Wade Clark Mulcahy LLP

<p style="text-align: justify;">Back in April, we noted all eyes were on the PA Supreme Court to further clarify the bad faith standard with respect to insurance coverage in the lawsuit captioned: <em>Berg v. Nationwide Mut. Ins. Co., Inc</em>.  On Thursday, November 21, oral arguments were finally held in this matter.  During arguments, the PA Supreme Court was asked to consider whether the PA Superior Court abused its discretion by reweighing evidence relied upon by the trial court in its finding of bad faith on the part of an insurance carrier.</p>
<p style="text-align: justify;">By way of background, this lawsuit stems from a 1996 car accident involving Sharon Berg which led to well over a decade of litigation between Berg and her automobile insurer. The insurance company chose to send the vehicle for repairs rather than deem it totaled. Berg sued her insurer on the premise that the repairs were defective and the car was no longer crashworthy. One of the hotly contested issues became whether the insurer had, in bad faith, decided to repair the vehicle because it was half the cost of rendering it totaled, although the car was in fact totaled. A Berk’s County jury found almost entirely in favor of the insurer and only found it should pay $295 for violating the Pennsylvania Unfair Trade Practices and Consumer Protection Law. However, the trial judge found bad faith on the part of the insurer and added $18M in punitive damages and $3M in counsel fees to Berg’s verdict. Specifically, the trial judge cited to the insurer’s later decision to deem the car totaled, its failures to disclose information about the vehicle’s condition, abusing the discovery process, and its failure to negotiate in good faith.</p>
<p style="text-align: justify;">On appeal, the Superior Court found the evidence relied upon by the trial judge to be unconvincing and reversed the trial court’s verdict. Specifically, it found that there was no evidence that the insurer knew the vehicle was not safe to be put back on the road nor that it acted in bad faith, stating, “The trial court simply ignored a large body of evidence that rendered is finding unsupported.” In addition, the appellate court found bias on the part of the trial judge because of language in the judge’s opinion that appeared to condemn the insurance industry in broad terms.</p>
<p style="text-align: justify;">On Thursday, the PA Supreme heard oral arguments after granting Berg’s appeal. It will issue its decision on, among other things, whether the appellate court abused its discretion “by reweighing and disregarding clear and convincing evidence introduced in the trial court upon which the trial court relied to enter a finding of insurance bad faith.”</p>
<p style="text-align: justify;">Continue to stay tuned for the PA Supreme Court’s ruling and its impact on PA bad faith litigation.</p>
<p style="text-align: justify;">Thank you to Priscilla Torres for her contribution to this post.  Please email <a href="mailto:chayes@wcmlaw.com">Colleen E. Hayes</a> with any questions.</p>