Judge Mazzoni of Lackawanna County Denies Motion for Summary Judgment in Auto Law Bad Faith Claim

In his recent Opinion in the case of Kearney v. Travelers Insurance Company and the St. Paul Fire and Marine Insurance Company, No. 2010-CV-8801 (C.P. Lacka. Co. Nov. 13, 2013 Mazzoni, J.), Judge Robert A. Mazzoni of the Lackawanna County Court of Common Pleas denied the Defendants’ Motion for Summary Judgment in a bad faith claim pursued under 42 Pa. C.S.A. §8371 and arising out of the handling of the Plaintiff’s underinsured motorist claim. 

Judge Robert A. Mazzoni
Lackawanna County

According to the Opinion, after settling his third party claim in this tractor trailer accident involving two tractor trailers, the Plaintiff submitted a claim for underinsured motorist benefits to the Defendants.  

In this matter, due to the fact that the carrier could not locate the relevant “signed down” form for the UIM coverage under the policy, the policy limits were asserted to be $1million in coverage rather than $35,000.00.  

Thereafter, the Plaintiff continued to provide the carrier with medical documentation in support of the claims presented, including several IME reports that were generated during the litigation involving the third party tortfeasor.  The Plaintiff also underwent a Statement Under Oath.   According to the court's Opinion in Kearney, at some point during the litigation, the carrier’s claims representative authorized its defense counsel to communicate to Plaintiff’s attorney a settlement offer of $200,000.00.

However, this offer was never made because, in part, an argument was raised by the UIM defense counsel that the third party Release executed by the Plaintiff constituted a General Release which had the effect of releasing the UIM carrier as well.   Upon receiving this opinion of the defense counsel, the claims representative for the Defendant UIM carrier directed the defense attorney to hold off on any settlement offers.  

The parties thereafter exchanged legal arguments through correspondence over the parameters of the Release and over whether the Court or a panel of arbitrators had the authority to resolve the dispute. 

Judge Mazzoni outlined in detail in his Kearney decision the extent to which the issues of the scope of the Release and the jurisdiction of the arbitration panel to decide the case was litigated by the parties before the Arbitration panel, in the Lackawanna County Court of Common Pleas ,and up to the Superior Court and back again, as well as in the Federal District Court for the Middle District Court of Pennsylvania. 

After the Plaintiff ultimately prevailed in all of these separate court actions with repeated decisions that the third party Release did not bar the UIM claim, that the UIM Arbitration Panel had the authority to rule upon that issue, and that the UIM Arbitration award should be confirmed, the UIM carrier then proceeded to pay the Plaintiff the full amount of the net arbitration award together with interest.

The Plaintiff followed that payment with this breach of contract and bad faith action.   After the bad faith action proceeded through discovery, the Defendant carrier filed a Motion for Summary Judgment.

In his Opinion, Judge Mazzoni provided thorough review of the current status of bad faith law in Pennsylvania.  After applying that law to the case presented, the court denied the summary judgment motion.  

In his Opinion, Judge Mazzoni noted that a significant part of the court’s analysis in denying the motion for summary judgment involved the issues surrounding the carrier’s repeated raising of the legal challenges of the scope of the Release and jurisdiction of the arbitration panel, the timing thereof, and whose decision (defense counsel vs. claims representative) it was to proceed with such arguments.

Judge Mazzoni found that issues of fact remained on the matters presented such that a trier of fact could conclude that the carrier acted in bad faith by raising allegedly patently inapplicable legal issues which were not supported of in law or in fact and which allegedly served no purpose but to delay the ultimate resolution of the claim. 

The court also noted that, despite the carrier’s claim of insufficient medical information, the Plaintiff claimed that, from the first medical records submission by the Plaintiff to the carrier, it took the carrier approximately 18 months to communicate a formal settlement offer.  

Accordingly, based upon his analysis and after reviewing the record in a light most favorable to the Plaintiff as a non-moving party, Judge Mazzoni found that the there were genuine issues of material fact which precluded the court from granting the UIM carrier’s request for summary judgment.  

 Anyone desiring a copy of this Opinion in the Kearney case may click this  LINK.