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MCCABE v. STATE FARM MUTUAL AUTOMOBILE INS. CO.

January 13, 1999

MARYBETH MCCABE, PLAINTIFF,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Anita B. Brody, District Judge.

  MEMORANDUM AND ORDER

The plaintiff, Marybeth McCabe (McCabe), brought an action against her insurer, defendant State Farm Mutual Automobile Insurance Company (State Farm), for damages arising out of the alleged mishandling of an insurance claim. The parties have filed cross motions, State Farm for summary judgment and McCabe for partial summary judgment.

I. Background

On March 22, 1991, McCabe was injured in an automobile accident when her car was hit from the rear. As a result of the accident, she claims she suffers serious permanent injuries including a brachial plexus traction injury which requires ongoing medical treatment and physical therapy. She incurred medical expenses in excess of $18,000. As for the brachial plexus injury, McCabe was advised that she would need surgery which would expose her to potential paralysis. Besides medical expenses, McCabe claims a loss of approximately $25,000 from her law practice.

At the time of the accident, McCabe was insured by State Farm. On December 22, 1992, the tortfeasor offered McCabe $92,755.39 to settle, which she accepted following State Farm's February 1993 approval of the offer. On December 30, 1992, McCabe's lawyer, Mona Shuben Picciotto, notified State Farm that McCabe would seek underinsured motorist benefits (UIM) under the terms of her insurance policy. In August of 1993, McCabe discharged her lawyer. On November 8, 1993, McCabe submitted medical documentation to State Farm regarding treatment for her injuries. On March 1, 1994, McCabe wrote to State Farm demanding the $100,000 policy limits pursuant to the UIM claim. In response to a request by State Farm, McCabe submitted additional medical records on July 20, 1994.

On September 28, 1994, State Farm offered McCabe $3,000 to settle her claim. The following day, McCabe rejected the offer and demanded arbitration pursuant to the terms of the insurance policy. Following this demand, State Farm retained John F. Lewis as counsel to handle the arbitration and Mr. Lewis appointed William H. Pugh, V, Esq. as State Farm's arbitrator. On October 25, 1994, McCabe requested an extension of time to retain new counsel and to appoint an arbitrator. McCabe chose Joseph M. Adams as her attorney, who in turn appointed Carol A. Shelly, Esq. as McCabe's arbitrator. On June 14, 1995, both arbitrators agreed on the choice of Rae Boylan Thomas, Esq. as the neutral arbitrator.

Following McCabe's demand for arbitration, State Farm requested additional medical authorizations from McCabe, a statement under oath (SUO), and an independent medical examination (IME). In February 1995, McCabe forwarded the medical authorizations to Mr. Lewis, followed by the SUO in August 1995. Dr. Lawrence Kerson was chosen by Mr. Lewis to conduct the IME. The examination took place on September 8, 1995. On September 18, 1995, McCabe was examined by Dr. Robert Schwartzman, who indicated the potential for surgery to treat her injuries. In April 1996, both Dr. Kerson and Dr. Schwartzman submitted additional reports. Dr. Schwartzman continued to recommend surgery and Dr. Kerson advised against it.

On April 10, 1996, Dr. Schwartzman was deposed. On May 17, 1996, State Farm made a second offer to McCabe in the sum of $25,000. On May 20, 1996, McCabe refused the offer, reiterating her demand for the policy limits. Dr. Kerson was deposed on May 23, 1996. Following his deposition, State Farm increased its offer to $30,000. The next day, McCabe refused this offer and again demanded the $100,000 policy limits.

The arbitration hearing was held on May 30, 1996. On June 6, 1996, the arbitrators unanimously agreed to an award of $52,744.11. On July 1, 1996, State Farm paid this amount to McCabe.

II. Legal Standard

Rule 56(c) of the Federal Rules of Civil Procedure provides that 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 a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party moving for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. When the moving party does not bear the burden of persuasion at trial, as here, its burden "may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548.

Once the moving party has filed a properly supported motion, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The nonmoving party "may not rest upon the mere allegations or denials of the [nonmoving] party's pleading," id., but must support its response with affidavits, depositions, answers to interrogatories, or admissions on file. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Schoch v. First Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990).

To determine whether summary judgment is appropriate, I must determine whether any genuine issue of material fact exists. An issue is "material" only if the dispute "might affect the outcome of the suit under the governing law." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Of course, "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Anderson, 477 U.S. at 255, 106 S.Ct. 2505; see also Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Moreover, the "evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S.Ct. 2505; see also Big Apple BMW, 974 F.2d at 1363. Thus, my inquiry at the summary judgment stage is only the "threshold inquiry of determining whether there is the need for a trial," that is, "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 250-52, 106 S.Ct. 2505.

III. Bad Faith

McCabe brings her bad faith claim under 42 Pa.C.S.A. ยง ...


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