BRANDON P. GROSSI, AN INDIVIDUAL Appellee
TRAVELERS PERSONAL INSURANCE COMPANY, A CORPORATION Appellant BRANDON P. GROSSI Appellant
TRAVELERS PERSONAL INSURANCE COMPANY, A CORPORATION Appellee
Appeal from the Order April 18, 2012 In the Court of Common Pleas of Beaver County Civil Division at No(s): 12646-2009
BEFORE: BOWES, J., DONOHUE, J., and MUNDY, J.
Before the Court are cross-appeals filed by Defendant, Travelers Personal Insurance Company (Travelers), and Plaintiff, Brandon P. Grossi (Grossi), from the April 18, 2012 order disposing of the parties' cross- motions for post-trial relief, and directing the prothonotary to enter judgment against Travelers and in favor of Grossi for $1, 478, 815.94. After careful review, we affirm in part, vacate in part, and remand for entry of a corrected verdict in accordance with this memorandum.
The instant matter stems from a December 24, 2006 automobile accident in which Grossi, a passenger in a vehicle owned by Tarquino Brothers Bakery, and driven by Michael Tarquino, was severely injured. Grossi retained counsel, Keith R. McMillen, Esquire, of McMillen, Urick, Tocci, Fouse & Jones, to pursue his personal injury claims. Tarquino Brothers Bakery had liability and umbrella insurance policies, providing a total coverage of $3, 000, 000.00. The liability of Michael Tarquino and Tarquino Brothers Bakery was not disputed. In addition, Grossi was an insured under his parents' policy with Travelers, which included coverage for $1, 000, 000.00 in medical benefits and underinsured motorist (UIM) coverage in the amount of $300, 000.00. Under that policy, Travelers paid approximately $500, 000.00 in first party medical expenses and $25, 000.00 in lost income to Grossi as of the date of the instant proceedings.
Based on preliminary contacts regarding Grossi's potential coverage under the Travelers policy, Travelers set an initial loss reserve of $1, 000.00 for any potential UIM claim. On April 21, 2008, based on his assessment that the value of his losses exceeded $3, 300, 000.00, Grossi, through counsel, notified Travelers of his demand for payment of the full UIM policy limits of $300, 000.00. Grossi's demand included an expert's analysis of his future earnings loss resulting, inter alia, from an inability to take over his father's automobile repair business. That loss alone was valued at $4, 252, 725.00. Trial Court Memorandum Opinion & Findings of Fact, 1/23/12, at 3, ¶ 12.
Grossi's claim was presented to Travelers' claim adjuster, Roxanne Youndt. Youndt reviewed Grossi's demand and prepared a worksheet for Travelers' Major Claims Unit (MCU). Travelers' claims manual specifies that the worksheet is a tool for "evaluating and reserving uninsured and underinsured motorist claimants." N.T., 10/19-20/11, Plaintiff's exhibit Tab 67, Travelers Liability Best Practices Manual. Youndt valued Grossi's net claim, after deduction of Tarquino Brothers Bakery's $3, 000, 000.00 coverage, at about $1, 800, 000.00. Notwithstanding the Manual's specifications, Youndt's estimate was not based on an independent analysis of Grossi's claim for loss of future earnings.
Without adjusting the $1, 000.00 reserve, Youndt transferred Grossi's claim to claims adjuster Andrew W. Makar at Travelers' MCU. On May 22, 2008, Makar responded by letter to Grossi's attorney, expressing the view that Grossi's future earnings loss estimate was "highly speculative, " and further expressing an intent to secure an independent medical examination (IME), a vocational expert, and an economist. Trial Court Memorandum Opinion & Findings of Fact, 1/23/12, at 5, ¶ 20. Makar did not adjust the January 28, 2007 reserve amount of $1, 000.00 on Grossi's UIM claim, which remained unchanged throughout the pendency of the claim. Travelers had no further communication with Grossi's counsel explaining the basis for its rejection of his UIM claim. On May 30, 2008, Grossi demanded arbitration. Travelers eventually obtained an IME report on May 7, 2009. Updated reports and other materials in support of his claim were presented to Travelers by Grossi. Travelers, after requesting a continuance of the arbitration hearing, finally obtained a vocational report from its expert, Mark Heckman, although the written report was never made a part of the claims file or reviewed by the adjuster prior to the arbitration hearing.
The UIM claim proceeded to arbitration, on August 6, 2009, resulting in a unanimous gross award in favor of Grossi of $4, 000, 000.00. Travelers did not appeal the award and promptly paid Grossi the policy UIM limits of $300, 000.00, without interest.
On September 29, 2009, Grossi filed a complaint asserting a claim for bad faith under 42 Pa.C.S.A. § 8371. The matter proceeded to a non-jury trial on October 19 to 21, 2011. Subsequently, the parties submitted proposed findings of fact and conclusions of law and presented their closing arguments on January 5, 2012. On January 23, 2012, the trial court announced its findings of fact and conclusions in a memorandum opinion, and issued the following verdict in favor of Grossi.
AND NOW this 23rd day of January, 2012, following a non-jury trial, the Plaintiff has proven by clear and convincing evidence The Travelers Insurance Company acted in bad faith in violation of 42 Pa.C.S.A. § 8371, [the trial c]ourt hereby renders a verdict in favor of Plaintiff, Brandon Grossi, and against the Defendant, Travelers, Inc., and awards damages to Plaintiff pursuant to 42 Pa.C.S.A. § 8371 as follows:
(i) Interest on $300, 000.00 underinsured motorist [c]overage from April 21, 2008 to September 11, 2009;
(ii) Attorneys fees to McMillen, Urick, Tocci, Fouse & Jones in connection with underinsured motorist claim[;]
(iii) Attorneys fees to McMillen, Urick, Tocci, Fouse & Jones in connection with bad faith claim[;]
(iv) Costs of bad faith claim[;]
(v) Punitive damages[;]
$1, 252, 325.00
$1, 480, 815.94
Trial Court Opinion and Verdict, 1/23/12, at 20-21.
The trial court made the extensive findings of fact and conclusions of law in ...