Thursday, October 8, 2015

Judge Williamson Reverses Course and Chooses to Stay Bad Faith Discovery in Post-Koken Cases

In follow-up to yesterday's post on Judge Williamson's Monroe County Post-Koken decision in Hakim v. Erie Insurance Exchange, No. 6241-Civil-2013 (C.P. Monroe Co. March 18, 2015, Williamson, J.), in which the court severed UIM and Bad Faith Claims but denied a request for a stay of bad faith discovery, it has been brought to my attention that Judge Williamson issued a discovery Order more recently in the same case on May 8, 2015 in which he reversed, in part, his prior decision.

Judge David J. Williamson
Monroe County
In his more recent May 8, 2015 decision, Judge Williamson noted that, in the previous March 18, 2015 decision he had granted the Plaintiffs' Motion to Compel but reserved ruling on the Plaintiffs' request for the production of the Erie Insurance claims manual pending an in camera review of privileged and confidential information.

The court's more recent May 8, 2015 outlines the court's review of the claims manual.

In his Opinion, Judge Williamson stated that "[t]he Erie Claims Manual is inherently a privileged and confidential document."  Op. at p. 1.

He also noted that while some sections of the Manual may be relevant to the Bad Faith portion of the claim, "[n]one of the sections appear relevant in the breach of contract claims."  Op. at p. 2.

Judge Williamson noted that, while some of the parts of the Claims Manual were relevant to the Bad Faith claims presented, the court was declining to order the release of those portions of the manual while the UIM claim was still pending.

In so ruling, Judge Williamson stated, "We have reexamined our opinion concerning the denial of the stay requested by the Defendant of the bad faith claim, while the breach of contract claim is pending.  Upon further reflection, we determine that a stay of the bad faith claim should be entered until such time as the breach of contract action is concluded."  Op. at p. 2.

Judge Williamson supported his reversal of his prior decision by noting that evidence of the handling of claims is not relevant to the merit of the actual injury claim and that the release of the Claims Manual information would be prejudicial.  The court also noted that it would be improper to allow for the release of the confidential Claims Manual information where it was certainly possible that the Bad Faith claims would never come to fruition pending the results of the breach of contract claim.

The court also supported its decision by noting that the release of confidential and proprietary information would expose the carrier's thoughts and analysis  prior to the breach of contract claim being fully litigated and could be improperly utilized as a bargaining chip in settlement negotiation.

Moreover, the court noted that allowing this discovery would likely lead to more Bad Faith discovery requests, more motions to compel, more motions for protective orders, and more court hearings, all of which would serve to unnecessarily delay the resolution or trial of the breach of contract claims.

Judge Williamson noted that he felt "confident that without this ruling [to stay the bad faith discovery], this matter will continue in the discovery stage with a war of attrition through motions, rather than proceed to court."  This, the court noted, would "be a burden on the court's resources, and will serve to prejudice both litigants."  Op. at p. 3

Accordingly, Judge Williamson entered an Order vacating his prior decision and staying all discovery and action in the Bad Faith claim pending the resolution of the Breach of Contract claim.

Anyone wishing to review this Opinion by Judge Williamson, may click this LINK.

I send thanks to Attorney Domenic Sbrocchi of the Bethlehem, PA law firm of King, Spry, Herman, Freund, & Faul for bringing this case to my attention.  I also send thanks to Attorney Pete Speaker of the Harrisburg, PA law firm of Thomas, Thomas & Hafer for alerting me to this decision as well.

NOTE:  Judge Williamson issued another Opinion along the same lines more recently on October 1, 2015 in the case of Brands v. Erie Ins. Exchange, No. 2604-CIVIL-2015 (C.P. Monroe Oct. 1, 2015 Willamson, J.).  Look for a summary of, and a Link to, that decision here on Tort Talk next week.

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