The opinion of the court was delivered by: WELSH
UNITED STATES MAGISTRATE JUDGE
This is a five count diversity action the plaintiff has filed against her insurer, State Farm Mutual Automobile Insurance Company ("State Farm"). All of the plaintiff's claims arise out of the manner in which State Farm processed her claim for underinsured motorist benefits. Count I is a claim for bad faith. Count II is a claim under Pennsylvania's Consumer Protection Law. Counts III-V are for common law fraud and breach of contract. State Farm has filed a motion for summary judgment with respect to all counts of the complaint.
I. Summary Judgment Standard
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Federal Rule of Civil Procedure 56(c). An issue of fact is genuine only if there is sufficient evidence to permit a reasonable fact finder to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). An issue of fact is material only if it might affect the outcome of the suit under the governing law. Id. at 248. Credibility determinations are not appropriately made by a judge in summary judgment but must be left for the fact finder. Id. at 255.
The moving party bears the initial burden of identifying for the court the basis for its motion and identifying the portions of the record it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Once the moving party has done this, the non-moving party must produce evidence such that a reasonable fact finder could find for that party, in order to avoid the entry of summary judgment against it. Anderson, 477 U.S. at 248-49. Where the moving party has met its initial burden, the non-moving party must respond with specific factual allegations or with other specific evidence demonstrating that there is a genuine issue for trial. See Lujan v. National Wildlife Federation, 497 U.S. 871, 888-89, 111 L. Ed. 2d 695, 110 S. Ct. 3177 (1990). Conclusory factual allegations will not suffice. Id. Finally, when considering how a reasonable fact finder would rule, the court should apply the evidentiary standard that the fact finder would use at trial. Anderson, 477 U.S. at 252.
The following constitute the facts about which there is no dispute. On July 15, 1992, the plaintiff was involved in an auto accident with Vasco Da Conceicao. Mr. Da Conceicao was insured under an automobile insurance policy issued by State Farm. The accident left the plaintiff with tarsal tunnel syndrome in her left ankle, as a result of which she required surgery. Despite the surgery, the plaintiff's ankle was permanently injured, causing pain and limiting her mobility. She incurred $ 17,147.99 in medical expenses and lost $ 11,233.75 in wages. She had $ 14,000 in medical and wage loss benefits, leaving her with $ 14,381.74 in uncompensated losses.
Attorney Paul Mark Perlstein represented the plaintiff with respect to this accident. Arlene McGonagle was the State Farm adjuster assigned to the plaintiff's claim against Mr. Da Conceicao. She determined that Mr. Da Conceicao was completely at fault for the accident and she valued the plaintiff's claim at $ 50,000 to $ 85,000. Deposition of Arlene McGonagle at 8, 19.
On October 28, 1993, State Farm tendered the plaintiff $ 50,000, which was Mr. Da Conceicao's policy limit.
The plaintiff and her husband also had three insurance policies from State Farm which provided a total of $ 75,000 in available underinsured motorist ("UIM") coverage. The plaintiff, through her attorney, sought to recover from State Farm in its capacity as her insurer, on the ground that Mr. Da Conceicao had been underinsured.
On December 8, 1993, State Farm asked attorney Perlstein to provide medical and other information regarding the accident and the extent of the plaintiff's injuries. Attorney Perlstein did so and demanded $ 75,000 on December 13, 1993. State Farm did not make an offer. Instead, it requested an independent medical examination ("IME"), which was scheduled for May 18, 1994. By letter dated April 26, 1994, the plaintiff was advised that it was her responsibility to obtain and bring to the appointment any "X-rays films, CT scans, MRI's etc." She was cautioned that "failure to bring these films could result in the cancellation of the appointment." The plaintiff appeared for the examination but the doctor did not perform the IME on that date because the plaintiff did not bring all of her X-rays to the examination.
In a letter dated May 18, 1994, attorney Perlstein wrote to L. Scott Whiteside, the State Farm adjuster assigned to the plaintiff's UIM claim, to complain about the doctor's refusal to perform the IME. Attorney Perlstein wrote "it is obvious that State Farm is acting in bad faith by stonewalling" and he demanded arbitration. Pursuant to the plaintiff's policy, attorney Perlstein named an arbitrator for the panel.
On May 26, 1994, John A. Luchsinger, an attorney for State Farm, requested that the plaintiff submit to a statement under oath. On June 20, 1994, the plaintiff again submitted herself for a medical examination. Dr. Charles S. Stone did examine her on that date. State Farm received Dr. Stone's report on or about July 12, 1994. Attorney Perlstein requested a copy of the report on August 17, 1994 and received a copy on August 19, 1994. The report stated that the plaintiff's "subjective symptoms were consistent with the objective findings." The report also stated that the plaintiff's symptoms were related to her accident on July 15, 1992, were related to tarsal tunnel syndrome and that her care to date was appropriate.
On August 19, 1994, attorney Perlstein again demanded the policy limit of $ 75,000. State Farm did not make any offer. Instead, by letter dated September 1, 1994, attorney Luchsinger reminded attorney Perlstein of the outstanding request for a statement under oath. Attorney Luchsinger, by letter dated November 10, 1994, again inquired when the plaintiff would be available to provide a statement under oath and acknowledged that the statement was the only item that State Farm needed in order to engage in settlement discussions. Another letter from attorney Luchsinger, dated December 8, 1994, confirmed that the statement under oath was scheduled for January 27, 1995. However, according to a letter dated December 20, 1994, the statement under oath was rescheduled until February 9, 1995.
The statement was taken on that day. The arbitration hearing was held the next day. On the day of the arbitration, State Farm offered $ 25,000 to settle the case before the hearing was held. That offer was refused and the arbitration hearing proceeded. The arbitrators awarded the plaintiff $ 75,000, which State Farm paid on or about February 22, 1995.
In the course of discovery for this lawsuit, the following State Farm employees were deposed: Arlene McGonagle, L. Scott Whiteside and Michael Moyer. In addition to the facts noted above, Mr. Whiteside and Mr. Moyer provided the following information. During his deposition, Mr. Whiteside testified that, during the entire time he was charged with evaluating the plaintiff's UIM claim, he never knew that Ms. McGonagle had valued the plaintiff's claim at $ 50,000 to $ 85,000. Deposition of L. Scott Whiteside ("Whiteside Dep.") at 92.
Mr. Whiteside also testified that he never attempted to put a value on the plaintiff's UIM claim until he had received the IME report and the plaintiff's statement under oath. Id. at 24-25, 36-37. He testified that he needed the plaintiff's statement under oath to determine "the present status of the person, whether or not their injuries are resolving, whether or not they continue to work or if they're having problems working, whether or not they continue to have pain in the given injured areas whether or not their injuries possibly caused them to actually fail more than they had previously, as to their standard of life." Id. at 29-30. He further testified that, until he had that information, attorney Luchsinger was not authorized to settle the plaintiff's UIM claim for any amount. Id. at 93-94.
Mr. Moyer was Mr. Whiteside's superior from the time Mr. Whiteside was assigned the plaintiff's UIM claim until just after the arbitration hearing. Id. at 50-51. Mr. Moyer testified that, on May 24, 1994, he had valued the plaintiff's UIM claim at $ 12,000. Deposition of Michael Moyer ("Moyer Dep.") at 13-15.
However, he did not authorize Mr. Whiteside to settle the plaintiff's claim for $ 12,000 because it was his understanding that attorney Perlstein had demanded $ 75,000 and would not lower his demand. Id. Mr. Moyer also testified that the IME did not lower the value of the plaintiff's claim. Id. at 26. In fact, the IME "supported some of her subjective . . . complaints," id. at 33, and was "to some extent" favorable to her claim. Id. at 34. Nonetheless, after reviewing the IME no offer was made for two reasons. First, he and Mr. Whiteside believed that ...