Friday, July 10, 2015

Federal Middle District Judge Conaboy Tackles Pre-Trial Motions in Bad Faith UIM Matter

In his recent post-Koken decision addressing numerous Motions In Limine filed by both parties in a UIM/Bad Faith case in the matter of Clemens v. New York Central Mutual Fire Insurance Company, No. 3:13-cv-2447 (M.D. Pa. June 15, 2015 Conaboy, J.), Judge Richard P. Conaboy of the Federal Middle District Court of Pennsylvania issued a number of decisions of note which are set forth below.

In the dispute over whether Pennsylvania law or New York law should apply in a case where the Defendant is a New York company, the insured was a New York resident, the insurance contract was delivered in New York, but where the accident occurred in Pennsylvania and the injured party resided in Pennsylvania at the time of the accident, the Court ruled that, due to the significant state interest to protect its resident insureds, Pennsylvania’s interest in the outcome of this lawsuit was superior to that of New York such that Pennsylvania law would be applied.  

On a separate issue, Judge Conaboy ruled that, since the New York insurance company Defendant was not licensed to do business in the Commonwealth of Pennsylvania and did not write insurance contracts in Pennsylvania, the Defendant’s Motion to preclude references to Pennsylvania insurance regulations and the Unfair Insurance Practices Act was granted.

In this bad faith action, the Court denied the Defendant’s Motion to Preclude Plaintiffs from introducing evidence of insurance reserves during trial.  The Court accepted the Plaintiff’s argument that the amount set aside in reserves by the carrier necessarily reflected the company’s assessment of the potential worth of the claim and, to the extent the reserves were different from the amount offered in settlement, such information was germane to an analysis of whether or not the company acted in bad faith in pre-trial settlement negotiations.   Judge Conaboy did also noted that the Defendant would be able to produce testimony explaining the difference between its reserve and its settlement offer in this case if the Defendant deemed that necessary.  

In another ruling, the Court granted the Defendant’s Motion In Limine regarding the relevant timeframe to be considered by the jury with respect to any bad faith allegations.  In this regard, the Court agreed with the defense position that bad faith may not be predicated on an insurance company’s actions or lack of actions before being notified of a claim.   The Court noted that the Plaintiff’s attorney’s previous reference to a “potential… claim” was insufficient to trigger any duty on the part of the Defendant carrier to act as of the time of that statement in a letter from Plaintiff's attorney.

However, the Court noted that the law did allow for the introduction of evidence of an insured’s alleged bad faith during the pendency of the underlying lawsuit involving the injury claim.   As such, Judge Conaboy allowed evidence of alleged bad faith conduct to include the time period that the underlying personal injury claim was pending and up to the time that underlying case was settled.  

The Court granted the Defendant’s Motion seeking to preclude the Plaintiff from introducing evidence regarding the existence or the amount of any settlement offers the Defendant made during the course of the underlying matter.  

The Court also granted the Defendant insurance company’s Motion to preclude the Plaintiff from introducing into evidence claims by other nonparties against the same insurance company in other unrelated matters.  

Judge Richard P. Conaboy
Federal Middle District of PA
Judge Conaboy denied the Defendant’s Motion to preclude the Plaintiff’s expert from testifying at trial.  The court rejected the defense argument that the bad faith claim was not complex and that jurors did not require the benefit of any specialized knowledge in order to evaluate the bad faith claim presented.   Judge Conaboy denied this defense motion, noting his belief that an expert’s testimony could be helpful to the jury in their determination of whether or not the Defendant insurance company acted in bad faith towards the Plaintiff.   Accordingly, the Plaintiff’s expert was allowed to testify regarding industries standings and claims handling practices.  

The Court did granted the Defendant’s separate motion to preclude Plaintiffs’ attorneys from testifying during the course of the trial.  In ruling in this regard, the Court noted that, typically, a law firm that did not participate in the underlying matter, which gave rise to the alleged bad faith claim was also employed by the Plaintiff’s attorney from the underlying matter to prosecute the bad faith claims.   The Court noted that this practice avoids the confusion inherent and simultaneously having a Plaintiff’s attorney act as both a witness and an advocate.   Judge Conaboy noted the courts' “strong disinclination to permit Plaintiffs’ attorneys to render testimony in this matter and its expectation that counsel for both parties will be able to stipulate to the authenticity of Plaintiffs’ proposed documentary evidence.”

The Court granted Plaintiff’s Motion In Limine to preclude the Defendant from introducing evidence regarding the use of seat belts, i.e., that the injured party Plaintiff was not wearing a seat belt at the time of the accident.  Judge Conaboy noted that, under 75 Pa. C.S.A. §4581, and Pennsylvania law, a violation of the seat belt statute in Pennsylvania may not be used as evidence in the trial of a civil action.  

Judge Conaboy also noted that, should the Plaintiff move forward on an allegation of excess delay on the part of the Defendants as constituting bad faith, the Defendants would be allowed to introduce evidence regarding the amounts the Plaintiff demanded in settlement during negotiations.   In so ruling, the Court referred to F.R.E. 408(b) which permits the introduction of evidence regarding settlement discussions to “negate a contention of undue delay.”   The Court held a ruling on the Plaintiff’s motion in this regard in abeyance pending the presentation of evidence on these issues at trial. 

The Court also denied the Plaintiff ‘s Motion to preclude testimony or other evidence at trial pertaining to the Plaintiff’s conduct or the Plaintiff’s conduct of Plaintiff’s counsel.  The defense argued in this regard that any alleged actions by the Plaintiff or Plaintiff’s counsel that allegedly unreasonably delayed the evaluation of a UIM claim are relevant to the question of whether an insurance company acted in bad faith in resolving such a claim.   As such, the Court denied the Plaintiff’s Motion in this regard.  

The Court also granted, in part, the Defendant’s Motion In Limine to preclude the Plaintiff’s from introducing any evidence concerning any federal court mediation that was completed in the matter.  The Court limited its decision to the conduct of the parties in the presence of the mediator only.   As such, any negotiations that preceded or post-dated the mediation session were found to be relevant to the question of whether or not the Defendant alleged unreasonably delayed the negotiation of the UIM claim and thereby allegedly bargaining bad faith with its insured such that this type of information was deemed to be potentially admissible at trial.  


I send thanks to Attorney Michael Pisanchyn of the Pisanchyn Law Firm in Scranton, PA for bringing this decision to my attention.


Anyone desiring a copy of this decision may contact me at  



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