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Hatchigian v. State Farm Insurance Co.

United States District Court, Third Circuit

January 16, 2014




Pending before this Court is Defendant State Farm Insurance Company ("State Farm")'s Motion for Summary Judgment. For the following reasons, State Farm's Motion for Summary Judgment is granted in its entirety.


Plaintiff David Hatchigian ("Hatchigian") is an individual residing in Delaware County, Pennsylvania. (Notice of Removal ¶ 9.) Defendant State Farm is an Illinois corporation with its principal place of business in Illinois. ( Id. ¶ 10.)

A. Hatchigian's Policy with State Farm

On March 10, 2005, Hatchigian purchased an auto insurance policy from State Farm for his 2005 Ford Econoline van. (Def.'s Mot. Summ. J., Ex. Y, Hatchigian Policy with State Farm ("the policy").) Hatchigian purchased the policy from Ron Cephas Insurance Agency in Wilmington, Delaware while Hatchigian was a resident of Newark, Delaware. (Id.) Under the "Settlement of Loss" section of Hatchigian's "No Fault-Coverage P" policy, it reads:

[State Farm] will pay any amount due:
a. to the insured or any person or organization providing services; [or]
d. at our option to a person authorized by law to receive such payment.

(Id. at 11 (emphasis in original).) In completing his application to State Farm, Hatchigian affirmed that "the limits and coverages were selected by [him]." ( Id. at 1.)

B. Hatchigian's 2007 Settlement with State Farm

On August 7, 2007, Hatchigian filed an action against State Farm asserting that State Farm had acted in bad faith for allegedly failing to pay his lost wages after he was in an auto accident. (Def.'s Mot. Summ. J., Ex. A, Compl. in No. Civ.A.07-3217, ¶¶ 6-18.) In his complaint, Hatchigian claimed he was entitled to compensation under the "Loss of Earnings" section of his "No Fault-Coverage P" policy with State Farm. ( Id. ¶ 5.)

On October 22, 2009, the parties appeared before then-Magistrate Judge Felipe Restrepo for a settlement conference. (Def.'s Mot. Summ. J., Ex. D, Docket Rep. No. Civ.A.07-3217.) At that time, Hatchigian's counsel was Raymond Quaglia ("Quaglia"). (Id.) The next day, on October 23, 2009, the parties settled the case for $30, 000 in exchange for Hatchigian signing an "Indemnifying Release." (Def.'s Mot. Summ. J., Ex. F, Indemnifying Release.) On or about October 30, 2009, Quaglia delivered the release to State Farm, which bore the signatures of both Hatchigian and Quaglia. (Id.) On December 2, 2008, State Farm drafted a check for $30, 000 payable to "David Hatchigian & Raymond J. Quaglia PC, His/Her Attorney." (Def.'s Mot. Summ. J., Ex. G, First Transmittal Letter and Settlement Check.) The next day, State Farm hand-delivered the check with an accompanying transmittal letter to Quaglia at his office in Philadelphia. (Id.)

On December 4, 2009, Quaglia deposited the entire $30, 000 into an account at United Savings Bank ("USB"). (Id.) On December 15, 2009, Quaglia sent a check for $16, 500 to Hatchigian. (Def.'s Mot. Summ. J., Ex. L, Transmittal Letter and Check from Quaglia to Hatchigian.) In an accompanying letter, Quaglia explained to Hatchigian how he arrived at the $16, 500 figure:

From the total recovery of $30, 000.00, (see copy of check attached), I deducted $10, 000 as our fee. From the $20, 000.00 balance, I have held $3, 500.00 to cover the deposition transcription costs being incurred and paid by me in [another matter].

(Id.) Three days later, Hatchigian sent Quaglia a letter in response accusing Quaglia of having "usurped funds from a settlement by improperly endorsing a settlement check" and demanded that Quaglia "forward all monies related to the settlement within ten days - an amount of $13, 500." (Def.'s Mot. Summ. J., Ex. P, Hatchigian-Quaglia Correspondence.) On January 12, 2010, Quaglia responded in a letter that, "You authorized me to sign your name to the check so it could be promptly deposited and distributed within 5 days as per our agreement." (Id.)

B. Hatchigian's Affidavit of Forgery to State Farm

Sometime on or before February 1, 2010, Hatchigian contacted State Farm's "Finance, Planning & Analysis Department" and told State Farm that he had not authorized Quaglia to endorse the $30, 000 check it had issued and that Quaglia had illegally forged his signature. (Def.'s Mot. Summ. J., Ex. I, Affidavit of Forgery.) On February 1, 2010, State Farm sent Hatchigian a letter explaining how to fill out the attached "Affidavit of Forgery" form and where to mail the completed form. (Def.'s Mot. Summ. J., Ex. H, State Farm Letter to Hatchigian.) On February 8, 2010, Hatchigian swore his affidavit stating that "unknown" had forged his unauthorized endorsement on the $30, 000 settlement check. (Affidavit of Forgery.)

Upon receipt of Hatchigian's affidavit, State Farm sent a letter to its bank, Bank of America, and requested that it "process" Hatchigian's affidavit and credit its account $30, 000.00. (Def.'s Mot. Summ. J., Ex. J, Letter to Bank of America.) Bank of America then issued a Collections Letter to Quaglia's bank, USB, requesting that it draft a check for $30, 000.00 payable to "Bank of America Collections" because of a "[n]otice of a claim for breach of warranty" due to a forged endorsement. (Def.'s Mot. Summ. J., Ex. K, USB Check and Correspondence.) On March 8, 2010, USB drafted and sent a check for $30, 000.00 to Bank of America. (Id.)

Additionally, after receiving of Bank of America's notice of a forged endorsement, USB placed a hold on Quaglia's business account. (Def.'s Mot. Summ. J., Ex. L, Quaglia Letters to Bank of America.) On March 1, 2010, Quaglia sent a letter to Bank of America, requesting that it "withdraw your hold order" because the check had been "payable to me as well as Mr. Hatchigian" and that "distribution of the proceeds was made in due course." (Id.) Days later, Quaglia followed up with another letter to Bank of America, attaching a copy of the letter and $16, 500 check that he had drafted for Hatchigian which he said "conclusively proves that Mr. Hatchigian lied under oath and the affidavit you published that led ...

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