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Levan Johnson, Sr v. Progressive Insurance Company

December 28, 2009


Appeal from the Order entered September 26, 2008 In the Court of Common Pleas of Philadelphia County


Civil at No(s): June Term, 2007, No 2307


¶ 1 On appeal, Levan Johnson assails the propriety of the trial court's grant of summary judgment in favor of Progressive Insurance Company on Appellant's statutory bad faith insurance claim. We hereby affirm.

¶ 2 The following facts inform our decision herein. Appellant possessed automobile insurance issued by Appellee which included $100,000 in underinsured motorist ("UIM") benefits. On June 5, 2005, he was involved in an automobile accident when another vehicle rear-ended his car. Appellant did not require immediate medical treatment, but did present to the emergency room the following day complaining of knee and back pain.

¶ 3 On July 27, 2006, over one year after the accident, Appellant advised Appellee that he intended to pursue his UIM coverage under the * Former Justice specially assigned to the Superior Court. aforementioned policy. Within days, on August 2, 2006, Appellee acknowledged the claim. On August 22, 2006, Appellant sought permission to settle the underlying tort action against the driver of the other car, and Appellee consented two days later.

¶ 4 On September 26, 2006, just one month after the tortfeasor's claim was settled, Appellee sought documentation supporting the extent and nature of the injuries that Appellant suffered in the June 5, 2005 accident. Specifically, Appellee requested information on Appellant's wages, medical records, and his five prior automobile accidents in order to ascertain whether Appellant's physical complaints were related to those prior accidents or the June 5, 2005 incident.

¶ 5 In response, on October 2, 2006, Appellant made a demand for arbitration, did not provide any of the information to Appellee, and then suggested that the request relating to the prior car accidents was made in bad faith. Appellee promptly retained counsel who immediately sent a letter asking to schedule Appellant's statement under oath. The statement was taken on October 26, 2006. However, Appellant did not provide Appellee with permission to review his medical records until November 2, 2006, and Appellee did not receive all of those records until March 2007.

¶ 6 On September 27, 2006, Mark Avart, D.O. repaired Appellant's knee, which had been injured on June 5, 2005. That physician subsequently issued a report on November 7, 2006, opining that Appellant would suffer permanent impairment of that knee. Appellee received Dr. Avart's report on November 27, 2006, and also obtained Dr. Avart's post-operative report, which indicated that the surgery was successful. Dr. Avart's progress notes indicated that on November 2, 2006, Appellant was improving.

¶ 7 In light of the inconsistencies about Appellant's recovery from his knee injury, Appellee secured an independent medical examination from a board- certified orthopedic surgeon, John R. Duda. The physical examination of Appellant was conducted on February 20, 2007, and that same day, Dr. Duda issued a report. Therein, he opined that all of the injuries sustained by Appellee in the June 5, 2005 automobile accident had fully resolved, that the knee injuries suffered in the accident had been successfully repaired through surgery, and that any existing knee problems that Appellee was experiencing were unrelated to the car accident.

¶ 8 On February 16, 2007, Appellee agreed that the case could proceed to arbitration in front of Roger Gordon, as sole arbitrator. On April 23, 2007, Mr. Gordon scheduled the arbitration for May 14, 2007. Prior to arbitration, Appellant demanded the full amount of UIM coverage of $100,000; on May 10, 2007, Appellee offered $30,000. Appellant refused to lower his demand, and the case proceeded to arbitration. On May 18, 2007, Appellant was awarded $75,000, twenty-five percent less than his demand. On June 20, 2008, Appellant instituted this action against Appellee asserting claims for fraud, statutory bad faith under 42 Pa.C.S. § 8371, and negligence in the processing of his UIM claim. Appellee filed preliminary objections, which the trial court partially granted by dismissing counts one and three. Appellant's statutory bad faith was the sole surviving cause of action. Appellee filed a motion for summary judgment following the completion of discovery.

¶ 9 After review, the trial court concluded that there was no genuine issue of material fact that Appellee had not exhibited bad faith in processing Appellee's UIM claim, and it entered summary judgment in favor of Appellee. This appeal followed. An appellate court's scope of review of an order granting summary judgment is plenary. Stimmler v. Chestnut Hill Hospital, __ A.2d __ (Pa. No. 12 EAP 2008, filed September 30, 2009). Our standard of review is as follows: [T]he trial court's order will be reversed only where it is established that the court committed an error of law or clearly abused its discretion. Summary judgment is appropriate only in those cases where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. The reviewing court must view the record in the light most favorable to the nonmoving party, resolving all doubts as to the existence of a genuine issue of material fact against the moving party. When the facts are so clear that reasonable minds cannot differ, a trial court may properly enter summary judgment.

Id. at __ (quoting Atcovitz v. Gulph Mills Tennis Club, Inc., 812 A.2d 1218, 1221-22 (Pa. 2002)).

¶ 10 Common law does not provide for a bad faith cause of action against an insurance company, but § 8371, actions on insurance policies, creates a statutory remedy for such conduct. It states: 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 prime rate of interest plus 3%. ...

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