Tuesday, February 1, 2011

ARTICLE: Are the Winds of Hurricane Koken Dying Down?

The following article of mine appeared last week in the January 25, 2011 edition of The Pennsylvania Law Weekly. (c) 2010 Incisive Media US Properties, LLC.

Insurance Law

Are the Winds of Hurricane Koken Dying Down?
Superior Court touches on consolidation verse severance issue in post-Koken cases


Daniel E. Cummins
The Legal Intelligencer/Pennsylvania Law Weekly
January 25, 2011

As previously analyzed in this column, the new era of automobile accident litigation, dubbed "Hurricane Koken " due to the turbulent and uncertain path of the law and procedure in this regard, has continued to be guided by a split of authority among the various common pleas courts across Pennsylvania on how to properly handle such claims.

Now, with the Superior Court's Jan. 6 decision in Richner v. McCance , the sun appears to be peaking from behind the clouds.

The Superior Court specifically and emphatically stated in Richner that they were not in any way addressing the consolidation vs. severance issue found in the typical post- Koken case combining a tort claim and a UIM claim in a single lawsuit. Yet, the court's analysis of the issue in the context of a tort claim, combined with a request for declaratory judgment against the UIM carrier on a coverage question, sheds light on how the Superior Court may address the issue in the tort/UIM benefits claim scenarios in the future.

Origin of The Issue

A review of the history of post- Koken jurisprudence reveals that it has been about five years since the automobile accident litigation landscape was changed by a 2005 state Supreme Court case, Insurance Federation of Pennsylvania v. Commonwealth, Department of Insurance (Koken).

In Koken , the high court ruled for the first time that automobile insurance carriers were not required to include arbitration clauses in their policies for the resolution of disputed uninsured and underinsured motorist benefits claims. Accordingly, many carriers promptly rid their policies of the arbitration clauses, thereby requiring UM/UIM claims to instead be litigated as a typical automobile accident lawsuit in the common pleas court.

Following the basic rule that all matters arising out of a single occurrence, i.e., a motor vehicle accident, should be litigated in one matter, practitioners began to file lawsuits that combined the tort claim against the allegedly negligent driver with the contractual claim against the plaintiff's insurance carrier for UIM benefits in one lawsuit under a single caption.

The tortfeasor defendants in these matters found these new lawsuits objectionable, because it put them in the tough spot of having to go to a jury trial with an insurance company as a co-defendant.

In some cases, the insurance companies have objected to this new form of lawsuit, particularly when they were lumped in the same cases with a tortfeasor who was driving under the influence of drugs or alcohol and who, therefore, faced a claim for punitive damages.

As a result, one of the first issues that repeatedly came to the attention of the trial courts, typically by way of preliminary objections, was whether these new lawsuits should be allowed to proceed in a consolidated fashion.

Current Majority Rule

Presently, there are at least 34 trial court decisions from across the state in which the courts have ruled, or suggested they would rule, in favor of keeping these claims together under one caption and proceeding to a jury trial in a consolidated fashion. This is the majority rule so far among trial court decisions.

These initial decisions were handed down in Lackawanna, Luzerne, Pike, Lehigh, Northampton, Montgomery Dauphin, Clinton, Beaver, Erie, Lawrence, Allegheny, Philadelphia and Cambria counties.

The consistent rationale of these consolidation decisions is that the tort claims against the defendant motorist and the contractual claim for UIM benefits against the insurance company arise out of the same "transaction or occurrence," i.e., the same motor vehicle accident. Therefore, the courts have ruled, these claims should be tried together as a means of furthering the interests of judicial economy for the already overburdened trial court system.

Another factor noted is the avoidance of piecemeal litigation with the possibility of inconsistent verdicts.

Some of the trial court decisions in favor of consolidating post- Koken claims have referenced the permissive joinder of actions provision found in the Pa.R.C.P. 2229. Other courts have relied upon Pa.R.C.P. 213(a), which allows for the consolidation of actions arising out of the same occurrence.

Minority Rule

There are currently at least 20 trial court decisions from around Pennsylvania that have held post- Koken claims filed under a single caption should be severed into two separate lawsuits.

These decisions have come from Lackawanna, Butler, Washington, York, Adams, Lancaster, Schuylkill, Delaware, Montgomery, Mercer, Philadelphia and Allegheny counties.

A comparison of the lists of trial court decisions in favor of severance with the above list of those cases in favor of consolidation show some overlap, arguably revealing a split of authority on the issue even within certain counties, such as Lackawanna, Montgomery, Philadelphia and Allegheny.

The severance decisions have been primarily supported with the rationale that evidence of "insurance" is not admissible in personal injury civil litigation matters under Pa.R.E. 411. These courts have also referred Pa.R.E. 403, which allows a trial court to preclude relevant evidence "if its probative value is outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury."

In light of these rules, the courts favoring severance have held that a third party tortfeasor defendant may be unduly prejudiced by having the insurance company as a co-defendant in front of a jury.

Some of the courts in favor of severance have also noted that the act of severing and staying the UM/UIM claim pending the resolution of the third party liability claim may further the interest of judicial economy. This is particularly so in the event that a jury comes back with a verdict that is below the tortfeasor's liability limits, which would negate any UIM claim. In such cases, there would have been no need to include the UIM carrier in the litigation in the first place.

To date, there have been no appellate decisions to alleviate this split of authority.

Some Guidance

Then, along comes Richner.

The Allegheny County Court of Common Pleas ruled in Richner that the third party claim against the defendant driver and the separate declaratory judgment action on a UIM coverage issue should be allowed to proceed in a consolidated fashion. The trial court did leave the door open to bifurcate the case at time of trial, if necessary.

The Richner decision was appealed and, on Jan. 6, 2010, the Superior Court issued a decision reversing the trial court's ruling and held, instead, that the injured party could not join his tort claim with a count in the complaint for a declaratory judgment raising the coverage question surrounding the applicability of an exclusion in the UIM carrier's policy.

Interestingly, the Superior Court applied Pa.R.C.P. 2229(b), which pertains to the permissible joinder of actions, and found that the requirements of that rule were not met to allow for a joinder of a tort claim with a declaratory judgment action on a coverage question.

More specifically, the court found that, although the tort allegations and the contractual question pertaining to coverage both essentially arose out of the same car accident, the liabilities of the respective defendants arose from different circumstances, i.e., one in tort and the other in contract law.

The court also found that the questions of law at issue on the questions presented were not common to both actions. As such, the second requirement of Pa.R.C.P. 2229(b), i.e., common questions of law or fact, was not met to allow for a joinder of a tort claim with a declaratory judgment request on a coverage issue.

In so ruling, the Superior Court rejected the trial court's reliance on post- Koken cases ruling in favor of the consolidation of tort claims and claims for UIM benefits under Pa.R.C.P. 2229(b), as the analysis in those types of cases was "inapposite" to the issue in this case involving the separate and different question of the combination of a tort claim with a request for a declaratory judgment in response to a coverage question.

In that same footnote, the Superior Court also stated:

"We emphasize that we are not here deciding the propriety of the joinder of third party liability claims with post-Koken UIM benefit claims."

Despite this proviso by the Superior Court, this Richner decision is the closest the court has come to addressing the all-important consolidation vs. severance issue in post- Koken litigation and this opinion is sure to be referenced if that issue is ever squarely before the Superior Court.

As such, the Superior Court's decision in Richner appears to be a must-read for practitioners handling post- Koken automobile litigation matters.

On the Horizon

On a related note, while the Superior Court has not squarely addressed the consolidation vs. severance issue in a true post-Koken case to date, the court is poised to tackle another important post- Koken issue pertaining to the proper venue for these types of actions.

The Luzerne County Common Pleas Court case W issinger v. Brady and the Philadelphia Common Pleas Court case Sehl v. Neff are both in the briefing phase at the Superior Court. They are still awaiting argument dates.

The central issue in each of those cases involves proper venue for post- Koken litigation.

The trial courts in each case rejected the plaintiffs' contentions that such lawsuits can be filed in any county across Pennsylvania, regardless of where the accident happened or where the tortfeasor defendant resided, based on the fact that the insurance carriers in those cases conduct business in every county.

It remains to be seen whether the trial court decisions in these cases will be upheld. One thing is for sure — the venue issue is in a position to be finally clarified by the appellate courts. Unfortunately, the consolidation vs. severance question is not raised in either the Wissinger or the Sehl appeals.

Further guidance on that issue will have to await another day.  

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

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