Middle District Court Denies Carrier’s MSJ on Claims for Stacked UIM Benefits and Bad Faith

Connolly v. Progressive Northern Insurance Company,3:13-CV-2717 (M.D. Pa. Feb. 4, 2015 Conaboy, J.)

On February 26, 2009, April Connolly was involved in a motor vehicle accident with tortfeasor driver Thorton. Plaintiff placed Progressive on notice of her intention to make an underinsured motorist claim (UIM) claim and forwarded some documents in support of the claim.   Plaintiff and Progressive disputed the nature and extent of the Plaintiff’s injuries and whether the value of the injuries exceeded the $250,000 credit from Thorton’s underlying liability coverage.

Ms. Connolly’s vehicle was covered by a Progressive Northern Insurance Company policy, Policy No. 1041808708 which provided UM/UIM coverage of 100/300. Plaintiff alleged stacked coverage between the Progressive Northern Policy and a “Progressive Preferred” Insurance Company Policy, along with a “Progressive Casualty” Company Policy.  The Progressive Preferred policy did not originate until after the accident.  There was never a Progressive Casualty policy in effect at any time.  Plaintiff also claimed that proper stacking waivers were not executed at the time certain vehicles were added and removed from the Progressive Northern policy over the years.  Plaintiff also claimed bad faith in that she was never provided with “certified policies” dating back to 1998.

Plaintiff filed a Writ of Summons which was removed to the Middle District.  All three Progressive entities were defendants. Progressive alleged that Plaintiff’s parents had rejected UIM coverage at the inception of the policy.  However, Plaintiff argued that there was ambiguity in her entitlement to stacking because she was not provided certified copies of the policies.

A.     PROGRESSIVE PREFERRED AND PROGRESSIVE CASUALTY WERE DISMISSED

Judge Conaboy first considered whether the two other Progressive entities were properly named in the lawsuit. The Motion included a declarations page from the year prior to the accident from Progressive Northern and a second declarations page renewing that policy for the time period covering the accident. A third exhibit was a Progressive Preferred declarations page dated March 26, 2009, one month after the accident. The court held that “Progressive Preferred” Insurance Company had no contractual relationship with the Plaintiff at the time of the incident and therefore was dismissed.

Plaintiff alleged that the claims representative testified that she was unclear about which Progressive entity employed her, and therefore Progressive Casualty should be party. The court was unpersuaded that the claims representative’s testimony created a contractual relationship with Progressive Casualty and granted “Progressive Casualty” summary judgment in the matter.

B.     STACKING ISSUE

Defendant argued that under Pennsylvania law (Sackett I, II and III) once an insured executes a stacking waiver there is no need to obtain a new waiver once the policy comes up for renewal or the insured adds a new vehicle to the policy. Plaintiff’s parents executed a stacking waiver in 1998 when the Progressive Northern policy incepted. Defendants provided an affidavit of Progressive employee Tiffany Burton which outlined the details of the Progressive Northern Policy 10418087-0 through 21 renewals in 10.5 years. However, the Court noted that Ms. Burton could not explain why the core number of the policy – 10418087 was changed at various times with the addition of final numbers 0 through 9. The court was troubled by the fact that there was not an equal number of suffixes through the 21 renewals, and that issue was not addressed in Ms. Burton’s affidavit. The Court ultimately denied the Defendant’s Motion for Summary Judgment on the stacking issue, as it could not conclude that the policies throughout the 10.5 years were identical to the initial policy that incepted in 1998.

C.     WHETHER DEFENDANT IS ENTITLED TO SUMMARY JUDGMENT REGARDING PLAINTIFF’S ALLEGATIONS OF STATUTORY BAD FAITH

Plaintiff claimed Defendant caused statutory bad faith pursuant to 42 Pa. C.S.A. § 8371. The Court set out the standard for bad faith as follows:

“Bad faith” on the part of an insurer is any frivolous or unfounded refusal to pay the proceeds to 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 interest or ill will; mere negligence is not bad faith.

Northwestern Mutual Life Insurance Company v. Babayan, 430 F.3d 121, 137 (3rd Cir. 2005) (citingTerletsky v. Prudential Property and Casualty Company, 649 A.2d 680, 688 (Pa. Super 1994)).

Plaintiff’s bad faith claim was based on two assertions: 1) Defendant failed to communicate with Plaintiff’s counsel regarding the provisions of a “certified copy of the policies” in order to clarify the issue regarding stacked coverage; and 2) Defendant failed to perform a reasonable and timely investigation of Plaintiff’s claim by failing to schedule Plaintiff’s deposition or ever request her Statement Under Oath.

The Defendant cited several factors mitigating the claim of bad faith, including the $250,000 credit from the third party claim, Plaintiff’s release to normal activity with no restrictions in the two months after the accident; her orthopedic doctor’s opinion that her lacerations were healed in two months; her last treatment date of August 2010, and her counsel’s refusal to provide an update on her status.  Despite the mitigating factors, the Court determined that the question of statutory bad faith was a factual determination to be made by the jury, and denied Defendant’s Motion for Summary Judgment.

In sum, Defendant’s Motion for Summary Judgment was granted in part and denied in part. The two additional Progressive entities, Progressive Preferred and Progressive Casualty Insurance Company were dismissed, but the UIM stacking issue and claim for statutory bad faith were preserved as jury questions.

Jennifer L. LeVan

Office: Bethlehem
Phone: (610) 954-6873
Email: jlevan@forryullman.com
Practice Areas: Commercial Litigation, First Party PIP / MPC, Fraud / SIU, General Liability, Premises Liability, Third Party, UM/UIM