Sunday, June 5, 2011

Latest Bad Faith Decision from the Pennsylvania Superior Court

The latest Opinion from the Pennsylvania Superior Court in the context of bad faith litigation is the case of Rhodes v. USAA Cas. Ins. Co., 2011 WL 1844148 (Pa. Super. May 17, 2011, Ford Elliot, J.). This matter involved a UIM claim pursued by an injured party against USAA with regard to a motor vehicle accident that occurred on July of 2000.

In Rhodes, the injured party asserted a total value on the claim presented as being $235,000.00. The third party carrier and another UIM carrier had tendered their limits (the other UIM carrier’s limits was $15,000.00; the tortfeasor’s limits were $50,000.00).

Based upon the total value placed on the claim, the injured party offered to settle with USAA for $175,000.00. In response, USAA offered $5,000.00 to settle. The injured party claimed that this offer was not made in good faith and requested arbitration. However, at some point thereafter, USAA eventually did agree to settle the claim for $175,000.00 in December of 2003.
The injured party later filed suit against USAA for breach of contract for allegedly failing to act in good faith in the handling of the UIM claim.

In its decision in Rhodes, the Pennsylvania Superior Court addressed the discovery issue involving the efforts of USAA to secure the Plaintiff’s attorney’s files relevant to the claim presented by the Plaintiff against the another UIM carrier relevant to the same accident and claims of injury.

The trial court in Rhodes had touched upon the notion of "reverse bad faith" in its Opinion by noting that "[i]n the context of a bad faith insurance claim, the conduct of the plaintiffs and the possibility that their actions constituted bad faith is relevant because the possibility exists that the defendant acted in reliance on information provided to it by the plaintiffs that was inaccurate as a result of bad faith on the plaintiffs' part."  Under this rationale, the trial court granted USAA's motion to compel the discovery desired.  This appeal followed.

The Superior Court reversed and emphasized that there were no allegations of bad faith or lack of cooperation with regards to the conduct of the insured asserted in this matter.  Therefore, the only issue was the reasonableness of USAA’s settlement offers and whether it acted in bad faith in refusing the meet the injured party’s settlement demand sooner. As such, the Court rejected USAA's attempt to "turn the tables" and shift the focus to the injured party's conduct.  The Rhodes court ultimately ruled that USAA failed to demonstrate how the files of the Plaintiff’s attorney in the related UIM litigation would be relevant to this bad faith litigation.

Consequently, the trial court order compelling discovery of the file of injured party's attorney regarding the related UIM claim was reversed.

The Rhodes v. USAA decision may be viewed online here:

Source:  Case Digests of May 24, 2011 Pennsylvania Law Weekly.

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