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Crawford v. Allstate Insurance Co.

August 31, 2009


The opinion of the court was delivered by: Buckwalter, S. J.


Plaintiff Crystal Crawford's Complaint alleges that Defendant Allstate Insurance Company's ("Allstate") conduct in settling her insurance claim constitutes bad faith under Pennsylvania law.*fn1 She makes this claim even though Allstate awarded her both the policy's full $100,000 uninsured motorist ("UM") policy limit, as well as its entire $5,000 wage loss policy limit. Allstate subsequently filed a Motion for Summary Judgment. Crawford responded to Allstate's Motion for Summary Judgment, and Allstate replied to her Response. For the reasons discussed below, this Court grants Allstate's Motion for Summary Judgment.


A. The Complaint

Crawford's suit arises from her efforts to resolve an insurance claim with her insurer, Allstate. On September 8, 2005, Crawford was injured when the car she was driving was rear-ended. (Compl. ¶¶ 4-6.) The driver of the other vehicle was not insured. As a result, Crawford sought to recover the entire $100,000 UM and $5,000 wage loss limits contained in her Allstate policy. When Allstate indicated that it was unable to determine if it was a "policy limits" case, Crawford demanded arbitration. (Id. at ¶ 7.) Allstate made Crawford a $75,000 settlement offer which she refused. (Id. at ¶¶ 12-13.) Eventually, Allstate offered Crawford both the $100,000 UM policy limit and the $5,000 wage loss policy limit. She accepted both offers. (Id. at ¶ 17.)

In raising this Complaint, Crawford alleges nineteen particular acts that evidence Allstate's bad faith. (Id. at ¶ 19.) Given these allegations, Crawford seeks to recover for damages including:

a.) interest in the amount of the claim from the date the claim was submitted by the plaintiff, equal to the prime rate of interest plus 3 percent;

b.) compensatory damages;

c.) courts costs, arbitration costs, witness costs, and attorney's fees incurred in the arbitration of the claim;

d.) court costs and attorney's fees incurred in this litigation; and

e.) punitive damages.

(Id. at ¶ 20.)

B. Synopsis of Key Factual Background*fn2 The factual background for this suit is extensive. While there are many details, the key facts and dates are quite straightforward. By providing a synopsis of key dates, at the outset of this Memorandum, this Court endeavors to cut through the morass of claims, counter-claims, and assertions:

* September 8, 2005: Crawford was injured when an uninsured motorist rear-ended her car. (Compl. ¶ 4.)

* September 9, 2005: Crawford notified Allstate of the accident. (Allstate's Mot. Summ. J. 3.)

* September 15, 2005: Thaddeus Bartkowski II notified Allstate that he was Crawford's legal counsel. (Id., Ex. 2 Allstate Claim Diary 4.)

* September 13, 2006: Allstate first obtained medical records from Crawford. (Id., Ex. 18, Bartkowski Sept. 11, 2006 letter.)

* March 6, 2007: Donaghue wrote Bartkowski stating "that I have been authorized to offer the claimant $75,000 to settle the above captioned matter." (Id., Ex. 49, Donaghue Mar. 6, 2007 letter.) Crawford refused.

* July 11, 2007: Allstate received Crawford's medical records from Bryn Mawr Rehab. (Id., Allstate Claim Diary 36.)

* July 17, 2007: Donaghue wrote Bartkowski stating "[p]lease be advised that Allstate Insurance Company hereby tenders its $100,000 policy limits in the above captioned matter. Accordingly, I enclose a Release to be executed by the claimant." (Id., Ex. 68, Donaghue July 17, 2007, letter.)

* July 26, 2007: Bartkowski faxed a signed, revised release to Donaghue. (Id., Ex. 69, Signed and Revised Release.)

* August 20, 2007: Donaghue forwarded the settlement check to Bartkowski. (Id., Ex. 76, Donaghue Aug. 20, 2007 letter.)

* September 10, 2007: Bartkowski provided Allstate with the required wage loss documentation. (Id., Ex. 2, Claims Diary ("Claims Diary") 40-41.)

* September 10, 2007: Crawford filed suit against Allstate.

* September 12, 2007: A wage loss check was issued to Crawford. (Id.)


A. Summary Judgment Standard

Summary judgment is proper "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). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For there to be a "genuine" issue, a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. (Id.)

On summary judgment, it is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. County of Allegheny, PA, 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993.) Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence presented by both sides, the court must accept as true the allegations of the non-moving party, and "all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.

Although the moving party bears the initial burden of showing an absence of a genuine issue of material fact, it need not "support its motion with affidavits or other similar materials negating the opponent's claim." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by "pointing out . . . that there is an absence of evidence to support the nonmoving party's claims." (Id. at 325.) Once the movant has carried its initial burden, the opposing party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec., 475 U.S. at 586. "There must be sufficient evidence for a jury to return a verdict in favor of the non-moving party; if the evidence is merely colorable or not significantly probative, summary judgment should be granted. Arbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994), abrogated on other grounds, Showalter v. Univ. of Pittsburgh Med. Center, 190 F.3d 231 (3d Cir. 1999).


Crawford's Complaint raises a variety of general and specific allegations which she believes support a bad-faith claim. This Court groups Crawford's claims together, based on their typicality, addressing them in turn: (1) Allstate's delay in processing Crawford's claim; (2) Allstate's unreasonable settlement offer; (3) Donaghue's misrepresentation of the contents of Crawford's medical records; (4) Allstate's improper release and subsequent delay in issuing the $100,000 UM settlement check; (5) Allstate's use of an unfair doctor and an unfair arbitrator.*fn3

Where an insurer refuses to settle a claim that could have been resolved within the policy limits without "a bona fide belief . . . that it has a good possibility of winning," it breaches its duty to act in good faith. Cowden v. Aetna Cas. and Sur. Co., 389 Pa. 459, 134 A.2d 223, 229 (1957). Pennsylvania does not have a common-law remedy for insurance bad faith. Rather in 1990, the legislature enacted 42 Pa. C.S. § 8371 which provides a statutory remedy for bad faith. See 42 PA. CONS. STAT. § 8371 (1990).

To sustain a section 8371 claim, a Plaintiff must show that the: (1) the insurer did not have a reasonable basis for denying benefits under the applicable insurance policy; and (2) the insurer knew or recklessly disregarded its lack of reasonable basis in denying the claim.

Terletsky v. Prudential Prop., 649 A.2d 680, 688 (Pa. Super. Ct. 1994), appeal denied, 540 Pa. 641 (1995). "Bad faith by the insurer is any frivolous or unfounded refusal to pay proceeds of the policy, the refusal need not be fraudulent, but bad faith imports a dishonest purpose and means a breach of a known duty through some motive of self-interest or ill will."*fn4 Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1035 (Pa. Super. Ct. 1999) (quotations omitted.)

"[B]ad faith must be proven by clear and convincing evidence and not merely insinuated." Id., see; Greene v. United Servs. Auto. Ass'n, 936 A.2d 1178 (Pa. Super. Ct. 2007) (stating that the court was not convinced, by clear and convincing evidence, that the insurer acted in bad faith, or with dishonest purpose, ill-will, or self interest), appeal denied, 2008 WL 2894845 (Pa. 2008). Mere negligence or bad judgment by an insurer in refusing to pay a claim is not "bad faith." O'Donnell ex rel. Mitro v. Allstate Ins. Co., 734 A.2d 901 (Pa. Super. Ct. 1999).

Bad faith under section 8371 is not restricted to the denial of an insurance claim. See Ania v. Allstate Ins. Co., 161 F. Supp. 2d 424, 430 n.7 (E.D. Pa. 2001) (holding that section 8371 "applies equally to an unreasonable delay in payment"); Terletsky, 649 A.2d 680 (finding bad faith based upon a frivolous or unfounded refusal to pay the proceeds of a policy); O'Donnell, 734 A.2d at 906 ("An action for bad faith may also extend to the insurer's investigative practices"); Romano v. Nationwide Mut. Fire Ins. Co., 646 A.2d 1228, 1232 (Pa. Super. Ct. 1994) (affirming a finding of bad faith when insurer refused to settle a claim that could have been settled within the policy limits). Courts, however, have refused to find bad faith when an insurer makes a low but ...

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