Tuesday, July 7, 2015

Erie County Trial Court Severs and Stays UIM/Bad Faith Counterclaims in a Coverage Declaratory Judgment Action Filed by Carrier

In a recent Erie County Court of Common Pleas decision in the case of Erie Insurance Exchange v. Porter, No. 10327 -  2015 (C.P. Erie. Co. June 11, 2015 Cunningham, J.), Judge William R. Cunningham granted the carrier's request to sever and stay UIM and Bad Faith Claims from a Declaratory Judgment action on coverage issues filed by the carrier.

More specifically, the carrier started the litigation by filing a Declaratory Judgment action raising certain coverage issues for the carrier's consideration.  The injured party responded by filing counterclaims asserting claims for UIM benefits and Bad Faith damages.  The carrier filed Preliminary Objections seeking to sever and stay the UIM/Bad Faith counterclaims pending the resolution of the coverage issues. 

As stated, the court ruled in favor of the carrier and sustained the Preliminary Objections and severed and stayed the UIM/Bad Faith claims.

In his detailed Order, Judge Cunningham acknowledged the split of authority on this severance issue in the trial court and, in granting the severance and stay reasoned, in part, that to allow discovery to go forth on a bad faith claim that is combined with a UIM claim amounts to a "distinct advantage to the Plaintiff and a detriment to the insurance company."  By severing and staying the UIM/Bad Faith claims from the coverage action, the court believed that neither party would have an unfair advantage in resolving the underlying coverage issues presented.

As the issue was not before the court, Judge Cunningham did not address the separate, more specific issue of severing the UIM/Bad Faith claims and a stay of Bad Faith discovery.

I send thanks to Attorney William C. Wagner of the Erie, PA law firm of Marnen Mioduszewski Bordonaro Wagner & Sinnott, LLC for bringing this case to my attention.

Anyone wishing to review Judge Cunningham's detailed Order in the Erie Ins. v. Porter case may click this LINK.

If you wish to gather more info on other Pennsylvania trial court Opinions on this issue, please consider going to the Tort Talk Blog at www.TortTalk.com, and scrolling down the right hand column to the Link to the POST-KOKEN SCORECARD (Click on the date noted to go to that section of the Blog).

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