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Joyce v. Erie Insurance Exchange/Erie Insurance Co.

Superior Court of Pennsylvania

July 9, 2013


Appeal from the Order of January 23, 2012 In the Court of Common Pleas of Erie County Civil Division at No. 13656 of 2011




Michael Joyce ("Appellant") appeals from a January 23, 2012 order of the Court of Common Pleas of Erie County ("the trial court"). That order sustained preliminary objections filed by Appellee Erie Insurance Exchange ("Erie Insurance") and by Appellee State Farm Mutual Automobile Insurance Company ("State Farm") and dismissed Appellant's complaint. We affirm.

The trial court summarized the case history as follows:

[Appellant] is a former judge of the Pennsylvania Superior Court. On August 10, 2001, [Appellant] was involved in an automobile accident in which the vehicle he was driving was hit from behind by a vehicle owned and operated by Amber Cooper. At the time of the accident, Amber Cooper was insured by State Farm, and [Appellant] was insured by Erie Insurance. [Appellant's] coverage with Erie Insurance included underinsured insurance coverage in the amount of $500, 000. Amber Cooper was insured through State Farm for $50, 000. [Appellant] filed a claim with State Farm, and on September 4, 2002, State Farm issued a check for $50, 000 to [Appellant], and [Appellant] executed a Release. [Appellant] submitted a claim to Erie Insurance, and on November 26, 2002, Erie Insurance issued a check for $390, 000 to [Appellant], and [Appellant] executed a Release. On August 15, 2007, a federal grand jury returned an indictment against [Appellant] alleging violations of 18 U.S.C. §§ 1341 (mail fraud) and 1957 (money laundering). The factual basis of these counts relates to the conduct of [Appellant] after the motor vehicle accident, including his claims of injuries, pain, and suffering which he made to Erie Insurance and State Farm. A guilty verdict on eight counts, including two counts of mail fraud and six counts of money laundering, was returned on November 19, 2008 by a federal jury in the United States District Court for the Western District of Pennsylvania. Erie Insurance and State Farm submitted victim impact statements to the federal court prior to [Appellant's] sentencing. [Appellant] was ordered to pay restitution in the amount of $390, 000 to Erie Insurance and $50, 000 to State Farm. The restitution was set by the Court to reimburse the declared victims for the funds which they had paid out as a product of the mail fraud of which the jurors had found [Appellant] guilty. [Appellant] filed a Motion to Dismiss and/or For Judgment of Acquittal and a Motion for New Trial in the Western District Court of Pennsylvania. These motions were denied by the Western District Court. U.S. v. Joyce, No. 07-31, 2009 WL 578544 (W.D. Penn. March 5, 2009). [Appellant] next filed an appeal of his conviction and sentence with the Third Circuit Court of Appeals, both of which were denied. Joyce v. U.S., 373 Fed.App'x. 172 (3d Cir. 2010).

Trial Court Memorandum & Order ("T.C.M."), 1/25/2012, at 2-3 (footnote omitted).

The civil action that gives rise to this appeal was initiated soon after the federal criminal matter concluded. In a complaint filed on March 21, 2011, Appellant alleged that Erie Insurance schemed to defraud Appellant, as well as the state and federal governments, and "the citizens of the Commonwealth of Pennsylvania". Complaint at 20-21 ¶120. Appellant pled the following theory: Because Erie Insurance deemed Appellant "favorable to the insurance industry", Erie Insurance contrived to settle Appellant's claim "as expeditiously as possible and as favorably as possible to [Appellant]" without requesting that Appellant provide a statement under oath or submit to an independent medical examination. Complaint at 20-22 ¶¶123-27. Appellant contended that, as part of the plan, Erie Insurance required Appellant to sign a confidentiality agreement that prevented Appellant from disclosing the amount of the settlement. Id. at 23 ¶132. Appellant alleged that, by this scheme and artifice to defraud, Erie Insurance sought to "obtain" an industry-friendly judge who would be both "secretly beholden" to Erie Insurance and unable to disclose the settlement to litigants. Id. at 23 ¶133. According to the complaint, Erie Insurance then diverted attention from its own unlawful scheme by falsely holding itself out as a victim during the ensuing criminal investigation, and the federal government relied upon Erie Insurance's fraudulent misrepresentations. Id. at 24-25 ¶¶138-44. Appellant further alleged that "[t]he Government's reliance on [Erie Insurance's] misrepresentations and conduct was a factual cause of the harm suffered by [Appellant]." Id. at 25 ¶145. Appellant made similar allegations against State Farm. Id. At 31-33 ¶¶ 170-83. Appellant sought to recover the $390, 000 and $50, 000 that he was ordered to pay the insurance carriers in restitution.

The civil litigation ensued. The trial court summarized the procedural history as follows:

A Praecipe for Writ of Summons was initially filed on October 22, 2010 in the Civil Division of the Court of Common Pleas of Allegheny County by [Appellant]. The Writ was reissued on November 16, 2010, December 16, 2010, January 18, 2011, and February 17, 2011. Erie Insurance filed a Praecipe for Rule to File Complaint on February 28, 2011. On March 21, 2011, [Appellant] filed a Complaint. [Appellant's] Complaint asserts eight claims for relief. Specifically, [Appellant] claims fraud at Court I against Erie Insurance; insurance bad faith pursuant to 42 Pa.C.S.A. § 8371 at Count II against Erie Insurance; breach of contract at Count III against Erie Insurance; breach of contractual duty of good faith at Count IV against Erie Insurance; fraud at Count V against State Farm; breach of contract at Count VI against State Farm and [Appellees] Amber and Brian Cooper; unjust enrichment at Count VII against State Farm and [Appellees] Amber and Brian Cooper; and unjust enrichment at Count VII against Erie Insurance. Erie Insurance filed Preliminary Objections To [Appellant's] Complaint on April 12, 2011 with a supporting brief. On the same date, Erie Insurance also filed a Petition to Transfer Venue. State Farm filed a Motion to Sever on April 12, 2011, which was denied by The Honorable R. Stanton Wettick on the same date as premature. [Appellant] filed an Answer to Petition to Transfer Venue on May 2, 2011. [Appellant] filed a Reply to [Erie Insurance's] Preliminary Objections on May 3, 2011. On May 5, 2011, State Farm filed Preliminary Objections in the Form of Demurrers with a supporting brief. By Order dated June 3, 2011, The Honorable Ronald W. Folino ordered the parties to "create an evidentiary record by stipulation, deposition, or as agreed to by the parties." The Stipulation of Undisputed Facts Regarding Petition to Transfer Venue was filed on July 5, 2011. Judge Folino transferred this matter to the Erie County Court of Common Pleas on September 6, 2011. The Allegheny Court Department of Court Records transferred this matter to Erie County on October 11, 2011. On October 31, 2011, State Farm filed a second Motion to Sever. On December 23, 2011, [Appellant] filed a Brief in Reply to State Farm's Motion to Sever, Brief in Opposition to [Erie Insurance's] Preliminary Objections, and a Brief in Opposition to State Farm's Preliminary Objections. Oral arguments were held on January 6, 2012 regarding State Farm's Motion to Sever and Preliminary Objections and Erie Insurance's Preliminary Objections.

T.C.M. at 1-2.

The trial court denied the motion to sever, but sustained the preliminary objections. The court further dismissed the complaint and entered judgment in favor of Appellees. This appeal followed.[1]

Appellant raises five issues for our review:

I. Did the Lower Court err in finding the application of the doctrine of in pari delicto dismissing [sic] [Appellant's] Complaint?
II. Did the Lower Court err in finding [Appellant] did not state a valid claim for fraud on the part of Erie Insurance?
III. Did the Lower Court err in finding that [Appellant] has not stated a claim for which relief can be granted in Count II, Insurance Bad Faith pursuant to 42 Pa.C.S.A. §8371?
IV. Did the Lower Court err in finding that [State Farm] fully complied with its obligation to [Appellant's] signed release and therefore could not set forth a breach of contract claim [sic]?
V. Did the Lower Court err in finding that [Appellant] did not properly plead a claim for unjust enrichment against [State Farm]?

Appellant's Brief at 5.

Our standard of review of an order of the trial court overruling or granting preliminary objections is to determine whether the trial court committed an error of law. When considering the appropriateness of a ruling on preliminary objections, the appellate court must apply the same standard as the trial court.
Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief. If any ...

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