No. 7 April Term, 1979, Appeal from the Order of the Court of Common Pleas of Clearfield County, Civil Action-Law at No. 359 May Term 1971, dated November 3, 1978 and Judgment entered February 26, 1979
George F. Douglas, Jr., Carlisle, for appellant.
John R. Gavin, Oil City, for appellee.
Cercone, P. J., and Price, Spaeth, Hester, Cavanaugh, Brosky and Wickersham, JJ. Brosky, J., files a concurring opinion.
[ 286 Pa. Super. Page 189]
This is a garnishment proceeding to enforce a judgment recovered in a suit for personal injuries. The jury found that in refusing to offer to settle the suit for an amount within its policy limit, appellant insurance company had not acted in good faith. The only issue we need decide is whether the evidence was sufficient to support the jury's verdict. We have concluded that the evidence was sufficient, and shall therefore affirm.
The accident that led to this case took place early in the morning of July 2, 1969, outside of Clearfield, Pennsylvania. Gerald B. Reed, appellant's insured, was driving his automobile on a four-lane divided highway. Appellee was a passenger in an automobile driven by her son, Robert Owens, on a side road. As Owens entered the four-lane highway, he collided with Reed's automobile.*fn1
Reed and Owens sued each other. Appellee sued Reed alone. Appellant -- Reed's carrier -- did not join Owens as an additional defendant in appellee's suit against Reed.
Before the three suits were tried, appellee's attorney wrote Reed, with a copy of his letter to appellant. The letter stated that if appellant would disclose the limit of Reed's policy, appellee's attorney would negotiate a settlement of appellee's claim against Reed for an amount within
[ 286 Pa. Super. Page 190]
that limit. The letter also indicated what appellee's damages were. It stated that as of the date of the letter, appellee's liquidated damages were out-of-pocket expenses of $3,230.39 and a wage loss of $8,320; that she had suffered disfigurement of her face, a partial loss of vision, and was permanently disabled; that she was 56 years old with a life expectancy of 22.4 years; and that she was claiming, in addition to her liquidated damages, damage for disfigurement, pain and suffering, and future medical expenses. R.R. 18a. Appellant's attorney replied by letter stating that the policy limit was $10,000, but that "[a]s a result of our review of the facts of this accident we do not believe that Mr. Reed was negligent in the operation of his car and, therefore, we do not feel our refusal to make any offer to you is a failure to settle in good faith." R.R. 19a.
In May 1974 all three suits were tried to the same jury. The jury found that both Reed and Owens were negligent, which meant, under the law as it was at that time, that neither could recover from the other. In appellee's suit against Reed, the jury returned a verdict for appellee in the amount of $34,257.15. After appellant had paid its $10,000 policy limit, appellee filed a writ of execution for the balance, naming appellant as garnishee. The jury found that appellant had not acted in good faith, and a verdict of $24,215.15,*fn2 plus interest, was entered for appellee.
On appeal, appellant assigns no trial error. Its only argument, as we have indicated above, is that the evidence was insufficient to support the jury's verdict, and that the lower court therefore erred in refusing to grant its motion for judgment n. o. v.
Our Supreme Court first held that an insurance company owes its insured a duty of good faith, and that a violation of that duty may lead to liability for the full amount of a verdict obtained against the insured, in Cowden v. Aetna Casualty & Surety Company, 389 Pa. 459, 134 A.2d 223
[ 286 Pa. Super. Page 191]
(1957). In Cowden the Court noted that although the question was one of first impression in Pennsylvania, it had been considered extensively by courts in other states and by commentators, and the good faith standard represented the majority rule. Id., 389 Pa. at 468-69, 134 A.2d at 227-28. See e. g., Keeton, "Liability Insurance and Responsibility for Settlement." 67 Harvard L.Rev. 1136 (1954); Annot.: Duty of Liability Insurer to Settle or Compromise, 40 A.L.R.2d 168. The Court has reiterated the good faith standard in subsequent cases, e. g., Gedeon v. State Farm Mutual Automobile Insurance Company, 410 Pa. 55, 188 A.2d 320 (1963); Gray v. Nationwide Mutual Insurance Company, 422 Pa. 500, 223 A.2d 8 (1966), as has this court, e. g., Moody v. Nationwide Insurance Company, 257 Pa. Super. 642, 390 A.2d 311 (1978), and as have federal courts applying Pennsylvania law, e. g., Bell v. Commercial Insurance Company of Newark, New Jersey, 280 F.2d 514 (3d Cir. 1960); Ashbrook v. Kowalick, 332 F.Supp. 78 (E.D.Pa.1971), aff'd mem., 474 F.2d 1338 (3d Cir. 1973).
In the present case, the lower court carefully explained the good faith standard to the jury. R.R. 533a-42a. Following the court's charge, appellant's counsel indicated on the record his satisfaction with the charge. Id. at 551a.
In considering whether the jury was entitled to find that appellant had not exercised good faith, we must view the evidence, together with the inferences that may be drawn from it, in the light most favorable to appellee as the verdict winner. Flickinger Estate v. Ritsky, 452 Pa. 69, 305 A.2d 40 (1973); Moyer v. Ford Motor Co., 205 Pa. Super. 384, 209 A.2d 43 (1965). This is so regardless of whether judgment n. o. v. was granted, Handfinger v. Philadelphia Gas Works, 439 Pa. 130, 266 A.2d 769 (1970), or, as here, was denied, Glass v. Freeman, 430 Pa. 21, 240 A.2d 825 (1968), by the lower court.
Appellee's principal witness was Silvio P. Cerchie, who testified as an expert on insurance industry practice in handling claims resulting from automobile accidents. Cerchie's ...