurance policy.

In support of her argument, the defendant tortfeasor cited to Pennsylvania Rule of Evidence 411 which provides that “[e]vidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.”

Judge Chelak used Pa.R.E. 411 to instead support his decision to deny this preliminary objection. Judge Chelak found that, under the scenario presented in this Koken case, the defendant tortfeasor’s insurance policy would be relevant for the separate purpose of showing of State Farm’s liability, since State Farm’s UIM liability was dependent upon the amount of the defendant tortfeasor’s liability coverage. Note that it is settled law under Pennsylvania law, the UIM carrier is entitled to a credit in the amount of the tortfeasor’s liability policy before the UIM carrier has to pay out under its own policy.

According to Judge Chelak, it therefore followed that the defendant tortfeasor’s policy was “not inadmissible pursuant to Pa.R.E. 411” and, as such, he denied the defendant tortfeasor’s preliminary objection that it was unduly prejudicial to allow for this joinder of claims.

With this new area of law developing it is important that the courts and the bar attempt to publicize post-Koken decisions whenever possible. Surely, there have been other similar orders and opinions addressing important post-Koken issues handed down by other courts of common pleas across Pennsylvania that have gone unpublished or have not been otherwise publicized for the benefit of the bar. Perhaps the courts and counsel can bring these cases to the attention of others by submitting copies of the opinions to statewide organizations such as the Pennsylvania Bar Association (PBA), the Pennsylvania Association for the Advancement of Justice (PAAJ), and the Pennsylvania Defense Institute (PDI). In this way, the common law associated with post-Koken cases can be developed in a more uniform and consistent fashion under the doctrine of stare decisis.