Appeal from the Order of the Superior Court at Case No. 378, Pittsburgh, 1987 dated December 21, 1987 Affirming the Order of the Court of Common Pleas, Lawrence County, Civil Division at Case No. 67 of 1986 C.A. dated February 16, 1987. Pa. Super. ,
Nix, C.j., and Larsen, Flaherty, McDermott, Zappala, Papadakos and Stout, JJ. Papadakos, J., files a concurring opinion in which McDermott, J., joins. Flaherty, J., files a dissenting opinion in which Zappala, J., joins. Nix, C.j., dissents.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
Appellant Dorothea Dercoli appeals from an order of the Superior Court affirming an order of the Lawrence County Common Pleas Court which sustained a demurrer to her complaint and dismissed her lawsuit against appellees Pennsylvania National Mutual Insurance Company (Penn National) and Grange Mutual Casualty Company (Grange) for breach of fair dealing and good faith. In her appeal the appellant frames two issues: (1) whether our decision in Hack v. Hack, 495 Pa. 300, 433 A.2d 859 (1981), abolishing the defense of inter-spousal immunity is to be given retroactive application; and (2) whether the duty of fair dealing and good faith requires an automobile insurer to properly advise its insured of the insured's entitlement to present a claim or claims under the applicable policy where the insurer advises its insured that legal representation is unnecessary and induces the insured to rely upon the insurer to pay appropriate benefits?
The issues presented by the appellant arise out of the following factual background: On the morning of July 21, 1980, the appellant was riding as a passenger in an automobile being operated by her husband, David R. Dercoli. The automobile was travelling on U.S. Route 422 in Lawrence County when, apparently, Mr. Dercoli became drowsy and fell asleep. With Mr. Dercoli asleep at the wheel, the automobile crossed over the centerline of the highway and crashed into the rear wheels of an on-coming tractor-trailer. Mr. Dercoli was killed instantly. The appellant was severely injured.
At the time of the tragic accident Mr. Dercoli was insured under two automobile insurance policies. One of the policies was with appellee Penn National and the other was with appellee Grange. Both insurers were notified of the accident and the injuries and losses resulting therefrom. In the claim process that followed, the appellant relied upon the advice of the appellees' agents to receive the benefits
due her under the applicable policies. Subsequently, after receiving the advice of the appellees' agents, the appellant began to receive certain benefits paid by the appellees under the policies in force. Appellant continued to receive the benefit checks until approximately, April, 1984.
On July 14, 1981, approximately one year after the accident and while appellant was receiving benefit checks and relying upon appellees' agents for advice, this Court decided the case of Hack v. Hack, supra. In Hack we abolished the defense of inter-spousal immunity as a bar to an action for personal injuries caused by the negligence of the injured victim's spouse. The appellant did not learn of the removal of this bar to suit until sometime after March of 1985.
In January, 1986, appellant filed a complaint in civil action against the appellees averring, inter alia, a breach of appellees' duty of fair dealing and good faith. Specifically, the appellant sets forth, as relevant allegations in her complaint, the following:
16. [U]pon notice of said motor vehicle accident by or on behalf of Plaintiff, Defendants PENN NATIONAL and GRANGE, through their authorized Agents, cooperatively and equally undertook the handling, processing and payment of Plaintiff's benefits under said Contracts.
17. At all times herein material, Plaintiff was not represented by legal Counsel, and Defendants' Agents represented to and assured Plaintiff that her claim would be processed without the need for Plaintiff to be independently represented.
18. Plaintiff reasonably relied entirely upon the advice of Defendants' agents as to the nature and extent of benefits which were due to her under said insurance contracts. Further, Defendant's agents were fully cognizant of Plaintiff's said reasonable reliance and lack of independent representation.
19. At all times material herein, and by reason of said insurance Contracts, Defendants PENN NATIONAL and GRANGE were each charged with a duty of good faith and fair dealing in respect of determination of entitlement,
processing, and payment of Plaintiff's benefits under said Contracts. This duty included, among other things, the obligation on the part of said Defendants to pay or advise Plaintiff as to any and all benefits to which Plaintiff reasonably appeared to be entitled under said insurance contracts.
20. By reason of the nature of said insurance Contracts, Defendants PENN NATIONAL and GRANGE occupied the position of a fiduciary with respect to determination of entitlement and payment of Plaintiff's benefits thereunder.
25. Upon the decision of Hack vs Hack, Supra, Defendants were thereby placed in a position of conflicting interests, in that presentation or consideration of any claim by or on behalf of Plaintiff and based upon the negligence liability of her said husband would have created ...