The opinion of the court was delivered by: RALPH C. BRODY
On September 29, 1989, plaintiff, Darlene Gavaghan ("Gavaghan"), rented an automobile at the Philadelphia office of defendant, Automate Auto Rental, Division of Agency Rent-A-Car. Defendant Automate Auto Rental and defendant Replacement Rent-A-Car (hereinafter collectively referred to as "Automate") are related entities and are corporations organized and existing under the laws of the state of Ohio. At all times relevant to this lawsuit Automate was a self-insured car rental business.
On the same day she rented the car, Gavaghan suffered serious injuries from an accident in the car. Gavaghan claims the accident occurred when an unidentified vehicle forced her car off the road causing her to sustain severe head, neck and back injuries.
After her accident, Gavaghan sought uninsured motorist benefits from Automate and from her own insurance company, Reliance Insurance Company ("Reliance"). She received $ 175,000 in uninsured motorist benefits from Reliance pursuant to her own policy. Automate denied Gavaghan's uninsured motorist claim and she filed this lawsuit in the Court of Common Pleas of Philadelphia County seeking contractual and extra-contractual damages. Gavaghan's complaint alleges three counts against Automate. Count I states that Automate breached the policy of insurance it issued to Gavaghan when it refused to pay her uninsured motorist claim. Count II states that Automate's conduct constituted unfair or deceptive practices in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("CPL"), 73 Pa. Stat. Ann. section 201 et seq. (1976) and/or the Unfair Insurance Practices Act ("UIPA"), 40 Pa. Stat. Ann. section 1171.1 et seq. (1974) and/or the Unfair Claims Settlement Practices regulations, 31 Pa. Code section 146 et seq. (1978).
Count III states that Automate acted in bad faith and asserts a claim for damages pursuant to 42 Pa. Cons. Stat. Section 8371 (1990).
Automate removed Gavaghan's complaint to this court based upon diversity jurisdiction in accordance with 28 U.S.C. Section 1332. Automate then moved to dismiss Gavaghan's complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. In the motion, Automate maintains that: (1) according to section 1733 of the Pennsylvania Motor Vehicle Financial Responsibility Law ("PMVFRL"), 75 Pa. Cons. Stat. Ann. Section 1701 et seq. (1984), plaintiff waived her claim for insurance benefits from Automate when she recovered from Reliance before recovering from Automate; (2) plaintiff may recover no more than the amount of uninsured motorist coverage provided by Automate at the time of the accident ($ 15,000); (3) no private cause of action exists for claims pursuant to the CPL and UIPA
; (4) 42 Pa. Cons. Stat. Ann. Section 8371 (1990) does not apply to self insureds; and that (5) 42 Pa. Cons. Stat. Ann. section 8371 (1990) may not be retroactively applied.
When deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), I must accept as true all allegations in the complaint and construe them in a light most favorable to Gavaghan. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989); Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989); Williams v. State Farm Mutual Automobile Insur. Co., 763 F.Supp. 121, 122 (E.D.Pa. 1991). I may grant Automate's motion to dismiss only "if it appears to a certainty that no relief could be granted under any set of facts which could be proved." Williams, 763 F.Supp. at 122.
a. Applicability of 42 Pa.C.S. Section 8371
The central issue in this case is whether 42 Pa.C.S.A. Section 8371 ("section 8371") applies to Automate's denial of Gavaghan's claim for uninsured motorist coverage. More specifically, the issue is whether section 8371 applies to an action for uninsured motorist benefits brought pursuant to the PMVFRL, and if so, then whether Automate's self insured status affects section 8371's application to this case.
Section 8371 creates a private cause of action for bad faith conduct by an insurer against an insured. Thomson v. Prudential Property and Casualty Ins. Co., 1992 LEXIS 12627 (E.D.Pa. 1992). Enacted on July 1, 1990, section 8371 states as follows:
"In an action arising under an insurance policy,
if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the ...