Magistrate Judge Mehalchick of Federal Middle District Court Tackles Inter and Intra-Policy UIM Stacking Issues

In the case of Blizman v. The Travelers Home and Marine Ins. Co., No. 3:19-CV-01539 (M.D. Pa. Aug. 30, 2021 Mehalchick, M.J.), United States Federal Middle District Court Magistrate Judge Karoline Mehalchick issued a Memorandum Opinion in which she decided multiple Motions for Summary Judgment in a UIM stacking insurance coverage action.

Judge Mehalchick’s Opinion is written with notable clarity, which cannot always be counted on in stacking decisions.

In Blizman, the Plaintiffs sought a judicial declaration that the Defendant’s insurance policy should provide stacked underinsured motorist coverage for the injuries sustained by the decedent in a motor vehicle accident.

Judge Mehalchick previously reviewed the same issues in this case at the Motion to Dismiss stage of this case. The Tort Talk entry, which contains a Link to that decision, can be viewed HERE.

In her latest decision in the Blizman case, Judge Mehalchick granted the Plaintiff’s Motion for Summary Judgment and found that the Plaintiff was entitled to pursue both inter and intra-policy stacked UIM benefits under the insurance policy in question.

According to the Opinion, the Plaintiff purchased car insurance from the Defendant in March of 2008 on three (3) vehicles that they owned. The Defendant carrier obtained a waiver of stacked limits for UIM coverage at that time. Also contained in the policy was a household vehicle exclusion, which excluded coverage for bodily injuries sustained by any person while occupying a motor vehicle owned by the injured party or any family member which was not insured under the Defendant’s policy.

The policy at issue was amended in January of 2009 to add a fourth vehicle. The Plaintiff was not provided a new opportunity to reject stacked coverage. The declaration sheet issued at that point continued to reflect non-stacked UIM coverage.

In a “change” to the policy that occurred effective December 5, 2009, a vehicle was removed from the policy, resulting in three (3) vehicles remaining under the policy. The Defendant carrier did not obtain a new rejection form following the removal of that fourth vehicle.

The Plaintiff also asserted that, in a renewal of the policy dated September 5, 2014, a vehicle was removed which resulted in two (2) vehicles remaining under the policy. It was noted that the Defendant did not obtain any new rejection form following that change as well.

Ten (10) years later, the subject accident occurred in June of 2019 when the decedent suffered fatal injuries while driving a scooter.

The tortfeasor’s vehicle was insured by yet another carrier for bodily injury limits of up to $25,000.00. The scooter was insured by a Progressive Insurance policy with UIM coverage of up to $25,000.00.

At the time of the collision, the policy issued by Travelers, the Defendant carrier in this matter, provided for $100,000.00 in unstacked UIM coverage for each of the Plaintiff’s two (2) covered vehicles. The Plaintiff pursued UIM benefits under the policy and brought this declaratory judgment action seeking a judicial declaration that the Plaintiff was entitled to stacked UIM coverage under the case presented.

According to the Opinion, the tortfeasor tendered its limits as did the UIM carrier for the policy covering the scooter which the decedent was operating at the time of the accident.

The Plaintiffs requested Travelers to acknowledge and pay the policy’s UIM coverage. Thereafter, this declaratory judgment action was filed when the dispute arose between the parties with respect to the coverage.

The court reviewed the issue under arguments involving inter-policy stacking and intra-policy stacking.

Judge Mehalchick noted that the Pennsylvania Supreme Court recently clarified that stacking waivers, such as the one at issue in this case, are inapplicable to inter-policy stacking when multiple vehicles are insured under the policy containing the waiver. The court cited to the very recent Pennsylvania Supreme Court decision in Donovan v. State Farm Mut. Auto. Ins. Co., ___ A.3d ___, 2021 WL 3628706 (Pa. Aug. 17, 2021).

Judge Mehalchick noted that, under the Donovan case, the language of the statutory waiver only applies to intra-policy stacking issues, that is, efforts to secure stacking on multiple vehicles listed within a single policy. The court followed the Donovan rule that the language of the statutory waiver form did not apply to inter-policy stacking in terms of an attempt by a Plaintiff to stack coverages under separate policies of insurance.  As such, the court granted the Plaintiff’s Motion for Summary Judgment and found that the Plaintiff was entitled to inter-policy stacking under the policy at issue.

The Court in Blizman went on to address whether the waiver executed by the Plaintiffs back in 2008 was otherwise still valid as of the time of the subject accident with respect to stacking.  The Court found that the waiver was not still valid.

In this regard, Judge Mehalchick generally noted that, under 75 Pa. C.S.A. §1738(a) there is a presumption under the law that UIM coverage is to be stacked in Pennsylvania. However, the law provides that a named insured may waive coverage providing stacking of UM or UIM benefits by executing a stacking waiver in the language prescribed under 75 Pa. C.S.A. §1738(d).

In this matter, the Defendant pointed to a stacking waiver that was secured back in 2008 and asserted that that waiver remained valid as of the date of the accident in 2019 even though there were changes to the policy in the interim.

Federal Magistrate Judge Karoline Mehalchick
M.D. Pa.

Judge Mehalchick noted that, every time UM/UIM insurance is purchased by adding a vehicle to an existing policy, a new stacking waiver must be executed. In this regard, the court cited to Sackett v. Nationwide Mut. Ins. Co., 919 A.2d 194, 196-97 (Pa. 2007)(“Sackett I”).

Judge Mehalchick noted that, however, if coverage is extended to a vehicle added to an existing policy through a continuous after-acquired vehicle clause, then a new stacking waiver does not need to be executed even if the insurance premiums are increased. Judge Mehalchick cited to Sackett v. Nationwide Mut. Ins. Co., 940 A.2d 329, 334 (Pa. 2007) (“Sackett II”) in this regard.

The court noted that, therefore, the central issue of this case was whether the vehicle acquired by the Plaintiff in 2009 was added through and after-acquired vehicle clause. If it was, then a newly executed stacking waiver was not necessary and the 2008 waiver was still in effect at the time of the accident in accordance with Sackett II. However, if the vehicle was not subject to the after-acquired vehicle clause, then a new stacking waiver was required under Sacket I and the presumption that UIM coverage should be stacked would be controlling on the case.

In her Opinion, Judge Mehalchick noted that, as of the date of her decision, the Pennsylvania Supreme Court had not yet addressed the application of an after-acquired vehicle clause to a vehicle added to a policy’s declarations page at the time of acquisition.

As such, the court turned to the law last decided by the Pennsylvania Superior Court in the case of Kline v. Travelers Personal Sec. Ins. Co., 223 A.3d 677, 681 (Pa. Super. 2019). In that case, the Pennsylvania Superior Court addressed a situation in which an insured who had signed a stacking waiver form at the inception of his policy subsequently added two (2) vehicles to the existing policy. That insured was not presented with new stacking forms at the time the change was made. Approximately ten (10) years thereafter, the Plaintiff then signed a stacking waiver at the inception of the policy, and after the two (2) vehicles were added to the policy, the Plaintiff was involved in an accident. The Plaintiff then sought to stack the UIM coverage under his policy.

The Pennsylvania Superior Court in Kline affirmed the trial court’s decision that the Plaintiff was entitled to stacked coverage under the facts presented. The trial court in Kline had emphasized that the Plaintiff had notified Travelers each time he acquired an additional vehicle. The insurance company then subsequently generated amended declarations sheets on both occasions and increased the Plaintiff’s premiums to reflect the additional vehicles. As such, the court in Kline found that the Plaintiff’s vehicles were added to the policy via endorsements and were covered by the general terms of the policy as opposed to the after-acquired vehicle clause.

The trial court in Kline had also held that the Plaintiff had made “purchases” for purposes of 75 Pa. C.S.A. §1738 when his premiums were increased as vehicles were added to the policy.

For these reasons, the trial court held that Travelers failed in its obligation to obtain new stacking waivers from the Plaintiff at the time his two (2) vehicles were added to the policy. As noted, the Pennsylvania Superior Court in Kline affirmed the trial court’s conclusion and reasoning.

Judge Mehalchick found that the facts in the Blizman case before her were governed by the Kline decision. The Plaintiffs in this Blizman case and the Kline case both notified the carrier when new vehicles were added to the policy and both Plaintiffs were subjected to increased premiums to reflect the additional vehicles under the policy.

Where, as in Blizman, vehicles were added to the insurance policy through endorsements when the insured notified the carrier at the time the additional vehicle was acquired, an amended declaration sheet was subsequently generated in conjunction with that notification, and were premiums were increased to reflect the additional vehicles, the court found that the vehicles were added to the Plaintiff’s policy under the general terms of the policy and the not the after-acquired vehicle clause.

As such, Judge Mehalchick held for this additional reason that the carrier was obligated to acquire a new executed waiver of stacked UM/UIM coverage limits from the Plaintiff. Given that the carrier had failed to do so, the court ruled in favor of the Plaintiffs.

Lastly, Judge Mehalchick also addressed the applicability of the household vehicle exclusion in the policy. The carrier submitted that the exclusion should operate to preclude the Plaintiff’s claim for UIM benefits. The Defendant asserted that the case of Gallagher v. Geico, 201 A.3d 132 (Pa. 2019) was factually distinguishable.

Judge Mehalchick agreed with the Plaintiff’s argument that the household vehicle exclusion had no bearing on the resolution of this case as the question of the applicability of that exclusion was previously decided by Judge Mehalchick in her Opinion issued earlier in the case with respect to a Motion to Dismiss filed by the carrier. Judge Mehalchick noted that the holding in the prior decision made it clear that, in the absence of a valid stacking waiver such as was found in this case, a household vehicle exclusion could not otherwise serve to prevent stacked UIM coverage.

In this regard, the court again pointed to the ruling in Gallagher that a household vehicle exclusion cannot be used as a de facto waiver of stacked UIM coverage when an insured does not formally waiver stacking through the statutorily-prescribed UIM coverage waiver.

Given that the court found that there was no valid stacking waiver in this case, the carrier’s Motion for Summary Judgment under the household vehicle exclusion was denied.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Joseph Martam of the Property & Liability Resource Bureau (PLRB) for bringing this case to my attention.

Source of image at top: Photo by Lidya Nada on Unsplash.com.

UIM Coverage Election Forms Found To Be Valid

In the case of Eckman v. Encompass Home & Auto Ins. Co., No. 1904038 KSM (E.D. Pa. July 30, 2021 Marston, J.), the court ruled that an insured was not entitled to underinsured motorist coverage equal to the bodily injury liability coverage limits under the subject automobile insurance policy where the statutory coverage election forms, as well as the insured’s initial application for the insurance policy, all provided sufficient evidence under Pennsylvania statutory law to demonstrate that the insured intended to purchase a lower amount of UIM coverage.

As such, the Defendant carrier’s Motion for Summary Judgment was granted and the Plaintiff’s cross Motion for Summary Judgment was denied.

According to the Opinion, the Plaintiff sought to preclude the coverage forms at issue from consideration by the court. However, the Plaintiff also conceded that, if the UM/UIM coverage forms were admissible, then the carrier would indeed be entitled to summary judgment. The court denied the Motion to Preclude the Documents from Consideration.

The court also ruled that, even if the election forms were excluded, the application for insurance itself constituted sufficient evidence for the court to find that the Plaintiff intended to purchase lower UM/UIM coverage limits.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.

The Court's Opinion on the Plaintiff's motion to preclude the admission of copies of the pertinent documents can be viewed HERE.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Aug. 17, 2021).

Source of image: Photo by Scott Graham on Unsplash.com.

Third Circuit Court of Appeals Confirms that Any Writing Can Serve as a UIM Sign Down Form

In the case of Gibson v. State Farm Mut. Auto. Ins. Co., No. 20-1609 (3d Cir. Jan. 21, 2021 Hardiman, J., Roth, J., and Pratter, J.) (Op. by Pratter, J.), the court addressed the requirement under §1734 of the Motor Vehicle Code with respect to the valid election for reduced underinsured motorist coverage.

At the outset of its Opinion, the Third Circuit noted that, although basic UIM coverage is typically offered in an amount equal to the bodily injury limits set forth in an automobile insurance policy, an insured in Pennsylvania can reduce premium costs by opting for a lower amount of underinsured motorist coverage. The court noted that, to accomplish this result, the Pennsylvania law requires, under  75 Pa. C.S.A. §1734, that the insured make a “request in writing.” 

The Third Circuit indicated that the statute says “little beyond that. But that silence speaks volumes. As we reiterate today, the statute means what it says: an insured can make that choice “in writing” in any writing as long as the choice is clear.”  See Op. p. at 4.

In this matter, the Plaintiff signed an insurance application with the carrier for bodily injury coverage of $250,000.00 and $100,000.00 in stacked UIM coverage. The Plaintiffs had three (3) cars under the policy.

The court emphasized that the court signed an application that included language that stated “the limits and coverages [in the application] were selected by me.” The application also referenced another “required” document, an acknowledgement of coverage selection form for UIM. The carrier did not supply that form and the Plaintiff did not sign it at that time.

The Plaintiff was seriously injured in a motor vehicle accident shortly after signing the application for the insurance. Three (3) weeks after the accident, the Plaintiff signed an Acknowledgement of Coverage Selection form in which she acknowledged that she had been given opportunity to purchase UIM coverage with limits up to her liability coverage for bodily injury but had instead selected a lower UIM limits.

In the end, the court found that the Plaintiff’s signature on the application, with the language contained in the application, confirmed that the Plaintiff was electing lower UIM limits.


Anyone wishing to review a copy of this decision may click this LINK.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (April 22, 2021).

 

Split in Authority on Post-Koken Bifurcation of Trial Issues

In the Blair County Court of Common Pleas case of Swan v. Moorefield, No. 2014 GN 2606 (C.P. Blair Co. Sept. 9, 2017 Kagarise, J.), the court denied a UIM carrier’s Motion to Sever and Stay Bad Faith Claims in a post-Koken matter.  

According to the Opinion, the Motion to Sever was filed pursuant to Pa. R.C.P. 213(b).   The court noted that the determination of whether to sever cases was within the discretion of the trial court and that the court should make this determination based upon the particular facts and circumstances of the case before it.  

In his Opinion, Judge Wade pointed to a prior Blair County decision in favor of the severance of a UIM claim from the bad faith claim in the case of Raia v. Agency Ins.  Co. of Maryland (C.P. Blair Co. March 2, 2017 Doyle, P.J.).  

However, Judge Wade noted that there were several differences between the case before him and the facts in the Raia case.  

For example, Judge Wade noted that, in the Raia case, Judge Doyle had reasoned that separating the causes of action would decrease discovery disputes and allow both cases to proceed more smoothly.   In the Swan case, the motion was filed three (3) years after the Complaint was file and, as such, the court noted that many of the discovery disputes had already been raised and resolved.  Accordingly, the court felt that “granting severance now [in the Swan case] is akin to shutting the stable door after the horse has bolted.”  

The court also noted that it was sensitive to the fact that severing could further drag out the resolution of the bad faith claims in this already three (3) year old case.  

The court was also influenced to deny the request for severance under the Plaintiff’s argument that a severance of the case would necessitate a second jury trial on the common law (as opposed to the statutory) bad faith claims raised by the Plaintiff.  

While the court denied the request for severance of the claim during the course of discovery, the court in Swan otherwise noted that it would consider a Motion for Bifurcation at a later time in the proceedings. 

In this regard, the Swan court pointed to the decision by the Westmoreland County Court of Common Pleas in the case of Madeja v. State Farm Mut. Auto. Ins. Co. (C.P. Westmoreland Co. April 11, 2017) in which the court did not sever the causes of action but did bifurcate the trial proceedings.   The Swan court found that there was “significant merit to the approached taken in the Madeja case and felt that the Madeja court’s reasoning was appropriate in the instant matter.   However, as the issue of bifurcation was not currently before the Swan court, the court did not rule on that particular issue.  

As stated, the court in Swan ultimately denied the Defendant’s Motion to Sever and Stay the extra contractual claims.  Accordingly, there is a split of authority on this issue within Blair County which mirrors the split of authority on this issue across the state courts in the Commonwealth of Pennsylvania. 


Anyone wishing to review this case may click this LINK

UIM Claims Found Barred by General Release Signed by Plaintiff

In the case of Crisp v. Ace Am. Ins. Co., No. 150902953, 3167 EDA 2016 (C.P. First Judicial District March 7, 2017 Cohen, J.), the court issued an Rule 1925 Opinion asserting that its decision to dismiss a motor vehicle accident Plaintiff’s underinsured motorist claim against her employer’s insurer should be affirmed by the appellate court because the Plaintiff, after consulting with a lawyer, signed a General Release releasing “any and all other persons or entities whatsoever.”  

The trial court granted summary judgment in favor of the carrier’s insurer in which that company asserted the Plaintiff’s claims were precluded by the General Release.  

In support of its decision, the trial court stated that it was settled Pennsylvania law that General Releases should be enforced against all parties listed in the Release, even when the party at issue is not listed by name and did not provide any consideration in support of the Release.  

The court also noted that the Plaintiff made no allegations that she had signed the Release because of fraud, accident, or mutual mistake.  Rather, the Plaintiff acknowledged that she had reviewed the Release with an attorney and agreed to be bound by its provisions.  

Anyone wishing to review this decision may click this LINK.

Judge Polachek-Gartley of Luzerne County Denies UIM Carrier's Preliminary Objections in Post-Koken Case Involving an Alleged DUI Tortfeasor Defendant

In a recent Order without Opinion in the case of Baldinucci v. Purcell and State Farm Mut. Auto. Ins. Co., No. 2015-Civil-7972 (C.P. Luz. Co. Dec. 18, 2015 Polachek-Gartley, J.), Judge Tina Polachek-Gartley of the Luzerne County Court of Common Pleas denied Preliminary Objections filed by the UIM carrier Defendant asserting a misjoinder of the Plaintiff’s tort and UIM breach of contract claims in a case where the tortfeasor Defendant driver was alleged to have been driving under the influence at the time of the accident.  

Anyone desiring a copy of this Order without Opinion may email me at dancummins@comcast.net.

I send thanks to the prevailing Plaintiff’s attorney, Michael A. O’Donnell of the O’Donnell Law Offices in Kingston, Pennsylvania for providing me with a copy of this Order.  

Order of Applying Comparative Negligence Percentage Followed By Liability Credit in Post-Koken Auto Verdict

In the case of Pusey v. Allstate Insurance Company, PICS Case No. 15-1258 (C.P. Delaware Co. May 21, 2015 Green, J.), the Court addressed the proper procedure for applying credits and comparative negligence in an underinsured motorist trial.

According to a summary of the Opinion, this matter arose out an incident during which a minor was struck by a vehicle while the minor was riding his bicycle.

Prior to trial, the tortfeasor’s carrier tendered its $25,000.00 policy limits to the Plaintiff. The Plaintiff then brought suit against the UIM carrier for underinsured motorist coverage.

After a trial, the jury awarded the Plaintiff $58,600.00. However, the jury also attributed 41% of the negligence to the minor Plaintiff.

When a dispute arose over how to apply the credit for the tortfeasor’s limits and the comparative negligence percentage, the court ruled that the comparative negligence percentage should be applied first, and then followed by the application of the credit owed from the tortfeasor’s liability limits.

This matter was apparently going up on appeal as it appeared that the trial court’s opinion was a Rule 1925 Opinion. Anyone wishing to review a copy of this decision may contact the Instant Case Service of the Pennsylvania Law Weekly at 1-800-276-7427 and pay a small fee.

Source: "Digest of Recent Opinions," Pennsylvania Law Weekly (August 18, 2015).

Another UIM Case Defeated By Collateral Estoppel Doctrine

In a recent Post-Koken collateral estoppel decision of note, Judge David Williamson of the Monroe County Court of Common Pleas ruled in the case of DeHoyos v. GEICO, No. 10532-CV-2013 (C.P. Monroe Co. April 20, 2015 Willamson, J.) that a Plaintiff was barred from pursuing a UIM claim where the award the Plaintiff received from the third party tortfeasor after an application of a high/low agreement to the jury's verdict was less than the tortfeasor's liability limits.

In this matter, the tortfeasor's liability limits were $500,000.  The jury awarded $581,000 at trial but that verdict was molded downward to $450,000 pursuant to the high/low agreement entered into by the parties prior to the entry of the verdict.

Applying the language of the GEICO policy, as well as Pennsylvania law, the court noted that there could be no claim for UIM coverage when the amount of damages the plaintiff was legally entitled to recover from the tortfeasor did not exceed the available liability policy limits covering the tortfeasor.

Judge David J. Williamson
Monroe County

The court rejected the argument by the Plaintiff that the amount of the jury's original verdict that was entered  constituted the actual award to be considered with respect to the collateral estoppel issue.   Judge Williamson instead viewed the high/low agreement as a settlement agreement that placed limits of a maximum and a minimum for potential awards by the jury.  Accordingly, the high/low agreement was found to be a valid and enforceable contract that capped the plaintiff's recovery at a number below the available liability limits.  Thus, the actual award for collateral estoppel analysis in this matter was the high parameter of the high/low agreement.

Since the high parameter was less than the tortfeasor's liability limits, the court found no legal basis for the plaintiff to pursue the companion UIM claim.  As such, the carrier's motion for partial summary judgment was granted.


Anyone wishing to review a copy of this decision, may contact me at dancummins@comcast.net.

To review other Tort Talk blog posts on similar collateral estoppel issues, click HERE.

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 dancummins@comcast.net.  

 

 

Judge Williamson of Monroe County Stays His Course of Severing Bad Faith and UM/UIM Claims for Trial (But Not Discovery)

In his recent decision in the case of Kemp v. Mut. Benefit Ins. Co., PICS Case No. 15-0517 (C.P. Monroe Co. Jan. 14, 2015 Williamson J.), Judge David J. Williamson addressed a defendant carrier's motion to sever bad faith claims from the contractual claims in the early stages of the matter.  The motion also requested a stay on any bad faith discovery requests.

This matter involved UM/UIM coverage and bad-faith damages claims.  In her complaint, plaintiff sought recovery of UM and UIM benefits and bad faith damages under 42 Pa.C.S.A. §8371. She alleged a bad faith delay in the Defendant carrier's request for a statement under oath, a medical examination, or medical records.

Defendant filed to motion to sever the bad faith claims from the contractual claims and to stay discovery on the bad faith claims until resolution of the contractual claims.

Judge David Williamson
Monroe County

The court granted defendant's motion to sever but denied its motion to stay discovery.  Judge Williamson noted that there was no appellate authority regarding whether to sever bad faith claims from contractual claims and that there was a split among the courts of common pleas on the issue.

The court did hold that the Defendant insurance company would be prejudiced by joining the bad faith claims with the contractual claims during trial. Citing his own previous decision on similar issues in the case of Orsulak v. Penn National [See HERE], Judge Williamson granted the motion to sever the bad faith claims.

  As to defendant's motion to stay discovery regarding the bad faith claims, the court found that staying discovery until after resolution of the contractual claims would unfairly and unnecessarily delay a conclusion of all proceedings. Further, there were more efficient measures the court could use to protect defendant from prejudice than ordering a blanket freeze on all discovery regarding bad faith.  Judge Williamson noted that if actual prejudice caused by bad faith discovery requests could be shown as discovery progressed, the court could bar certain discovery until resolution of the contractual claims.

Anyone desiring a copy of this decision may email me at dancummins@comcast.net.

Source:  "Case Digests."  The Pennsylvania Law Weekly (March 30, 2015).

Judge Conaboy Addresses Application of Rejection of UIM Stacking Form to Renewal Policies

In the case of Connolly v. Progressive Northern Ins. Co., 3:13-CV-2717 (M.D. Pa. Feb. 4, 2015 Conaboy, J.), Judge Richard P. Conaboy of the Federal Middle District Court for the Middle District of Pennsylvania addressed a carrier's motion for summary judgment in a case involving a challenge to the carrier's rejection of stacking form in an underinsured (UIM) motorists benefits matter.

 Before the court were insurance application documents concerning an underinsured motorist claim (UIM) and the applicability of a rejection of stacking form signed when the policy was first purchased in 1998.   The UIM limits under the policy were $100,000 per person.  The stacking issue was important as there were three vehicles on the policy.

The Plaintiff asserted that, since there was only a rejection of stacking form signed at the inception of the policy, then stacking should apply because the policy numbers were different every time the policy was renewed.  According to the Plaintiff's argument, this represented the creation of a new policy, which, in turn, arguably required the need for the carrier to obtain a new rejection of stacking form. 

The insurance company argued that the last numbers were only changed but that the policy remained the same. 

Judge Conaboy agreed with the defense position that, under the Sackett line of cases, once a valid rejection of stacking form was secured, the carrier need not secure a rejection of stacking form every time the same policy came up for a renewal or when a car was added to the policy.

According to the Opinion, however,  the carrier never explained in its argument why the suffixes were different or why the company periodically modified the final number on the policy.  In other words, the court was unable to state, as a matter of law, that there were not any substantive differences in the policy over the course of the 21 renewals in 10 years.  Simply put, based upon the record before the court, Judge Conaboy could not state that the policy at issue was identical to the one originally issued at the inception of the policy back in 1998 when the rejection form was signed.

As such, the Connolly court ultimately held that.“[d]ue to uncertainty in the record, the Court must deny the Defendant’s Motion for Summary Judgment.”

Judge Conaboy also allowed the Plaintiff's bad faith claim to proceed.


Anyone wishing to read Judge Conaboy's Memorandum Opinion in Connolly v. Progressive may click this LINK.


I send thanks to Attorney Scott Cooper of the Harrisburg, PA law office of Schmidt Kramer for bringing this case to my attention.

 

A Sampling of Post-Koken Jury Verdicts From Around the Commonwealth To Date

Below is a sampling of Post-Koken jury verdict results uncovered to date from a review of cases that have gone up the appellate ladder and from research on verdicts from valid sources such as the Pennsylvania Law Weekly.

This list is NOT represented to be exhaustive.  Rather, it only lists those cases my research has uncovered to date.  There certainly could be, and likely are, many more Post-Koken jury verdicts that have not been generally publicized.

Please let me know if you are aware of any other such cases--I can be reached at dancummins@comcast.net.

I will update this list periodically with new information.  Note that it is not my plan to identify the attorneys involved in the summaries of the verdicts reviewed.

It is my understanding that there may have been at least one other defense verdict in a Post-Koken case, but I will not reference that case until I have confirmed such results as being accurate.

An analysis of the below sampling of Post-Koken jury verdicts reveals no clear trends.  Stated otherwise, the risks attendant with proceeding to a jury trial in an auto accident case remain to be considered by all parties involved.



STATE COURT

Allegheny County

Stepanovich v. McGraw and State Farm, 78 A.3d 1147 (Pa. Super. 2013) appeal denied 11 WAL 2014 (Pa. 2014)(Allegheny County case)

Post-Koken UIM claim.   Plaintiff sued tortfeasor Defendant and UIM carrier.   Disputed negligence case over who had the red light in a pedestrian versus vehicle case.   Both tortfeasor’s defense counsel and UIM carrier’s defense counsel were allowed to participate in the defense with the only limitation being on cumulative questioning.   Jury not informed of involvement of UIM carrier as a party Defendant.  Defense verdict entered.  

Marlette v. State Farm, 57 A.3d 1224 (Pa. 2012) (Allegheny County case)

Uninsured motorist case.   Plaintiff’s sued uninsured tortfeasor and their own UM carrier, State Farm Mutual Automobile Insurance Company.  Liability was uncontested and the case proceeded to trial on damages for the injured husband and wife Plaintiffs.   Following a two (2) day trial, the jury entered a verdict in favor of the Plaintiff-husband in the amount of $550,000.00 for his bodily injuries and lost wages and in the amount of $150,000.00 to the Plaintiff-wife for loss of consortium.   The total $700,000.00 verdict was molded down to the uninsured motorists policy limits of $250,000.00.

 

 
Philadelphia County

Patterson v. Travelers Home and Marine Ins. Co., No. 130502892 (C.P. Phila. Co. July 9, 2014)

Plaintiff complained of neck, back, right knee injuries; tortfeasor tendered his $50,000.00 liability limits.  Plaintiff demanded Travelers’ $25,000.00 UIM limits; jury awarded $86,000.00 in UIM benefits; verdict molded to limits.

 
Phy v. Nikulin and Progressive Advanced Insurance Company, No. 130203316 (C.P. Phila. Co. June 14, 2014)

UM claim; rear–end accident caused by uninsured driver.  Plaintiff complains of headaches, neck pain, thoracic pain, low back pain.   Plaintiff did not report to an emergency room and did not treat for one (1) month following the accident.  Plaintiff’s primary treatment was approximately five (5) months of chiropractic treatment.  MRIs revealed bulging discs.  Uninsured tortfeasor was not represented and did not appear for trial.   Progressive’s Motion In Limine to preclude any mention of Progressive as UIM carrier was granted; however, Progressive attorney was allowed to defend the matter.   Plaintiff demanded Progressive’s $15,000.00 in uninsured motorists benefits.  Progressive offered $4,500.00.   Jury awarded $250,000.00 for pain and suffering (there were no economic damages claims for medical expenses or wage loss)).  

 

Casino v. Progressive Specialty Ins. Co., No. 130200693 (C.P. Phila. Co. Apr. 23, 2014)

Clear liability case.  Plaintiff alleges a torn meniscus in right knee.   After his emergency room visit on the day of the accident, there was then a 45 day gap in treatment.   Surgery was allegedly recommended but not completed by the Plaintiff allegedly due to financial constraints.  Plaintiff settled with tortfeasor for $13,500.00 out of $15,000.00 liability limits.  The Plaintiff demanded Progressive’s $15,000.00 in UIM limits.   At a court mandated arbitration, a panel ruled in favor of Progressive and the Plaintiff appealed to a jury trial.  After a jury trial, the jury entered an award in favor of the Plaintiff in the amount of $60,000.00. 

 

Hall v. Irving, et.al., November Term, 2012 No.:  0220 (C.P. Phila., 1/29/2014) (Allen, J.)

A Philadelphia jury returned a verdict in favor a limited tort plaintiff and awarded $100,000.00 in a combined negligence/UM action. 

While a passenger in her husband’s automobile, plaintiff was injured when her vehicle was struck by the third-party defendant, who was operating an uninsured motor vehicle. 

The third-party defendant claimed the plaintiff’s injuries were not serious enough to entitle her to non-economic damages. 

Prior to trial, the court granted the UM carrier’s motion in limine, which precluded any  mention of the UM carrier or any reference to or introduction into evidence of any matters concerning plaintiff’s insurance coverage.  Counsel for the UM carrier was permitted to participate at trial, but the UM carrier was never identified to the jury. 

The jury found that plaintiff’s two herniated discs in her neck constituted a serious impairment of a bodily function and awarded $100,000.00 to compensate her for past and future pain and suffering.

 

Mitchell v. Progressive Specialty Ins. Co., No.: June Term, 2012 No.: 03679 (C.P. Philadelphia, 10/3/2013) (Maier, J.)

Limited Tort Plaintiff’s vehicle was struck by a taxi cab in Philadelphia County.  Following the accident, plaintiff settled with the driver of the taxi cab for $13,000.00 (policy limits of $15,000.00) and pursued UIM benefits against her own UIM insurer, Progressive.

At trial against the UIM carrier only, plaintiff showed that she went to work the day of the accident, but treated with an acupuncturist the next day, and received physical therapy for five months.  An MRI confirmed an aggravation of plaintiff’s pre-existing cervical herniation.

Prior to the accident, plaintiff had reached a tolerable baseline condition with respect to her previous cervical-spine injury.  After the accident, however, her condition was allegedly worsened.

The jury found that plaintiff’s injuries were sufficiently serious to pierce the limited tort threshold and awarded $70,000.00.  Post-trial, the trial court molded the award to $15,136.00 to reflect the limits of plaintiff’s UIM policy after application of a credit from the amount previously received from the third-party tortfeasor.



Luzerne County

Borthwick v. Webb and GEICO, No.  No. 2735-Civil-2010 (C.P. Luz. Co. 2012 Vough, J.)

Combined third party tortfeasor and UIM carrier case.  Limited Tort defense.  Both defense attorneys participate.

Liability admitted by third party tortfeasor thereby precluding UIM carrier from arguing contributory negligence.  Plaintiff alleges aggravation of pre-existing thoracic and lumbar spine disc disease.  Vocational claim in approximate amount of $40,000.

Tortfeasor's third party liability limits were $50,000 of which $20,000 was offered in settlement.

UIM carrier's limits were $1.2 million dollars.  No offer by GEICO.

Jury was informed that the Plaintiff had an insurance policy with GEICO.  No more detailed mentioning of insurance at trial.

Jury awarded $2,000 in wage loss and $0 for pain and suffering, equating to a UIM defense verdict.

Brobst v. Komrowski, Progressive Ins., and GEICO, No. 16180-CV-2010 (C.P. Luz. Co. 2012 Hughes, J.)

Disputed liability case.  Third party and UIM defendants.  Progressive settled out prior to trial with $4,000 payment.  Third party defense attorney and GEICO defense attorney both participate.

Plaintiff alleges soft tissue strain injuries to neck and mid-back along with contusions to elbow, right rib, and leg.  Plaintiff's demand was $40,000.

Third party tortfeasor had $100,000 in liability limits of which $8,600 was offered in settlement.

First-level UIM carrier, Progressive had $50,000 in UIM limits and, as noted, settled out for $4,000.

Second-level UIM carrier, GEICO had $100,000 in UIM limits and did not have an offer out at the time of trial.

Jury was informed that the Plaintiff had an insurance policy with GEICO.  No more detailed mentioning of insurance at trial.

Jury assessed 50% contributory negligence on the Plaintiff and awarded $3,696 for lost wages only. Equates to defense verdict for UIM carrier.




 

FEDERAL COURT

 

Eastern District Court of Pennsylvania 

Heebner v. Nationwide Insurance Enterprise, 818 F. Supp. 2^nd 853 (E.D. Pa. 2011)

Plaintiff involved in an accident with an uninsured/underinsured motorist.   The Plaintiff’s Complaint described the motorist as “self-insured”.  As required under the Nationwide policy, the Plaintiff sued the motorist.   Jury entered an award of $85,000.00 in compensatory damages on top of which was added delay damages of $48,201.96.  



Middle District Court of Pennsylvania

Calestini v. Progressive Cas. Ins. Co., No. 3:09-CV-1679 (M.D.Pa. 2010 Caputo, J.)

Defense verdict in Limited Tort case.

Erie Forum Selection Clause Allows for Federal Court Venue Too

In its recent decision in the case of Otto v. Erie Insurance Exchange, NO. 13-6722 (E.D. Pa. March 31, 2014 Brody, J.), Judge Anita B. Brody of the U.S. Federal Court for the Eastern District of Pennsylvania addressed the application of Erie Insurance's forum selection clause in a Post-Koken matter.

Based upon diversity that existed at the time of filing the suit, the Plaintiff filed suit in the Eastern District of Pennsylvania.  

The Erie policy mandated that a suit "must be filed in a court of competent jurisdiction in the county and state of [the Ottos’] legal domicile at the time of the accident."　

Erie asserted that this language required the case be filed in state court only. The Plaintiff countered with the argument that the forum selection clause should be broadly construed to possibly include both the federal and state courts.

Applying the Third Circuit case of Jumara v. State Farm Insurance Company, 55 F.3d 873 (3d. Cir. 1995), the court in Otto ruled that that the language in the Erie Insurance forum selection clause would be construed to include the federal court located in the county the insured resides at the time of the accident.　

Since the Eastern District federal court included Montgomery County where the Ottos’ resided at the time of the accident, then the Eastern District federal court was found to be a proper venue under the clause.

Accordingly, the court denied Erie Insurance’s motion to dismiss based upon forum non conveniens because the Plaintiff's decision to file suit in federal court complied with the terms of the forum selection clause.

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this case to my attention.

Anyone wishing to review this case may click this LINK.

 

Source of Image: www.arup.com

 

Judge Rambo of Federal Middle District of PA Addresses Scope of Bad Faith Discovery in Post-Koken Matter

In her recent decision in the Post-Koken case of  Keefer v. Erie Insurance Exchange, Civil No. 1:13-CV-1938 (M.D. Pa. March 7, 2014 Rambo, J.), Judge Sylvia H. Rambo of the Middle District of Pennsylvania Federal Court addressed the scope of allowable discovery in the context of a bad faith UIM claim.

With respect to reserves information in a UIM carrier’s claims file, the court in Keefer found that the amount of reserves, if any, assigned to the insured’s UIM claim by the UIM carrier should be produced in a bad faith case where the insured was asserting that that the insurer acted in bad faith during its claim investigation.  Judge Rambo ruled in Keefer that a comparison between the reserve value of the claim and the insurer’s actual actions in processing the claim could shed light on the insurer’s liability under the bad faith statute. Thus, the reserve amount was deemed relevant or, in the alternative, evidence that could potentially lead to the discovery of other relevant information.  In so ruling, the court also rejected the argument that the reserve information is protected from discovery by the work product doctrine.

On another issue of note, the insurer argued against the plaintiff’s request that claims handling manuals be produced in this case where both the UIM claim and the bad faith claims were still pending.  

The court in Keefer permitted the insured to inquire into the processes that the insurer used to investigate her claims.  The court found that the allowance of discovery of the carrier’s policies for handling claims was reasonably calculated to lead to information relevant to the bad faith cause of action. 

In Keefer, the UIM carrier also opposed the plaintiff’s request for information regarding its adjusters’ impressions, conclusions, and opinions regarding the value and merit of the claim and their evaluations of the insured’s demands and the insurer’s offers.

The court noted that mental impressions and opinions of a party and its agents are not generally protected by the work product doctrine unless they are prepared in anticipation of litigation. Thus, “work product prepared in the ordinary course of business is not immune from discovery.” The gravamen of a claim of work product protection necessarily requires an assessment of when litigation was anticipated, which, the court noted, is a determination that is not subject to a bright-line rule.

Judge Rambo found that, in this matter, the facts were not sufficiently developed yet to determine whether litigation was reasonably anticipated and, as such, the court deferred ruling on this discovery request for the moment.

In Keefer, the carrier also objected to the plaintiff’s request for discovery regarding the adjuster’s or supervisor’s rationale behind the decision not to pay the Plaintiff’s UIM claim.  In light of the liberal scope of federal discovery allowed, and the fact that the reason for non-payment may be probative on the issue of whether insurer acted in bad faith in the handling of the UIM claim, the objection was overruled.

The court in this matter also noted that the UIM carrier could rely upon the work product doctrine to reject the plaintiff’s request for the unredacted production of the carrier’s entire claims file.

 In another notable decision, Judge Rambo upheld the carrier’s objection to the plaintiff’s demand for information pertaining to unrelated bad faith claims against the insurer over the previous five years. The court found that past claims in that regard were irrelevant to the case at hand.

Anyone wishing to review a copy of the Keefer decision may click this LINK.

I cite to the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog by the Philadelphia law firm of Fineman, Krekstein & Harris for bringing this decision to my attention.  If you are a Bad Faith litigator, regardless of whether you are on the Plaintiff's side or the Defense side, that is an excellent blog to subscribe to for continuing updates.

Source of image: www.nobadfaith.com.

 

Big Post-Koken Question Of How to Handle "Insurance" At Trial Will Remain Unanswered For Now

The Pennsylvania Supreme Court has denied the Petition for Appeal in the Post-Koken case of Stepanovich v. McGraw and State Farm.  Click HERE to review the Court's Order.

Too bad....another opportunity for much-desired appellate guidance on important and novel Post-Koken issues is lost.

Tort Talkers may recall that, at the Superior Court level, that appellate court found no error in allowing two defense attorneys to participate in the trial, one for the tortfeasor Defendant and one for  the UIM carrier Defendant, in a case where the jury was not advised as to the identity of the insurance company Defendant or why there were two defense attorneys.  The double-team defense against the Plaintiff in that matter resulted in a defense verdict.

For more details on the import of the Pennsylvania Superior Court's decision in Stepanovich, which the Pennsylvania Supreme Court has now refused to review, click HERE to review my November 19, 2013 Pennsylvania Law Weekly article on the case entitled "Superior Court Leaves Big Post-Koken Question Unanswered."

ARTICLE: "Significant Changes Abound in Post-Koken Auto Law" (4/1/14)

The below article of mine recently appeared in the April 1, 2014 edition of the Pennsylvania Law Weekly and is republished here with permission from the publisher, American Law Media.  All rights reserved.

Significant Changes Abound in Post-Koken Auto Law

by

Daniel E. Cummins, Esq.
Pennsylvania Law Weekly
April 1, 2014

A recent flurry of decisions in the context of post-Koken auto accident litigation matters have amounted to a blizzard of change in how such matters are handled. Chilling and shifting winds of uncertainty continue to blow through this area of the law with the trial courts of different counties continuing to split on common but novel litigation issues.


The post-Koken era began around 2005 when automobile insurance carriers were permitted by the Pennsylvania Supreme Court's decision in the case of Insurance Federation of Pennsylvania v. Koken, 889 A.2d 550 (Pa. 2005), to issue insurance policies without any arbitration clauses for the resolution of uninsured/underinsured claims. Rather, such cases were instead to be litigated in the court system. This total about-face in the handling of such UM/UIM claims has given rise to a wide variety of novel issues, many of which, as noted below, remain unsettled even up until today.


In the end, depending upon how you look at it, it is either an exciting time or an unbelievably nerve-wracking time to be an auto law litigator.

Order of Recovery

One major change in UM/UIM claims since the Koken decision is the order in which the claims of recovery are pursued by injured parties. Prior to Koken, the plaintiffs bar would typically pursue the UIM claim first before proceeding ahead on the third-party claim against the tortfeasor. The rationale for this strategy was that if an award or settlement was secured from the UIM carrier, that would show that the tortfeasor was underinsured and thereby place pressure on the tortfeasor's liability carrier to pony up a settlement as well.


That strategy came to a screeching halt with the case of Pusl v. Means, 982 A.2d 550 (Pa. Super. Sept 23, 2009), petition for allowance of appeal denied, 991 A.2d 313 (Pa. 2010). In Pusl, a three-judge panel of the Superior Court allowed the molding of a third-party verdict downward to reflect the previous UIM settlement secured by a plaintiff for the same accident and thereby prevent a double recovery.


After Pusl, the plaintiffs bar switched back to the strategy pursuing the third-party liability claims first for several years until the 2012 decision of the Superior Court came down in Smith v. Rohrbaugh, 54 A.3d 892 (Pa.Super. 2012). In Smith, the Superior Court held that its previous decision in the case of Pusl was wrongly decided and therefore overruled.


Although the practical effect of Smith is that the plaintiffs bar may now go back to the previous strategy of pursuing the UIM claim first so as to pressure the third-party liability carrier into a settlement, in reality, there does not appear to have been a full-fledged return to that approach.


The difference these days may be that UIM claims now largely have to proceed to a jury trial as opposed to the more liberal forum of an arbitration. Moreover, it has become readily apparent that third-party liability carriers have not been pressured into settlement by previous UIM results, as those results are viewed as an entirely separate and distinct part of the claim presented, which should not be factored into the value of the case on the third-party side.


Which claim the injured party pursues first may now also be impacted by the Pennsylvania Supreme
Court's Jan. 21 opinion in the UIM offset case of AAA Mid-Atlantic Insurance v. Ryan, PICS No. 14-0090 (Pa. 2014). In this case, the court held that under a UIM policy of insurance, the amount of the injured party's UIM recovery may be offset not only by the amount of compensation paid under the auto insurance liability policy of the underinsured third-party tortfeasor defendant who caused the accident, but also by the amounts the injured party recovered from any other nondriver defendants, such as the Pennsylvania Department of Transportation or a municipality on a defective road claim.


The Supreme Court ruled in this fashion, in part to uphold the long-standing rule against double recoveries for the same injury. More specifically, where an injured party plaintiff was found to have been fully compensated for his or her injuries by the tortfeasor defendants in the third-party lawsuit side of the matter, the underlying purposes of Pennsylvania's Motor Vehicle Financial Responsibility Law would not be furthered by allowing for an additional recovery against the UIM carrier for the same injuries claimed. As such, plaintiffs may be compelled in some cases to proceed on a UIM claim first.

Trend Toward Arbitration

Although most carriers have done away with UM/UIM arbitration clauses in their automobile insurance policies such that cases are required to proceed through the court system to a jury trial, there have only been a smattering of such trials across Pennsylvania to date. By and large, with both the carriers and the plaintiffs bar each being leery for their own reasons to face a jury, UM/UIM cases continue to largely be resolved by arbitrations agreed upon between the parties.


Such arbitrations typically have only one arbitrator as opposed to the three-member panels of the old days. The auto insurance carriers appear to feel a bit safer heading to arbitration these days, as they have more control over the selection of the sole arbitrator. Typically, such arbitrations also provide greater protection for both parties by the presence of confidential high-low agreements. Both sides also view arbitrations as a more efficient, prompt and less stressful way to conclude the matter, as compared with the uncertainties that accompany a jury trial.


A novel post-Koken issue in this regard is the extent to which a party may appeal from an award resulting from an arbitration completed by agreement of the parties. This issue was recently addressed by Monroe County Court of Common Pleas Judge David J. Williamson in Campbell v. SafeCo Insurance Co. of Illinois, PICS Case No. 13-2525 (C.P. Monroe Co. 2013).


In Campbell, Williamson denied a plaintiff's petition to set aside an arbitration award from an agreed-upon private arbitration in a motor vehicle accident case. According to the decision, no formal arbitration agreement was ever executed between the parties. After the arbitrator granted the defendant UM carrier's motion to dismiss, the plaintiff filed a petition to vacate the arbitrator's decision as contrary to law.


Williamson concluded that in the absence of a formal arbitration agreement, the case should be considered as if the parties submitted the matter to common-law arbitration under 42 Pa. C.S.A. §7341.


Under that statute, an arbitrator's decision could only be set aside if there was "clear, precise and convincing evidence" that the parties were denied a hearing or that there was fraud, misconduct, corruption or some other irregularity that caused the rendering of an unjust, inequitable award. As the plaintiff made no allegations consistent with the wording of the statute, the court denied the plaintiff's petition.

Collateral Estoppel

Where an injured party elects to instead proceed with an agreed-upon private arbitration on the third-party side of the case, the novel issue arises of whether the result there would have any impact on a later UIM claim for the same accident.


In his Jan. 15 opinion in Borrelli v. AIU North America, No. 0430, Control No. 13110820 (C.P. Phila. Jan. 15, 2014), Philadelphia Court of Common Pleas Judge Mark I. Bernstein granted a UIM carrier's motion for summary judgment based on collateral estoppel in a case where the plaintiff elected to proceed through an agreed upon high-low arbitration with the tortfeasor defendant first.


Unfortunately for the plaintiff, that third-party arbitration resulted in an arbitration award that was less than the amount of the defendant tortfeasor's liability limits. The UIM carrier responded to this result by arguing that the plaintiff's damages had been determined and the doctrine of collateral estoppel prevented the claims from being relitigated.


After finding all elements of the collateral estoppel doctrine established, the court agreed, and since the plaintiff's damages were previously determined to be less than the tortfeasor's liability limits, the tortfeasor was not underinsured and, therefore, no UIM claim could be pursued. Arguably, the same result would occur if a plaintiff proceeded to a jury trial against the tortfeasor and secured a verdict in an amount less than the policy limits. Accordingly, if other courts follow the rationale in Borrelli, there may be an increasing risk for the injured parties to proceed with the third-party matter first.

Splits on Important Issues

The trial courts of Pennsylvania have created a split of authority on a number of other post-Koken issues. Questions still abound on whether post-Koken claims asserted against the tortfeasor and the UIM carrier should be permitted to be pleaded together under a single complaint, proceed through discovery in a consolidated fashion or be tried together in front of the same jury.


In the absence of concrete appellate guidance, the trend appears to be leaning toward allowing such cases to remain consolidated in the pleadings and discovery stage, with the more slippery question of whether such cases should be tried together for a later date. As a greater number of consolidated post-Koken cases reaches the trial stage, we can expect to see more trial opinions on this issue. Hopefully, we will also see an appellate decision providing guidance on these issues sooner rather than later.


The closest to appellate guidance on the issue of consolidated or bifurcated trials came in the form of the Superior Court's decision in the case of Stepanovich v. McGraw and State Farm Insurance, 78 A.3d 1147 (Pa.Super. 2013). In Stepanovich, the Superior Court found no violation by the trial court's decision to allow a post-Koken trial to proceed before a jury against both the defendant driver and the UIM carrier without any mentioning to the jury of the UIM carrier as a party defendant.


Unfortunately, while providing some guidance, the Stepanovich decision did not serve to finalize the issue of the proper manner of trying post-Koken cases and litigators in this field must wait for another case to climb the appellate ladder. 


Daniel E. Cummins is a partner and an insurance defense civil litigator with the Scranton, PA law firm of Foley, Comerford & Cummins (www.foleycomerfordcumminslaw.com).  His Pennsylvania civil litigation blog may be viewed at www.TortTalk.com.  Attorney Cummins' online profile may be viewed HERE.

Latest UIM Sign Down Decision Favors Carrier's Position

One of the latest UIM sign down cases was handed down by Judge C. Darnell Jones II of the Federal District Court for the Eastern District of Pennsylvania on March 21, 2014 in the case Henderson v. Charter Oak Ins. Co., No. 12-4363 (E.D. Pa. March 21, 2014 Jones, J.)


Henderson involved the sign down issue in the context of UIM coverage under a commercial policy.  According to the Opinion, the insured executed a proper sign down form back in 2008-09 under 75 Pa.C.S.A. § 1734 of the Motor Vehicle Financial Responsibility Law (MVFRL) under which the UIM coverage of $1 million was reduced to $35,000. 


Thereafter, in 2010-11, the sign down forms were not signed again and the only thing on the election form was that the insured wanted the minimum UIM coverage.  Testimony from an underwriter confirmed that the forms only applied from year to year.   


The Plaintiff insured argued that there should be $1 million in UIM coverage under the policy because the form was not executed properly in 2010-11 and his accident occurred during that time period.  The insurance company asserted that there was only $35,000 in coverage under the rationale that once a sign down form is executed, that form applied over the entire lifetime of that policy.


Relying upon the Pennsylvania Supreme Court opinion in Blood v. Old Guard Ins. Co., 934 A.2d 1218 (Pa. 2007), the Federal Eastern District Court ruled that the insured was only entitled to $35,000 in UIM coverage regardless of the testimony offered up by the underwriter witness as there was no written request for higher coverage.  


The Henderson court noted that the Pennsylvania Supreme Court’s decision in Blood supported the decision that a sign down form is good through the entire lifetime of the policy unless the company receives a written request for higher coverage. 


Anyone wishing to review a copy of this Henderson decision may contact me at dancummins@comcast.net.


I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer and Attorney Paul Oven of the Moosic law firm of Dougherty, Leventhal & Price for bringing this case to my attention.