Blair County Court of Common Pleas Rules to Sever and Stay Post-Koken Bad Faith Claim

In a recent trial court decision out of the Court of Common Pleas of Blair County in the case of Raia v. Agency Insurance Company of Maryland, Inc., No. 2015- GN-3456 (C.P. Blair Co. Feb. 28, 2017 Doyle, P.J.), the court sustained an insurance company’s Preliminary Objections in a post-Koken matter seeking the severance of the bad faith claim from the breach of contract claim. The court also agreed to stay discovery in the bad faith portion to the case. 

In her Opinion, President Judge Doyle noted that the Koken v. Reliance Ins. Corp., 891 A.2d 704 (Pa. 2005) decision, in which the Pennsylvania Supreme Court held that uninsured and underinsured motorist claims may be presented in the Court of Common Pleas, “has created uncertainty on how to conduct civil actions which involve a claim on a plaintiff’s uninsured or underinsured motorist coverage as well as a claim for bad faith on the part of the insurance company."  

The Raia court also noted that this “uncertainty is further exacerbated through the lack of guidance from the appellate courts, resulting in split authority among the Common Pleas Courts and the Federal District Courts.” 

Generally reviewing decisions from around Commonwealth of Pennsylvania, this court in Raia noted that “the rulings from the State and Federal courts have run the gamut, State courts are much more willing to sever and stay proceedings in some form or fashion, while Federal courts tend to deny these motions and keep the matters consolidated.   However, this is not a hard and fast observation, and judges, both State and Federal, have come out on different sides of this issue.”  

This issue of severing and staying the bad faith portion of a Post-Koken matter appeared to be a case of first impression within Blair County.  

In this decision, the court agreed that there is a potential for substantial prejudice to the insurance company in trying both the UIM and bad faith claim in front of the same jury.  

The court found that it would be difficult to for an average jury, after having listened to issues relating to the bad faith claim and the UIM claim, to disregard evidence presented for the bad faith claim when deciding the UIM claim.   This court felt that, in reality, such evidence would play in the minds of a jury and would likely influence their verdict, even if a limiting jury instruction was provided by the court.  

Accordingly, the court in Raia found that the potential prejudice in trying a UIM claim and a bad faith claim together warranted the severing of the two (2) claims.  

As for the decision to stay discovery on the bad faith claim, this court noted that allowing discovery to proceed on the bad faith claim, would permit the Plaintiff to discover material not relevant to a straightforward UIM claim.  

The court also noted that staying discovery would keep both parties on an equal footing with respect to the UIM claim until the UIM litigation is concluded.  

As such, the court stayed discovery on the bad faith claim until the conclusion of the UIM litigation.  

The court also noted that the interests of judicial economy favored this decision to stay the bad faith claim as UIM discovery was fast, fairly routine, and generally without contention as opposed to the typically contentious nature of bad faith discovery which would serve to slow down and prolong the litigation as the parties file and argue multiple discovery motions.  

Anyone wishing to read this case online may click this LINK.

I send thanks to the prevailing defense attorneys, John W. Croumer and Attorney Paul Grego of the Lancaster, Pennsylvania office of Post & Schell, P.C. for bringing this decision to my attention.