Wednesday, March 16, 2016

Crawford County Post-Koken Decision In Favor of Consolidaton of Negligence/UIM Claims, But Severance and Stay of Bad Faith Claim

In the case of Lamagna v. Keffer, No. A.D. 2015-630 (C.P. Crawford Co. March 1, 2016 Stevens, J.), Judge Mark D. Stevens of the Crawford County Court of Common Pleas addressed Preliminary Objections filed by all Defendants to a Plaintiff’s Complaint along with a Motion to Sever the negligence claim from UIM claims and a companion Motion to Stay and Sever the Bad Faith Claims.  

In this case, the Plaintiff sued the third party tortfeasor along with his own UIM carrier and asserted bad faith claims against the UIM carrier with respect to their handling of the UIM claim.  

Judge Stevens noted that he was faced with two (2) issues. First, whether the breach of contract action (UIM action) should be severed from the negligence claim.  

The second issue was whether the breach of contract action (UIM action) and/or the third party negligence claim should be severed from the bad faith claim and whether the bad faith claims should then be stayed.  

The court reviewed the first issue, i.e., whether the UIM claim should be severed from the negligence claim, under Pa. R.C.P. 2229(b) which pertains to joinder of actions that arise out of the same transaction, occurrence, or series of transactions or occurrences.   If any common questions or law or fact affecting the liabilities of all such persons would arise in the action.  

Judge Stevens noted that the Pennsylvania Courts of Common Pleas are split on this issue and that he was unaware of any binding authority within the Crawford County Court of Common Pleas that matched the facts of this case.  

To date, there have been no appellate court decision on this issue.  

After comparing and contrasting the Plaintiff’s UIM claim against the third party negligence claims against the alleged tortfeasor, the court declined to sever the UIM claims from the negligence claims during the course of discovery.   The court found no meritorious basis that the Defendants would be prejudice by the claims proceeding together.  

Judge Stevens noted that, should the UIM carrier raise additional defenses in the UIM claim that were contractual in nature and unrelated to the negligence issues against the Defendant driver, the court would reconsider the possibility of a future severance at a later time.  

Judge Stevens also noted that, with this decision in favor of a consolidation of claims, “[t]he question becomes whether the Court can effectively manage the insurance issue before the jury by appropriately grafting the instructions and a verdict slip and controlling the proceedings in a way that does not prejudice any of the parties but allows the fact finder to make the appropriate, fundamental decisions necessary to dispose of the common questions of liability and damages.”  

The court found that, at this early stage of the matter, it appeared that discovery could be effectively managed by allowing the third party and contract claims to proceed together as no prejudice existed on the service with respect to the discovery phase of the matter.   Judge Stevens was careful to note in his Opinion that he would address the issue of how to proceed at trial, including whether or not the case should be tried in a consolidated fashion, at a later time, if necessary.  

On the separate issue of whether the bad faith claims should be severed from the UIM claim in the underlying negligence claims, Judge Stevens granted the defense Motion to Sever and Stay.   In so ruling, Judge Stevens pointed to his prior decision in the case of Rucci v. Erie Insurance Exchange, No. 2014-803 (C.P. Crawford Co. Feb. 5, 2015, Stevens, J.).   In Rucci, Judge Stevens had severed the Plaintiffs’ bad faith claim from their breach of contract claim and stayed discovery on the bad faith claim.  

Judge Stevens felt that the logic of the Rucci decision applied in a more compelling fashion in this matter where the Plaintiff was additionally asserting negligence claim along with the bad faith claim.   In this regard, the court reasoned, as follows:
 

“Here, the Plaintiff alleges negligence along with the bad
faith claim.   [The UIM carrier] owes the Plaintiff a
fiduciary duty of good faith and fair dealing pursuant to
its insurance contract.    However, provided that a factual
basis exists, [the UIM carrier] has the right to argue that
it is not contractually obligated to pay the claim.  In this
case, that contractual obligation seems to turn, at least at
this stage, on the question of who was the responsible
driver at the time of the motor vehicle accident.   In the
event that the Plaintiff was in fact the responsible driver,
which is a defense that [the UIM carrier] suggests that it
has a legitimate basis to assert, and [the UIM carrier] would
not be contractually obligated to provide UIM benefits
under most typical policies of automobile insurance.  To
require [the UIM carrier] to simultaneously attempt to
balance a pending bad faith claim subject to discovery
while asserting that no contractual obligation exists creates
an unfair and prejudicial circumstance.  This circumstance
is compounded even more by the fact that there exists at
third party claim where the decedent Defendant appears
prepared to defend on grounds that the Plaintiff was the
driver.   While arguably the applicable standard for the
Defendant in the third party claim to assert that the
Plaintiff was the driver is different than [the UIM
carrier’s] standard for asserting such under the breach
contract claim, the reality is that the factual question is
still the same.
 
Regardless of the pendency of the bad faith claim,
[the UIM carrier] must always conduct itself in
conformity with its obligations to act appropriately
towards its insured.  However, the posture of that
situation changes dramatically if there is ongoing,
active bad faith litigation.”


The court went on to note that, if a jury ultimately concluded that the Plaintiff was the operator of the motor vehicle at the time of the accident, a successful bad faith claim would obviously be difficult, if not impossible.  
 
Judge Stevens also stated that, even if the court determined that the Defendant was the driver of the vehicle, the Plaintiff’s bad faith claim would not be established by the mere fact that the carrier contested the issue of who was driving during the subject accident.   The court noted that typically, when a bad faith claim is filed, the allegations of bad faith have already substantially occurred.   In the case before the court, Judge Stevens felt that it appeared almost certain that, as the underlying UIM claim progressed, the allegations of bad faith the theories of and facts upon which the bad faith claim would be asserted, would likely develop and change.  
 
Accordingly, the court ruled that, even assuming for arguments sake that bad faith conduct had occurred at this early stage of the litigation, severing and/or staying the bad faith action would not in any way harm the Plaintiff nor would it serve to excuse any bad faith conduct of the carrier.   Judge Stevens felt that, as this UIM claim developed, especially where it appeared that the UIM carrier was prepared to vigorously defend under the contract as to who the responsible driver was, it was almost certain that the bad faith claims would become more complex as the case proceeded.  
 
Accordingly, Judge Stevens held that “[t]o force [the UIM carrier] to assert its contractual defenses pursuant to the policy while simultaneously defending itself on a bad faith claim appears to create an obvious and immediate prejudice.”
 
Judge Stevens also noted that “[c]onversely, assuming arguendo that the cases proceeded simultaneously, the only benefit to the insured, besides some minor, if not illusory, efficiencies, is the leverage the Plaintiff could use to attempt to prevent [the UIM carrier] from vigorously asserting its contractual defenses for fear of the open, pending bad faith claim.” 
 
As such, the court granted the Defendant’s Motion to Sever and Stay the Bad Faith Claim.   The court stated that the bad faith claim would be allowed to proceed only upon further Order of the Court.  

Anyone desiring a copy of this Lamagna  decision by Judge Stevens of Crawford County may contact me at dancummins@comcast.net.
 
I send thanks to Attorney Joseph Hudock of the Pittsburgh, PA law office of Summers, McDonnell, Hudock & Guthrie for bringing this decision to my attention.

                         


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