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KOSIEROWSKI v. ALLSTATE INS. CO.

June 4, 1999

BARBARA GERMAN KOSIEROWSKI, PLAINTIFF,
v.
ALLSTATE INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Katz, Senior District Judge.

    MEMORANDUM & ORDER

Plaintiff Barbara German Kosierowski brought this action alleging that defendant Allstate Insurance Company acted in bad faith in its handling of her claim for underinsured motorist benefits under her policy. Allstate now moves for summary judgment. Because the plaintiff has not shown the existence of a genuine issue of material fact through evidence that a reasonable jury could find to be clear and convincing, the motion will be granted.

I. Background*fn1

The facts in this case are, for the most part, undisputed. On October 7, 1992, Kosierowski was injured when her vehicle was rear-ended by a car driven by an underinsured motorist (UIM). The tortfeasor was insured for only $15,000, but Kosierowski had a policy with Allstate that provided UIM coverage up to $100,000. By letter dated August 9, 1993, Joseph Mallon, plaintiffs attorney, informed Allstate that the tortfeasor's insurer had tendered its $15,000 limits and requested Allstate's consent to settle Kosierowski's claim against the tortfeasor. In response, Allstate sent a form letter asking Kosierowski to provide information about the tortfeasor before it would agree to settle the claim. Mallon informed Allstate that Kosierowski had no duty to perform this investigation and that Allstate was required to notify her within thirty days whether it would consent to settlement.

Allstate consented to settlement, and no action occurred in the case for almost two years following the settlement with the tortfeasor. On October 11, 1995, Mallon demanded UIM policy limits of $100,000, stating that Kosierowski had suffered lost wages and loss of earning capacity in excess of $118,000 and compensable medical expenses in excess of $12,000. On October 23, 1995, Allstate said that it would schedule plaintiffs independent medical examination (IME) after receiving Kosierowski's employment records, her medical records for the preceding tell years, and information pertaining to her marital and family status. Mallon provided some of this information by letter dated January 10, 1996, and asked Allstate to schedule an IME, which was performed by Dr. Bocher on February 7, 1996. Dr. Bocher issued a report on February 23, 1996, finding that Kosierowski had various soft tissue injuries. The report concluded that her symptoms were persistent and could continue indefinitely.

On November 20 and 22, 1996, Allstate ran Kosierowski's claim through Colossus, a computer program used by Allstate to calculate the settlement value of claims. The first evaluation produced a settlement range of $11,624 to $13,824, although Huber, the adjustor on the case, independently evaluated the case as worth $50,000 to $60,000. On the same day, Allstate made an offer of $50,000 to Kosierowski. Two days later, with the addition of different variables, Colossus produced a settlement range of $50,760 to $61,060. On December 5, 1996, Allstate gave Huber $100,000 in settlement authority, but Huber did not exercise that. authority, instead asking Mallon what he thought of the $60,000 offer. Mallon said that the offer was $50,000, not $60,000; after negotiations, Huber made an offer of $80,000. Kosierowski agreed to accept $80,000 but would not release the bad faith claim. Allstate next offered $100,000 to settle the bad faith and the UIM claim, and Mallon refused, stating that plaintiff was still willing to accept $80,000 without a release of the bad faith claims. Finally, on December 8, 1996, Allstate agreed to settle the case for $100,000 with no release of the had faith claim. Kosierowski accepted this offer.

Following these events, Kosierowski brought a claim of bad faith against Allstate for its handling of her case. Allstate now moves for summary judgment, arguing that (1) plaintiff has no evidence to support an award of punitive damages; (2) plaintiff has not presented sufficient facts from which a jury could conclude that Allstate acted in bad faith; (3) plaintiff has no proof that she suffered any harm by Allstate's actions; and (4) plaintiffs expert opinion does not provide clear and convincing evidence that Allstate acted without a reasonable basis. As the plaintiff has not presented evidence that a reasonable jury could find to be clear and convincing that Allstate acted in bad faith, the court does not reach defendant's first and third contentions.

II. Discussion*fn2

A. Bad Faith

  (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 prime rate of interest
      plus 3%.
  (2) Award punitive damages against the
      insurer.
  (3) Assess court costs and attorney fees
      against the insurer.

42 Pa.C.S.A. § 8371.

In Terletsky v. Prudential Property and Casually Insurance Company, 437 Pa. Super. 108, 649 A.2d 680 (1994), the Pennsylvania Superior Court explained that bad faith by an insurer is

  any frivolous or unfounded refusal to
  pay proceeds of a policy; it is not necessary
  that such refusal be fraudulent.
  For purposes of an action against an
  insurer for failure to pay a claim, such
  conduct imports a dishonest purpose and
  means a breach of a known duty (i.e.,
  good faith and fair dealing), through
  some motive of self-interest or ill will;
  mere negligence or bad judgment is not
  bad faith.

Terletsky, 649 A.2d at 688. The plaintiff must demonstrate "(1) that the insurer lacked a reasonable basis for denying benefits; and (2) that the insurer knew or recklessly disregarded its lack of reasonable basis." Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997). While an insurer is required to accord the interests of its insureds the same consideration it gives its own, it is not required actively to submerge its own interests. See Hyde Athletic Indus. v. Continental ...


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