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Graham v. Progressive Direct Insurance Co.

September 15, 2010


The opinion of the court was delivered by: Nora Barry Fischer United States District Judge

Judge Nora Barry Fischer



This lawsuit started as a straightforward individual action brought by Plaintiffs, Lori and Paul Graham, against their insurance company, Defendant Progressive Direct Insurance Company ("Defendant" or "Progressive"), seeking to recover for underinsured motorists benefits pursuant to their automobile insurance policy issued by Progressive, loss of consortium (by Paul Graham, only), and a claim of bad faith under Pennsylvania law, 42 P.A.C.S. § 8371. Eight months of discovery as to these claims and the defenses asserted by Progressive followed. Then, after the period for discovery closed, Plaintiffs filed the pending Motion for Leave to File a Second Amended Complaint and now seek to transform this litigation from an individual case into a class action. (Docket No. 90). In their Motion, Plaintiffs request leave to add class plaintiffs and class action claims against Progressive, as detailed in their Proposed Second Amended Complaint. (Id.; Docket No. 90-1). They also implicitly request additional time to conduct discovery as to the class claims. (Id.).

Progressive opposes the motion. (Docket No. 103). Plaintiffs' motion has been fully briefed and oral argument was held on August 9, 2010. (Docket Nos. 90, 103, 108, 111, Hr'g Trans 8/9/10). Upon consideration of Plaintiffs' Motion, their Proposed Second Amended Complaint, the parties' arguments, and for the following reasons, Plaintiffs' Motion [90] is DENIED. Accordingly, this matter will proceed as to the individual claims only as set forth in Plaintiffs' Amended Complaint.


The Court and the Court-appointed Special Master have exhaustively discussed the procedural and factual background of this case in two prior Memorandum Orders and the Special Master's Report and Recommendation ("R & R"). (Docket Nos. 62-1, 96, 110). Therefore, the Court will only address the background relevant to the disposition of the instant motion.

Plaintiffs initiated this lawsuit by filing a three-count Complaint against Defendant Progressive on July 23, 2009, asserting claims for underinsured motorist benefits, loss of consortium (by Paul Graham, only), and bad faith under Pennsylvania law. (Docket No. 1). The underlying factual allegations in Plaintiffs' Complaint were that Lori Graham was involved in an auto accident on October 29, 2007, wherein an underinsured motorist, Jayne Guzzie, failed to stop at a stop sign, colliding with Mrs. Graham's vehicle and causing her injuries. (Id. at ¶¶ 6-19).

Guzzie's insurance company, Allstate, determined that Guzzie was at fault for the accident and that Mrs. Graham's injuries were in excess of the policy limits under the policy that Guzzie held with Allstate ($25,000). (Id. at ¶¶ 20-23). A settlement was reached between Allstate and Graham, with consent of Progressive, wherein Allstate paid its policy limits in exchange for a release of future claims. (Id. at ¶¶ 24, 30, 31). Mrs. Graham also reserved the right to pursue a claim for underinsured motorists benefits under the policy she and her husband held with Progressive, a "stacked policy" under which the policy limits were $500,000. (Id. at ¶¶ 27, 28, 31).

Mrs. Graham made an underinsured motorists claim to Progressive on January 24, 2008. (Id. at ¶ 40). Progressive made an offer to Mrs. Graham on April 9, 2009 of $55,000. (Id. at ¶ 54). She rejected that offer. (Id. at ¶ 55). Plaintiffs contend that Progressive acted in bad faith during said negotiations in that its claims adjusters should have made a decision on her claim by February 10, 2009 and that its offer "was far below any reasonable value attributable to the Graham claim and Progressive knew that the offer was far below a fair and reasonable offer." (Id.). In their initial Complaint, they further allege that Progressive acted in bad faith by:

a. Failing to properly investigate and gather information necessary to make a fair and reasonable evaluation of the Graham claim;

b. Failing to place a reasonable and fair value on the Graham claim in an attempt to pay less on the Graham claim than on similar underinsured and uninsured Progressive claims handled by Progressive previously;

c. Making an offer substantially below the fair value of the claim;

d. Making the $55,000.00 offer to the Grahams without any reasonable basis for making such a low offer or in reckless disregard of its lack of a reasonable basis for making such a low offer;

e. Making a "lowball" offer in a dishonest attempt to deprive its insureds of fair and reasonable compensation for their injuries[,] damages and losses;

f. Acting with a motive of self-interest or ill will towards its insureds when evaluating and tendering a "lowball" offer beyond any reasonable or justifiable offer;

g. Failing to follow its own internal procedures, rules, regulations, directives and claim handling practices while evaluating the Graham claim;

h. Applying inconsistent and/or different standards to the Graham claim than those applied to other claims of a similar nature submitted to Progressive Insurance Company in an effort to deny the Grahams fair and adequate compensation for their injuries[,] damages and losses and to save Progressive from having to pay fair and just compensation to the Grahams;

i. In forcing the Grahams to institute legal proceedings to obtain benefits to which they are clearly entitled under the policy of insurance with a motive of coercing the Grahams to take less than a fair and reasonable amount to compensate them for their injuries, damages and losses. (Id. at ¶ 56).

Progressive filed its Answer to Plaintiff's Complaint on September 21, 2009, denying the allegations in the Complaint and raising a number of affirmative defenses to Plaintiffs' claims. (Docket No. 7). Simultaneously, Progressive moved the Court to bifurcate and stay discovery. (Docket Nos. 8, 9). The Court ordered a response to Progressive's motion and scheduled a Case Management Conference for October 20, 2009. (Docket No. 10). As is the Court's practice in all matters, the parties were ordered to confer and submit a joint Rule 26(f) Report and ADR Stipulation prior to the Case Management Conference. (Id.). Plaintiffs timely filed their response and brief in opposition to Progressive's motion to bifurcate and stay discovery. (Docket Nos. 13, 14).

Subsequently, Plaintiffs filed an Amended Complaint on October 8, 2009.*fn1 (Docket No. 15). The substance of the allegations in the Amended Complaint are generally the same as those contained in their initial Complaint. However, they alleged some additional facts in support of their bad faith claim. Specifically, in addition to the averments quoted above, they alleged that Progressive acted in bad faith:

j. In removing the un-insured/underinsured arbitration clause from the Graham policy of insurance without a corresponding reduction in premium;

k. In failing to give adequate notice of the material change to the Graham policy whereby Progressive removed the arbitration clause from her policy and decreased the rights of the Grahams without a corresponding reduction in premium;

l. In deliberately attempting to mislead the Grahams by displaying a policy of insurance which contained a single-member arbitration clause when such a clause did not exist in the Graham policy;

m. In deliberately misrepresenting the displayed policy to be Grahams' actual policy when the actual policy contains no arbitration clause of any kind. (Docket No. 15 at ¶ 56).

The parties then submitted their Rule 26(f) Report on October 13, 2009. (Docket No. 17). In said Report, the parties stated that "[t]he Plaintiffs and Defendant do not anticipate that any additional parties will be joined. However, any additional parties ...

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