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HomeMy WebLinkAbout01-860 CivilSHIRLEY SPIGELMYER V. ERIE INSURANCE EXCHANGE IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 2001-0860 CIVIL TERM IN RE: DEFENDANT'S MOTION FOR SUMMARY JUDGMENT BEFORE HOFFER, P.J., OLER, GUIDO, JJ. OPINION AND ORDER OF COURT The instant action arises from defendant's alleged bad faith handling of an underinsured motorist claim made by plaintiff. Currently before us is defendant's motion for summary judgment. For the reasons hereinafter set forth, the motion will be granted. STANDARD OF REVIEW Pennsylvania Rule of Civil Procedure 1035.2 provides, in relevant part, as follows: Rule 1035.2 Motion After the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law (1) whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or (2) if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. NO. 2001-0860 CIVIL Pa. R.C.P. 1035.2. In determining whether to grant a motion for summary judgment we must view the record in the light most favorable to the non-moving party. Erte/v. Patriot News Co., 544 Pa. 93,674 A.2d 1038 (1966). Summary judgment may only be granted in cases that are clear and free from doubt. (Pa. Super. 2000). J.H. Ex Re/. Hoffman v. Pe//ak, 764 A.2d 64 FACTUAL BACKGROUND Plaintiff sustained a knee injury in a motor vehicle accident on June 9, 1999. At the time of the accident she was insured under an automobile policy issued by the defendant. The policy insured three vehicles with each having $50,000 ofunderinsured motorist coverage. Since the policy provided for stacking, the total underinsured motorist coverage was $150,000. In April of 2000, plaintiff settled her third party claim against the tortfeasor for $48,500. Since the third party tortfeasor had liability limits of $50,000, plaintiff sought and obtained defendant's consent to settle. She then presented a claim for underinsured benefits under her policy with defendant. Plaintiff underwent knee replacement surgery on August 23, 2000. A few days prior to the surgery, her counsel demanded that defendant pay $50,000 in partial payment of her underinsured motorist claim. Defendant refused to make any partial payment. On August 31, 2000, Defendant obtained a copy of the medical records relating to plaintiff' s knee replacement surgery. On October 17, 2000, defendant was advised that plaintiff' s physician cleared her to return to work on November 20, 2000. On November 9, 2000, defendant offered $40,000 as a full and final settlement of plaintiff' s claim. Plaintiff rejected this offer. She demanded the entire $150,000 policy limits. In the NO. 2001-0860 CIVIL alternative, she demanded immediate payment of $50,000 and suggested that the parties arbitrate the remaining value of her claim. On December 4, 2000, defendant offered $50,000 as a full and final settlement. Plaintiff again rejected the offer, reiterating her prior demands. Since the parties could not agree upon the value of the claim, plaintiff demanded that the matter proceed to arbitration under the terms of the policy. Shortly thereafter, the arbitrators were chosen and a hearing was scheduled for May 22, 2001. After the demand for arbitration, defendant obtained counsel who moved quickly to depose the plaintiff and to conduct other preparation in anticipation of the arbitration hearing. Two weeks before the scheduled arbitration date, the entire claim was settled for $73,931.00. DISCUSSION Plaintiff's cause of action is based upon 42 Pa. C.S.A. § 8371 which provides as follows: Actions on insurance policies In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. (2) Award punitive damages against the insurer. (3) Assess court costs and attorney fees against the insurer. While the statute does not define what constitutes bad faith, our appellate courts have given us some guidance: "Bad faith" on [the] part of [an] insurer is any frivolous or unfounded refusal to pay proceeds of a policy; it is not necessary that such refusal be fraudulent. For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e., good faith and fair dealing), through some motive of self NO. 2001-0860 CIVIL interest or ill will; mere negligence or bad judgment is not bad faith. A recovery for bad faith requires clear and convincing evidence of bad faith, rather than mere insinuation, and a showing by the insured that the insurer did not have a reasonable basis for denying benefits under the policy and that the insurer knew of or recklessly disregarded its lack of a reasonable basis in denying the claim. MGA Ins. Co. v. Bahos, 699 A.2d 751,754-755 (Pa. Super. 1997) (citations omitted). We are satisfied as a matter of law that plaintiff has produced no evidence of bad faith on the part of defendant in its handling of her underinsured motorist claim. The only bad faith alleged by plaintiff is the defendant's failure to make a partial payment of her claim. As she averred in her complaint: Defendant has agreed that Plaintiff Shirley Spigelmyer' s claim has a minimum value of $50,000.00. Defendant has offered said amount to Plaintiff. ~ She goes on to allege that defendant refused to "tender and pay the undisputed $50,000 underinsured policy limit coverage ... while the parties litigate whether plaintiff s claim has any additional value.''2 Plaintiff s bad faith claim must fail for several reasons. In the first instance, she has not come forward with evidence to show that a portion of her claim was undisputed. The mere fact that defendant offered $50,000 to settle her claim does not establish a "minimum value" nor does it make that amount "undisputed." As the Superior Court stated in a similar case involving underinsurance benefits: We cannot conclude that settlement offers.., equate to "undisputed amounts" of benefits due under the policies. "Undisputed" has been defined as "[n]ot questioned or challenged; uncontested." BLACK'S LAW DICTIONARY 1528 (7 th ed. 1999). It is well established in Pennsylvania that settlements are not to be construed as admissions of liability. See 42 Pa. C.S. {} 6141(a); Strutz v. State Farm Mut. Ins. Co., 415 Pa. Super. 371 609 A.2d 569 570 (1992). Other courts, under facts See Complaint, Paragraph 12. See Complaint, Paragraph 15. NO. 2001-0860 CIVIL similar to those in the present case, have stated: "[t]he court is unwilling to infer that settlement authority invariably constitutes a final, objective assessment of a claim' s worth to which an insurer may be held on penalty of bad faith." Kosierowski v. Allstate Ins. Co., 51 F.Supp. 2d 583, 592 (E.D.Pa. 1999). See also Volandv. Farmerslns. Co., 189 Ariz. 943 P.2d 808, 812 (App. 1997) ("Contrary to plaintiff' s contention, that the carriers considered her claim's fair value' to be $30,000 and therefore offered to settle for that amount does not mean they acknowledged that was 'the minimal amount the insurer's own adjuster ha[d] evaluated as being owed to the insured.'"). Williams v. Nationwide 34[utuallnsurance Co., 750 A.2d 881,887 (Pa. Super 2000). Furthermore, even assuming arguendo that $50,000 was the defendant's opinion as to the claim's fair value, it was not required to pay any amount unless plaintiff concurred as to that fair value. The policy at issue contains the following relevant language. Arbitration Disagreement over.., the amount of damages shall be settled by arbitration .... However, the amount of damages can never exceed that Uninsured or Underinsured Motorists Coverage limits shown on the Declarations. Throughout the negotiations plaintiff demanded the policy limits to settle her claim. In other words, she valued the worth of her claim to be at least $150,000. Obviously there was a disagreement between the parties as to the amount of damages. The express terms of the policy required that the disagreement be settled by arbitration. Just prior to the scheduled arbitration, and only 13 months after the claim was initially presented, the NO. 2001-0860 CIVIL parties resolved the case for less than one half the total policy limits.3 Finally, plaintiff s contention that defendant was required to make a partial payment without a full and final release defies reason and common sense. We note that the valuation of personal injury claims is far from an exact science. Because there are so many subjective factors involved, reasonable people acting in good faith can place substantially different values on the same claim. Anyone who has tried a case to verdict or an arbitration to award is well aware of this principle. While offers and demands are made and accepted based upon many factors, this uncertainty as to value is always present as a significant factor. Plaintiffs are aware that a verdict or award may be substantially less than their valuation, while defendants fear that a verdict or award may be substantially more than theirs. To accept plaintiff s position would be to discourage settlements by removing their downside risk. In any event, plaintiff has failed to come forward with any evidence to show that defendant acted in bad faith. To the contrary, the facts viewed in the light most favorable to her clearly show that defendant fairly and expeditiously complied with the terms of its policy and resolved plaintiff s claim in good faith. For those reasons, its motion for summary judgment will be granted. ~ Plaintiff argues that there were 3 separate $50,000 policy limits. We did not find that argument to be persuasive. The policy provided as follows: Stacked Coverage If Stacked Uninsured Motorists and/or Stacked Underinsured Motorists Coverage is purchased and the injured person is you or a relative, we will pay no more than the applicable sum of the Uninsured or Underinsured Motorists Coverage limits shown on the Declarations. There was only one policy with different limits of underinsured coverage depending on the option chosen. NO. 2001-0860 CIVIL ORDER OF COURT AND NOW, this day of MARCH, 2003, for the reasons set forth in the foregoing opinion, defendant's Motion for Summary Judgment is GRANTED and plaintiff' s claim for bad faith is DISMISSED with prejudice. By the Court, /s/Edward E. Guido Edward E. Guido, J. Richard A. Sadlock, Esquire For the Plaintiff Richard B. Wickersham, Esquire For the Defendant :sld