On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil Action No. 89-4421)
Before: Scirica, Alito and Seitz, Circuit Judges
In this diversity case, Harold and Ruth Katz allege that the Aetna Casualty and Surety Company intentionally concealed the existence of a liability policy issued by another insurance company, and that this concealment constituted a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and common law fraud. The district court granted summary judgment for Aetna. We will affirm in part and reverse in part.
Appellant Harold Katz was a passenger in a car being driven by Phyllis Appelbaum when an unknown motorist ran the car off the road. Katz was injured, and brought a negligence action against Appelbaum in the Philadelphia County Court of Common Pleas. At the time of the accident, Appelbaum owned two insurance policies: Aetna provided $100,000 in liability coverage and $100,000 in uninsured/underinsured ("UIM") coverage, while Allstate Insurance Company provided $1,000,000 in excess liability coverage. The Katzes had $600,000 in UIM coverage from Hartford Insurance Company.
During pre-trial preparation, the Katzes' attorney specifically asked an Aetna claims officer whether Appelbaum had excess coverage. The claims officer denied such coverage existed.*fn1 The Katzes then settled their claims against Appelbaum for the $100,000 liability limit of the Aetna policy, and the state action was closed.
The Katzes also sought UIM benefits from both Aetna and Hartford. These insurers agreed to joint arbitration in which Aetna's UIM coverage would be exhausted first. After two days of arbitration, Aetna told the Katzes about Appelbaum's $1,000,000 excess liability coverage from Allstate. The arbitration adjourned to allow the Katzes to reopen their state suit against Allstate.*fn2
After discovery and briefing, the common pleas Judge granted the Katzes' petition to reopen the state suit, finding that: (1) Appelbaum notified Allstate one or two days after the accident, (2) Allstate knew of the Katzes' claim, (3) neither the Katzes nor their attorney knew of the Allstate policy when they settled with Aetna, (3) Allstate knew that the Katzes' attorney did not know of the Allstate policy, (4) Appelbaum knew that the Katzes neither knew nor had reason to know of the Allstate policy, and (5) Aetna knew of the Allstate policy.
The Katzes then filed this action in state court, claiming that Appelbaum, Aetna, and Allstate willfully, intentionally, and fraudulently concealed the Allstate policy and caused financial and emotional harm. Appelbaum and Allstate soon settled, and Aetna -- the only remaining defendant -- removed the suit to federal district court. Aetna then moved for summary judgment. Construing the Katzes' complaint to assert a claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("the CPL") and a common law claim for fraud and deceit,*fn3 the district court ruled the Katzes had no standing to sue under the CPL, and their common law claim was preempted by the Unfair Insurance Practices Act (the "UIPA"). This appeal followed.*fn4
In this appeal, the Katzes contend that summary judgment for Aetna was inappropriate because (1) they have standing under the CPL and (2) their common law ...