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Charles Hall v. Nationwide Mutual Insurance Company

October 31, 2012


The opinion of the court was delivered by: Mitchell, Magistrate Judge:


In this insurance coverage dispute, the defendant, Nationwide Mutual Insurance Company ("Nationwide"), moves for partial summary on the plaintiff's claims of bad faith in Counts II and IV of the second amended complaint. For reasons discussed below, Nationwide's motion for partial summary judgment on Counts II and IV (Document No. 30) will be denied.

The plaintiff, Charles Hall, commenced this action in the Court of Common Pleas of Fayette County, PA, seeking to recover uninsured motorist ("UM") benefits under an insurance policy issued by Nationwide. On November 4, 2011, Nationwide filed a timely notice of removal to this Court, and it is undisputed that the Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.*fn1

At all relevant times, the plaintiff was insured under a policy of insurance issued by Nationwide at Policy No. 5437B652174 (second amended complaint at ¶ 5 and answer thereto). As part of this insurance policy, the plaintiff purchased stacked UM coverage in the amount of $50,000 for each person and $100,000 per occurrence (Id. at ¶ 7).

On October 19, 2009, the plaintiff was involved in a motor vehicle accident. Describing the accident in his second amended complaint, the plaintiff asserts that he was operating his vehicle, a 2004 GMC Canyon pick-up truck, traveling north on Break Neck Road in Bull Skin Township, Fayette County, PA. As he approached the intersection of Break Neck Road and Spruce Hollow Road, an unidentified all-terrain vehicle failed to stop at the posted stop sign. To avoid hitting the vehicle, the plaintiff was forced to swerve his pick-up truck off the road, where it struck a tree. As a result of the accident, the plaintiff incurred serious injuries, including a displaced fracture of the right olecranon and multiple contusions, and his vehicle was severely damaged and totaled (second amended complaint at ¶¶ 8-12).

The plaintiff contends that on October 19, 2009, he contacted Nationwide to file an insurance claim on the accident, after which he was informed that he had to file a police report to satisfy a condition of his policy (Id. at ¶¶ 13-14). According to the plaintiff, on October 20, 2009, he contacted the Uniontown barracks of the Pennsylvania State Police and requested that a police report be filed on his accident (Id. at ¶ 15). The police refused to investigate the accident, but they provided the plaintiff with a Commonwealth of Pennsylvania Driver's Report to complete (Id. at ¶ 16). The plaintiff avers that he completed the Driver's Report and submitted it to the Pennsylvania Department of Transportation, where it was received on October 26, 2009 (Id. at ¶ 17). On January 13, 2010, Nationwide denied the plaintiff's UM claim on grounds that he failed to file a police report on the accident, refusing to accept the Driver's Report as sufficient (Id. at ¶¶18-19).

The plaintiff also claims that under the terms of the policy, Nationwide is obligated to indemnify his wage loss at a rate of $1,000 per month and $10,000 total (Id. at ¶ 35). The plaintiff contends that due to the accident, he was unable to work from October 19, 2009 through April 2010 (Id. at ¶ 36); that in April 2010, he tried to return to work, but was unable to complete his job duties due to physical limitations suffered as a result of the accident; that he was laid off in June 2010 and has been unable to work since then (Id. at ¶ 37); and that despite being unable to work for over 10 months due to the accident, Nationwide refused to pay the full amount of his first party wage loss benefits (Id. at ¶ 39).

Based on these allegations, the plaintiff has filed a four-count second amended complaint. In Count I, the plaintiff complains that Nationwide is liable for breach of contract for having improperly denied his UM claim. In Count II, Nationwide is said to have acted in bad faith under Pennsylvania law by denying the plaintiff's UM claim without a reasonable basis. In Count III, the plaintiff claims that Nationwide breached the party's contract by refusing to pay him the full amount of first party wage loss benefits. In Count IV, the plaintiff contends that Nationwide acted in bad faith under Pennsylvania law by denying him wage loss benefits without a reasonable basis.

Nationwide has moved for partial summary judgment on the plaintiff's bad faith claims in Counts II and IV. Summary judgment will be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a).

The record shows that following the plaintiff's accident, he submitted claims for UM and income loss benefits to Nationwide (Defendant's Concise Statement of Material Facts ["DSMF"] at ¶ 5 and plaintiff's response thereto). On October 20, 2009, one day after the accident, Nationwide obtained a recorded statement from the plaintiff, during which he denied reporting the accident to the police immediately after it occurred (Id. at ¶¶ 6-7).

The plaintiff's UM claim was assigned to Jalinn Klopp, a claims representative, who contacted the plaintiff on October 21, 2009, two days after the accident (Id. at ¶¶ 8-9). On October 21, 2009, Klopp informed the plaintiff that he needed to report the accident to the police in order to receive UM benefits (Id. at ¶ 10). Klopp advised the plaintiff to file a report with the police department "ASAP" and to contact her with the name of the police department and the incident number, which the plaintiff said he would do (Id. at ¶ 12).

The next day, October 22, 2009, Klopp had another telephone conversation with the plaintiff, who said that he went that day to the Pennsylvania State Police ("PSP") and was given a form to fill out to send to Harrisburg, so as to file a report (Id. at ¶ 13). The plaintiff told Klopp he would fax a copy of the form to her (Id.). On November 9, 2009, Klopp had still not received a faxed a copy of the form, so she had another phone conversation with the plaintiff (Id. at ¶ 14); at that time, the plaintiff told Klopp he filed a report with the PSP and faxed the form to her, but as she did not receive it, he would refax it (Id.).

On November 24, 2009, Klopp spoke to the plaintiff, who asserted that he had an incorrect fax number and would fax the form to her; the plaintiff also stated that he spoke to the PSP in Harrisburg, who would not confirm if they received his form (Id. at ¶ 15). By December 11, 2009, Nationwide still had not received confirmation of a police report on the plaintiff's accident (Id. at ¶ 16). As such, Nationwide asserts that it sought to obtain a copy of the report directly from the PSP, but the PSP advised that they were unable to locate the report without an incident number, which the plaintiff did not have (DSMF at ¶ 17).

On December 30, 2009, Klopp called the PSP and was informed that they conducted a name search on the matter to no avail, such that the plaintiff must not have sent in a form (Id. at ¶ 18). In January 2010, Nationwide was unable to confirm that the plaintiff reported the accident to the police, whereupon it concluded he had not met its reporting requirement (DSMF at ¶ 19 and plaintiff's response thereto). Thus, on January 13, 2010, Nationwide sent a letter to the plaintiff, denying his claim for UM benefits (Id. at ¶ 20).

Over a year later, in February 2011, the plaintiff's previous counsel sent Nationwide a PennDOT "Driver's Accident Report" dated October 19, 2009 (Id. at ¶ 21). In July 2011, plaintiff's prior counsel submitted a demand package to Nationwide with a different PennDOT "Driver's Accident Report" which was dated October 22, 2009 (Id. at ¶¶ 22-23). Concerned about the discrepancies in the two accident reports, Nationwide again asked the plaintiff for proof that he reported the accident to the police (DSMF at ¶ 24). According to Nationwide, it still has not received documentation corroborating the plaintiff's assertion that he reported the accident to the police (Defendant's Memorandum [Doc. No. 31] at p. 5).

Concerning the plaintiff's wage loss claim, the record shows that at the time of the accident, the plaintiff worked for Swank Associated Companies ["Swank"] (DSMF at ¶ 25 and plaintiff's response thereto). Based on the plaintiff's injuries, Nationwide issued him two income loss benefit payments equal to the maximum monthly limits of $1,000 for the time he missed from the date of the accident until December 15, 2009 (Id. at ¶ 26). Nationwide asserts that the plaintiff told it that Swank usually laid off its workers "around Christmas" every year; as such, Nationwide spoke to the plaintiff's supervisor on December 8, 2009, and his supervisor confirmed that had the plaintiff not been off of work already, he would have been laid off from December 15, 2009 until March 2010 (Id. at ¶ 27). Due to the fact that the plaintiff would not miss work because of his injuries during the seasonal lay-off, Nationwide suspended issuance of his income loss benefits after December 15, 2009 (DSMF at ¶ 28). Nationwide apprised the plaintiff of this determination and informed him that if he remained unable to work after the seasonal lay-off, he could resume receipt of his income loss benefits at that time (Id. at ¶ 29).

On February 15, 2010, Nationwide spoke to the plaintiff, who advised that he would see his doctor on March 18th, at which time he expected to be released to work; however, due to snow, the plaintiff told Nationwide that his seasonal return to work had been moved to either the last week of March, or the first week of April 2010 (DSMF at ¶ 30 and plaintiff's response thereto). On March 29, 2010, the plaintiff informed Nationwide that he would be able to return to work the next week (Id. at ¶ 31). Nationwide confirmed with the plaintiff's health care providers that he had been released from treatment and was able to return to work with no restrictions (Id. at ¶ 32). The plaintiff apprised Nationwide that he returned to work in April 2010 (Id. at ¶ 33).

The plaintiff asserts that he hired an attorney to represent him in this litigation on June 6, 2010 (Id. at ¶ 35). The plaintiff's attorney sent a letter of representation to Nationwide, but did not mention that the plaintiff was no longer working and sought wage loss benefits (Id. at ¶ 36). On June 28, 2010, Nationwide closed the wage loss benefits portion of the plaintiff's claim (Id. at ¶ 34), but it did not deny his wage loss claim (Id. at ¶ 37).

In Counts II and IV of the second amended complaint, the plaintiff contends that Nationwide failed to deal fairly and in good faith with him. According to the plaintiff, Nationwide failed to reasonably investigate his claims and lacked a reasonable basis for denying his claims in violation of 42 Pa.C.S.A. § 8371.

It is provided in 42 Pa.C.S.A. § 8371:

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 ...

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