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Linda E. Heebner v. Nationwide Insurance Enterprise

September 28, 2011

LINDA E. HEEBNER,
PLAINTIFF,
v.
NATIONWIDE INSURANCE ENTERPRISE, DEFENDANT.



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

Memorandum Opinion

The primary issue in this case pertains to whether insurance coverage for compensatory damages, provided under an uninsured/underinsured policy, includes delay damages.*fn1 This question comes before the Court through Defendant, Nationwide Insurance Enterprise's (hereinafter "Nationwide"), motion to dismiss. For reasons set forth below, Nationwide's motion will be denied in part and granted in part.

I. Factual and Procedural Background

The relevant facts are straightforward and undisputed: Nationwide provided automobile insurance for Plaintiff, which included uninsured and underinsured (UM/UIM) coverage. Under both types of coverage, the policy states:

We [Nationwide] will pay compensatory damages as a result of bodily injury suffered by you or a relative and due by law from the owner or driver of an [uninsured/underinsured] motor vehicle. (Compl., Ex. A at 13, 17.) The policy sets forth definitions for several terms, such as "arbitration," "arbitrator," "uninsured motor vehicle," and "underinsured motor vehicle." "Compensatory damages," however, is not defined. The policy also specifically excludes from UM/UIM coverage numerous categories of damages,*fn2 but none of these exclusions involve delay damages. Indeed, none of the named exclusions even remotely pertain to any type of "interest" or delay-related damages award.

On February 24, 1997, Plaintiff was involved in an accident with an uninsured/underinsured motorist. Plaintiff's Amended Complaint describes this motorist as "self insured." (Compl. ¶¶ 6, 7.) As is required under Nationwide's policy, Plaintiff sued the motorist and on June 26, 2008, she was awarded $133,201.96.*fn3 This award was allocated as $85,000.00 for compensatory damages, and $48,201.96 for delay damages pursuant to Pa. R.C.P. 238 (hereinafter "Rule 238" ). Nationwide has paid Plaintiff $85,000.00 in compensatory damages, but refuses to pay the $48,201.96 in delay damages, claiming that it is not liable for such damages under the UM/UIM policy. (Compl. ¶¶ 6-7, 11, 13-14.)

In response, Plaintiff filed a declaratory judgment action in the Berks County Court of Common Pleas alleging that her insurance policy entitles her to delay damages (Count I). Plaintiff's complaint also alleges bad faith on the part of Nationwide due to its refusal to pay the delay damages award (Count II). (Compl. ¶¶ 17, 22; Compl. Ex. A, at 13, 17.) On May 20, 2010, Nationwide removed this case to federal court.

II. Legal Standards - Motion to Dismiss

When considering a motion to dismiss, the court must assume the veracity of well-pleaded factual allegations, construe them in a light most favorable to the Plaintiff, and "then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) (aff'g Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). The court may only look to the facts alleged in the complaint and its attachments when deciding a motion to dismiss. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). "'[B]are-bones' allegations will no longer survive a motion to dismiss: 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.' To prevent dismissal, all civil complaints must now set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1949).

III. Analysis

As previously noted, the primary issue in this case is whether coverage for "compensatory damages" includes the $48,201.96 awarded to Plaintiff in delay damages.

Plaintiff presses several arguments. She first asserts that delay damages are "compensatory," pointing to the text of Rule 238, which states that delay damages shall be "added to the amount of compensatory damages . . . and shall become part of the verdict, decision or award." Pa. R.C.P. 238(a)(1). Plaintiff concludes that because "these particular delay damages were a result of a compensatory award, the damages awarded under Rule 238 are compensatory." Plaintiff also notes that the policy defines an "underinsured motor vehicle" as an insured vehicle that has insufficient coverage to pay the damages an insured motorist is entitled to recover. Because the policy's definition section further explains that Nationwide "will pay damages that exceed such total amount" of coverage, Plaintiff concludes that all damages, including delay damages, should be covered. Finally, Plaintiff argues that the policy is ambiguous on the issue of whether delay damages are "compensatory."

In urging that delay damages are not covered, Nationwide relies heavily on the text of Rule 238. In particular, Nationwide focuses on the clause that states that delay damages will be "added to the amount of compensatory damages." Id. From this language, Nationwide contends that delay damages must be separate from-and different than-compensatory damages. Nationwide also asserts that the primary purpose of delay damages is not to compensate, but to encourage quicker settlements and thus lessen the burden on courts. Lastly, Nationwide claims that ...


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