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ANTHONY E. D'AMBROSIO v. PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY (07/08/81)

decided: July 8, 1981.

ANTHONY E. D'AMBROSIO, JR., APPELLANT,
v.
PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY



No. 119 January Term, 1979, Appeal from the Order of the Superior Court at No. 390 October Term, 1978, affirming the Order of the Court of Common Pleas of Delaware County at No. 77-8286, Civil Action -- Law, dated November 14, 1977.

COUNSEL

Joel S. Robbins, Brookhaven, for appellant.

Timothy B. Barnard, Media, for appellee.

Roberts, Nix, Larsen, Flaherty, Kauffman and Wilkinson, JJ. O'Brien, C. J., did not participate in the consideration or decision of this case. Nix, J., joins in this opinion and filed a concurring opinion. Larsen, J., filed a dissenting opinion in which Kauffman, J., joins.

Author: Roberts

[ 494 Pa. Page 502]

OPINION OF THE COURT

This is a dispute over property insurance coverage. It is usual in that the insured seeks to recover that sum he had expected the insurer to pay for repairs to his property under the parties' contract of insurance. However, it is unusual in that the insured also seeks damages for "emotional distress" and punitive damages because of the insurer's alleged "bad faith" conduct in denying the insured's claim. At issue on this appeal is whether, in light of the Unfair Insurance

[ 494 Pa. Page 503]

Practices Act, this Court should permit an action seeking these latter, additional forms of damages.

I

The insured, appellant Anthony D'Ambrosio, commenced the present action on June 28, 1977, by filing a two-count complaint, one in assumpsit and the other in trespass, against his insurer, appellee Pennsylvania National Mutual Casualty Insurance Company. In his count in assumpsit, appellant alleged that on June 12, 1976, his motor boat and outboard motor were damaged as a result of a severe storm. Appellant claimed that the damage was covered by the parties' contract of insurance then in effect, but that appellee had failed to honor his claim. Thus in his count in assumpsit appellate sought a money judgment of $932.23, reflecting the cost of necessary repairs to the boat, as well as interest, attorney's fees and costs.*fn1

In his court in trespass, appellant alleged that his claim had been "summarily denied." Appellant averred that "[a]fter several and repeated phone calls by the plaintiff to defendant, the plaintiff was able to ascertain the reason for the denial of the claim by the defendant, said reason being that an adjuster hired by defendant had reached the conclusion that the claim submitted by the plaintiff was improper." According to appellant, he asked appellee for "the exact information which the defendant had received which led it to believe that the claim was improper . . . ." Appellant did not specify the result of this inquiry. He did aver that he had submitted to appellee written statements from the mechanic who had repaired the property and a letter from the party to whom appellee's adjuster had spoken. In appellant's view, "said letter indicat[ed] that the adjuster was wrong in the conclusions he had reached, and had not based his conclusions on probative evidence." Appellant alleged that, after further demands, appellee continued to refuse the claim, "even though the defendant has not been

[ 494 Pa. Page 504]

    able to produce any information whatsoever which would in any way indicate that their original investigation was valid."*fn2 Appellant thus sought "compensatory damages . . . in an amount in excess of Ten Thousand Dollars ($10,000.00)

[ 494 Pa. Page 505]

    and punitive damages . . . in an amount in excess of Ten Thousand Dollars ($10,000.00), plus all costs and attorneys fees."

Appellee filed preliminary objections to the count in trespass, in the nature of a demurrer. After argument, the Count of Common Pleas of Delaware County sustained the preliminary objections and dismissed the count in trespass. Appellant did not request leave to amend.

On appeal, the Superior Court divided evenly and affirmed. This Court granted allowance of appeal.

II

In arguing for the reinstatement of his count in trespass, appellant would have this Court adopt the position of the Supreme Court of California which, in Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973), held that where an insurer

"fails to deal fairly and in good faith with its insured by refusing, without proper cause, to compensate its insured for a loss covered by the policy, such conduct may give rise to a cause of action in tort for breach of an implied covenant of good faith and fair dealing."

9 Cal.3d at 574, 108 Cal.Rptr. at 485, 510 P.2d at 1037 (emphasis in original). Appellant's argument is based on his belief that such an action "is the only remedy which will prevent insurance industry abuse in handing first party claims, and which will place the consumer on more equal footing with insurers."*fn3

Although the seriousness of "bad faith" conduct by insurance carriers cannot go unrecognized, our Legislature has already made dramatic, sweeping efforts to curb the bad faith conduct. Section 4 ...


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