Tuesday, May 31, 2011

ARTICLE: The Weathermen of Hurricane Koken

Here's a reprint of my article that appeared in last week's May 24, 2011 Pennsylvania Law Weekly:

The Weathermen of Hurricane Koken

Daniel E. Cummins
The Legal Intelligencer/Pennsylvania Law Weekly
May 24, 2011

Like a Weather Channel weatherman leaning into driving rain and gale force winds while trying to hold onto his microphone and baseball cap and report on the center of a storm, Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas faced the swirling winds of change brought on by Hurricane Koken and, in doing so, brought more clarity to the issue of proper venue in post-Koken cases as well as the issue of whether the claims in these cases should proceed in a consolidated fashion or be severed.

In his April 8 decision in the case of Bingham v. Poswistilo, Nealon issued the most thorough trial court opinion to date on the question of consolidation versus severance of third-party claims and UIM claims in post- Koken Matters.

I note that, in his opinion, Nealon actually cited to my blog, Tort Talk (www.torttalk.com), and its compilation of relevant cases in the Post- Koken Scorecard, as being part of his research on the issues presented.

Judicial Economy Compels Consolidation

In his opinion in Bingham, Nealon noted that, although the Pennsylvania Superior Court came close to addressing the consolidation versus severance issue in the 2011 case of Richner v. McCance, that court addressed a similar issue but did not render a decision on the question presented. As such, there was still no appellate guidance on this recurring question of procedure in post- Koken cases.

After reviewing the essentially even split of authority on the issue across the county courts in Pennsylvania and even the split of authority on the issue that exists within his own county of Lackawanna, Nealon held in Bingham that tort and UIM claims can be joined under Pennsylvania Rule of Civil Procedure 2229(b), pertaining to joinder of claims.

Nealon ruled in favor of consolidation under Rule 2229(b) primarily because (1) both claims arise out of the same occurrence, and (2) both claims involve common questions of fact or law affecting the liabilities of the tortfeasor and UIM insurer.

In so ruling, Nealon also emphasized that Rule 2229(b) does not require the tortfeasor and UIM carrier to be jointly and severally liable in order to be joined in a single lawsuit. Rather, he noted that Rule 2229(b) uses the disjunctive "or" in the phrase "right to relief jointly, severally, separately or in the alternative...." [Emphasis added here]. As such, the fact that the court found the third party tortfeasor and the UIM carriers were not joint tortfeasors did not preclude the joinder of these claims under one caption.

In Bingham, Nealon also raised and reviewed the predicament that allowing for the joinder of these claims may ultimately bring evidence of "insurance" before the jury in violation of Pa.R.E. 411 prohibition against the introduction of such evidence in civil jury trials.

Nealon provided a thorough analysis of how the evidentiary issue has been discussed and handled by other courts, both in the Commonwealth of Pennsylvania and in other jurisdictions. He reviewed the different approaches adopted by other states such as trying the case as a tort case with the UIM insurer removed from the caption, but bound by the verdict. Another possible trial method involved allowing the UIM insurance to be mentioned, but not on the issue of whether the tortfeasor "acted negligently or otherwise wrongfully."

In the opinion, Nealon noted that yet another trial procedure considered was to allow the evidence of insurance to come before the jury under the exception to the rule that allows the jury to consider evidence of insurance when it is being "offered for another purpose" as permitted by Rule 411. In this regard, one possible other purpose for allowing evidence of insurance is not to show that the tortfeasor was insured, but rather to inform and explain to the jury why the UIM carrier was also involved in the trial.

Wisely showing judicial restraint, Nealon noted that he was only faced with preliminary objections to decide and not any evidentiary issues for trial. Accordingly, Nealon decided that it should be the trial judge who could later revisit the issue of the introduction of evidence of insurance closer to the time of trial and determine again, at that time, whether or not the cases should remain consolidated for trial purposes or be severed to avoid the mentioning of "insurance" at trial.

At the preliminary objections stage of the matter before him, Nealon concluded that the better approach was to leave the cases consolidated for at least discovery purposes as a matter of judicial economy and to lessen the burden and expenses on the parties and the court.

Improper Venue Compels Severance

While Nealon ruled that the claims in Bingham could be consolidated under one caption, he ultimately ruled that the cases should be severed under the venue issue presented in the case.

The Bingham case, which was filed in Lackawanna County, involved a motor vehicle accident that occurred in Lehigh County. The tortfeasors were not residents of Lackawanna County and could not be served in Lackawanna County.

However, the plaintiff filed the complaint in Lackawanna County on account of the fact that the plaintiff's UIM policy with Erie Insurance Exchange had a forum selection clause that required the lawsuit to be pursued in the county of the insured's domicile or residence. At the time, the plaintiff resided in Lackawanna County.

Nealon noted that Erie's forum selection clause had been previously upheld as valid by the Pennsylvania Superior Court in the separate case of O'Hara v. First Liberty Ins. Corp. , 984 A.2d 938 (Pa.Super. 2009) appeal denied, 995 A.2d 354 (Pa. 2010).

The plaintiff in Bingham argued that all of the claims could be pursued in Lackawanna County under the venue Rule of Civil Procedure 1006(c)(1) which essentially provides that, where venue was good for one of the defendants, it should be good for all the defendants and the other defendants could therefore be brought to suit in that same county.

However, Nealon emphasized that Pa.R.C.P. 1006(c)(1) only applies in actions "to enforce a joint or joint and several liability." Nealon ruled that, in the context of this post- Koken scenario, since the UIM insurer could never be responsible for the full amount of the jury award, it could not be considered to ever be potentially jointly and severally liable with the tortfeasor(s).

Accordingly, Nealon sustained the venue preliminary objection asserted by the tortfeasor defendants, severed the tort and UIM claims, and transferred the tort action only to Lehigh County and kept the UIM claim in Lackawanna County as per the forum selection clause found in the Erie insurance policy.

An Open Issue Answered

At the end of his opinion, Nealon went on to note that the court took no position as to whether the plaintiff, with the severance of the claims mandated by this decision, may thereafter attempt to reunite his UIM claim in Lackawanna County with the tort claims in Lehigh County pursuant to the different standards applicable under Pa.R.C.P. 213.1(a) and (c), pertaining to "coordination of actions in separate counties."

On the heels of Nealon's opinion, Luzerne County Common Pleas Court Judge Joseph Van Jura coincidentally addressed that very issue of coordination of post- Koken claims in the April 12 opinion in Orsulak v. Penn National Mutual Casualty Insurance Co.

In Orsulak, Van Jura addressed the various factors to be considered on a motion for coordination/petition to transfer venue that was filed by a UIM carrier under Pa. R.C.P. 213.1.

Under Pa. R.C.P. 213.1(a), it is provided that "in actions pending in different counties which involve a common question of law or fact or which arise from the same transactions or occurrence, any party, with notice to all other parties, may file a motion requesting the court in which a complaint was first filed to order coordination of the actions. Any party may file an answer to the motion and the court may hold a hearing."

Pennsylvania Rule of Civil Procedure 213.1(c) sets forth at least six (6) factors to be used by the court in determining whether to order coordination and to determine which location is appropriate for the coordinated proceedings.

Among the factors to be considered are the question of whether the separate cases involve common questions of fact or law, the convenience to the parties, counsel, and witnesses that a coordination may bring, the goals of judicial economy, and the likelihood of settlement of the actions without further litigation should coordination be denied.

Van Jura noted that the primary "basis for the rule is the avoidance of multiple trials and proceedings in these separate actions and the resultant economy to both the parties and the judicial system."

In addition to reviewing the factors noted under Rule 213.1, Van Jura also noted guidance from the explanatory comment to the rule "which explains that the ultimate determination that the court must make is whether coordination is 'a fair and efficient method of adjudicating the controversy.'"

In Orsulak, the plaintiffs' claims arose from a motor vehicle accident that occurred in Monroe County. The plaintiffs filed a writ of summons in Monroe County against the tortfeasors only.

The case in Monroe County sat dormant with a writ only filed while the plaintiffs attempted to resolve their separate but related claims with a worker's compensation carrier and with Penn National Insurance Company as the UIM carrier.

When the claims with the UIM carrier and the worker's compensation carrier could not be resolved, the plaintiffs filed a separate complaint in Luzerne County against Penn National as the UIM carrier alleging post- Koken causes of action for breach of contract in not paying UIM benefits under the policy and bad faith.

Thereafter, the UIM carrier filed its motion for coordination/petition to transfer seeking to have the claim filed against it moved from Luzerne County to Monroe County. The carrier argued that the only apparent connection of the UIM claim and Luzerne County was that plaintiff's attorney's office was located in Luzerne County.

After applying the six factors under Rule 213.1(c), along with the guidance from the explanatory comment, Van Jura ruled that the motion for coordination should be granted and that venue of the Luzerne County UIM case should be transferred to Monroe County.

Van Jura noted that Luzerne County had no, or virtually no, connection with, the issues involved, the facts or site of the accident in question, the potential witnesses, or other sources of proof.

Van Jura also noted that the plaintiffs resided in Northampton County and that their residence was less than 33 driving miles from the Monroe County Courthouse, but over 61 driving miles to the Luzerne County Courthouse.

The court was also influenced by the fact that both the Luzerne County case and the Monroe County case were in their seminal stages and that coordination would, therefore, not result in any unreasonable delay, expense, or prejudice to any party in the action. Van Jura additionally pointed to the benefits of judicial economy that would result from a coordination of the actions together in Monroe County, according to the opinion.

Thus, based upon Van Jura's decision in Orsulak it appears that, where a post- Koken claim has been severed into two separate actions and split between two separate counties due to venue issues as in the Bingham case decided by Nealon, the potential exists that the cases could be reunited again thereafter under the coordination of actions in separate counties rule of civil procedure.   •

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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