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Strausser v. Merchants Insurance Group

United States District Court, M.D. Pennsylvania

April 7, 2014

David W. Strausser, Sr. Plaintiff,
Merchants Insurance Group, Defendant.


RICHARD P. CONABOY, District Judge.

The Court considers here Defendant Merchant Insurance Group's Motion for Summary Judgment (Doc. 17) filed September 30, 2013. That motion, which seeks dismissal of the bad faith count of Plaintiff's complaint, has been fully briefed (Docs. 18, 21 and 23) by the parties and is ripe for disposition.

I. Background.

This case was initiated by Complaint (Doc. 1) filed on August 9, 2012. In that complaint, Plaintiff David W. Strausser, Sr. has asserted that Defendant breached its insurance contract with him and violated the Pennsylvania Bad Faith Statute, 42 Pa. C.S.A. § 8371, by failing to promptly and reasonably settle his claim for underinsured ("UIM") motorist benefits. (Doc. 1 at 5-6).

This case arises from a motor vehicle accident that occurred on December 18, 2007. (Doc. 1 at 1). In that accident, Plaintiff alleges that he sustained serious and disabling physical injuries (Doc. 1, ¶ 14). After receiving payment from the tortfeasor's carrier, Plaintiff made his UIM claim with Defendant, his auto insurer, in January of 2010. (Doc. 1, ¶¶ 11-12).

Defendant contends that it investigated Plaintiff's UIM claim and discovered "red flags" in the form of Plaintiff's prior accident history and pre-existent financial and psychological problems. (Doc. 21 at 1-2). Nevertheless, Defendant asserts that it ultimately agreed to arbitrate the UIM claim as per its insurance contract with Plaintiff. (Doc. 21 at 2). Defendant asserts further that it promptly paid the sum awarded by the arbitrator - $135, 000.00 - in August of 2013 after the arbitrator rendered his decision. (Doc. 21 at 4). Defendant also contends that the 43 month delay between Plaintiff's filing of the UIM claim and the issuance of the arbitrator's award was largely the result of the refusal of one of Plaintiff's medical providers to respond to a subpoena. (Doc. 17-2, ¶¶ 23-41). Finally, Defendant contends that, for reasons beyond its control, negotiations before a private mediator became protracted due to the mediator's personal emergency. (Doc. 21 at 3). Defendant characterizes the parties' impasse as a simple disagreement about the value of Plaintiff's UIM claim. (Doc. 21 at 2).

Plaintiff counters that Defendant unreasonably complicated the settlement process by requesting 33 separate authorizations and tax returns in piecemeal fashion over a period of many months in 2010 and 2011. (Doc. 20, ¶¶ 16-21). Plaintiff argues that one of Plaintiff's medical providers, a psychologist who could not assemble her treatment records because of a computer malfunction, was unreasonably subjected to a lawsuit by the Defendant that resulted in further significant and unnecessary delay in arbitrating Plaintiff's UIM claim. (Doc. 20, ¶¶ 22-31). Finally, Plaintiff contends that, despite an exhaustive investigation spanning 4½ years, Defendant never obtained any evidence to support its position that Plaintiff had been disabled before the accident that produced this lawsuit. (Doc. 20, ¶ 40).

The parties do agree that the case was finally arbitrated in August of 2013 and that the arbitrator awarded the Plaintiff the sum of $135, 000.00, almost four (4) times more than the Defendant's best offer to that point. (Doc. 20, ¶ 38; Doc. 17-2, ¶¶ 45 and 56). Defendant explains the size of the arbitration award as one of the "vagaries inherent in predicting how a factfinder will respond to a complex set of evidentiary factors." (Doc. 21 at 7). Plaintiff points to the sizeable discrepancy between the arbitrator's award and the Defendant's best prior settlement offer as proof that the Defendant acted in bad faith by refusing to make a timely and reasonable offer in settlement. (Doc. 18 at 6).

II. Summary Judgment Standard.

Summary judgment is appropriate when the movant demonstrates there is no "genuine issue as to any material fact." Fed.R.Civ.P. 56(a). "[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48 (1986).

An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party, and a factual dispute is material only if it might affect the outcome of the suit under governing law." Kaucher v. County of Bucks , 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson , 477 U.S. at 248). In determining whether a genuine issue of fact exists, a court must resolve all factual doubts and draw all reasonable inferences in favor of the nonmoving party. Conoshenti v. Public Serv. Elec. & Gas. , 364 F.3d 135, 140 (3d Cir. 2004) (citation omitted).

The initial burden is on the moving party to show an absence of a genuine issue of material fact. Celotex Corp. V. Catreet, 477 U.S. 317 , 330 (1986) (citations omitted). The moving party may meet this burden by "pointing out to the district court[] that there is an absence of evidence to support the nonmoving party's case when the nonmoving party bears the ultimate burden of proof." Id. at 325. The non-moving party may not rest on the bare allegations contained in his or her pleadings, but is required by Federal Rule of Civil Procedure 56 to go beyond the pleadings by way of affidavits, depositions, answers to interrogatories or the like in order to demonstrate specific material facts which give rise to a genuine issue. Id . At 324.

Where underlying facts are in dispute, the facts are viewed in the light most favorable to the non-moving party. Abramson v. William Patterson College of N.J. , 260 F.3d 265, 267 (3d Cir. 2001) (citing Drinkwater v. Union Carbide Corp. , 904 F.2d 853, 854 N.1 (3d Cir. 1990). "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of evidence." Anderson , 477 U.S. at 255. Therefore, when evidentiary facts are in dispute, ...

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