Haugh v. Allstate Ins. Co.
| Decision Date | 28 February 2003 |
| Docket Number | No. 01-4197.,01-4197. |
| Parties | Dennis HAUGH Appellant v. ALLSTATE INSURANCE COMPANY |
| Court | U.S. Court of Appeals — Third Circuit |
Vincent A. Coppola (argued), Pribanic & Pribanic, Pittsburgh, PA, for Appellant.
Anthony J. Williott (argued), Dickie, McCamey, & Chilcote, P.C., Pittsburgh, PA, for Appellee.
Before SLOVITER, RENDELL, and GREENBERG, Circuit Judges.
This matter comes on before this court on an appeal from an order of the district court entered October 22, 2001, granting summary judgment in favor of Allstate Insurance Company in this insurance policy bad faith action predicated on Allstate's failure to settle a claim asserted by appellant Dennis Haugh against its insured, Theodore Uher. The district court held that the statute of limitations barred Haugh's statutory bad faith claim against Allstate and rejected his argument that as Uher's assignee he can assert a separate common law cause of action for breach of Allstate's duty to act in good faith toward Uher. For the reasons set forth herein we disagree with the district court as we cannot say at this time that the action is time barred and we conclude that Haugh adequately has pled a viable common law action. Accordingly, we will reverse the order of October 22, 2001, and remand the case to the district court for further proceedings.
On September 7, 1993, in McKeesport, Pennsylvania, Uher struck and severely injured Haugh with his automobile. Uher reported the accident to his insurance carrier, Allstate, which assigned Veronica Clarke, an Allstate claims adjuster, to investigate the accident. Based on a visit to and photographs of the accident scene, observation of the damage to Uher's motor vehicle, Uher's and an eyewitness's accounts of the accident, and a police report Clarke determined that Uher was not liable to Haugh.
Following this investigation when Haugh's counsel, Victor Pribanic, contacted Clarke to discuss Haugh's claim Clarke informed him that Allstate had decided to deny the claim based on its determination that Uher was not liable for the accident. Pribanic, however, informed Clarke during the conversation that there were several witnesses who would state that Uher was speeding and had crossed the center line of the roadway where he hit Haugh. In what ultimately proved to be a critical step in his representation of Haugh, Pribanic later wrote Clarke a letter dated March 2, 1994, indicating that his client would be willing to settle his claim on the basis of Allstate paying Uher's policy limit which in fact was $15,000 for a single injured claimant. The letter stated that the offer to settle for the policy limits would be revoked automatically in 30 days if not accepted. Allstate did not advise Uher of this settlement offer and on March 23, 1994, Clarke, without Uher's knowledge, sent Pribanic a letter reiterating Allstate's position that Uher was not liable for the accident. Thereafter by letter dated May 16, 1994, Pribanic informed Clarke that the offer to settle for the policy limits was withdrawn.
Inasmuch as the matter had not been settled, Haugh filed suit against Uher on July 14, 1994, in the Court of Common Pleas of Allegheny County, Pennsylvania, seeking to recover damages for his injuries. Thereafter, Joseph Toth, an Allstate insurance adjuster assigned to handle the claim in litigation, informed Uher in writing that Allstate had hired an attorney to represent him in the suit, the insurance policy limits of $15,000 might be inadequate for the amount claimed as damages, a verdict that exceeded the policy limits would result in personal liability, and he had the right to retain his own counsel. The letter, however, did not advise Uher that Allstate had declined to settle the case for $15,000 before Haugh filed his action. On September 13, 1995, Allstate reversed its position regarding settlement as it offered to settle the case with Haugh for the $15,000 policy limits. Haugh, however, rejected the offer. Subsequently, Haugh's case came on for a trial at which he obtained a verdict on March 13, 1998, for $740,000.1
The verdict led to negotiations between Haugh and Uher resulting in the execution of an assignment agreement on May 28, 1999, in which Haugh acquired Uher's right to any potential bad faith claims against Allstate in exchange for Haugh's promise to refrain from executing on the judgment against Uher. Haugh, however, did not sign this agreement but rather authorized his sister to sign his name to it and she did so. Insofar as we are aware neither Haugh nor Uher ever has challenged the validity of this agreement by reason of Haugh's sister having signed it or for any other reason.
On October 22, 1999, Haugh, as Uher's assignee, filed a bad faith action against Allstate in the district court pursuant to the Pennsylvania bad faith statute, 42 Pa. Cons.Stat. Ann. § 8371 (West 1998),2 claiming that Allstate exhibited bad faith in failing to settle the claim against Uher for the $15,000 policy limits. Haugh also advanced a separate common law cause of action for breach of Allstate's contractual duty to act in good faith.3 Allstate subsequently moved for and then obtained a summary judgment on October 22, 2001, the district court granting its motion on the grounds that Haugh's claim brought under the Pennsylvania bad faith statute was subject to a two-year statute of limitations and was time barred and that Pennsylvania did not recognize a separate common law bad faith action predicated on Allstate's initial refusal to settle the case. In concluding that the action was time barred, the district court held that the bad faith claim accrued at the latest when Pribanic informed Clarke by his May 16, 1994 letter that he was withdrawing the offer to settle for $15,000. Haugh timely filed a notice of appeal on November 19, 2001.
We have jurisdiction over this matter pursuant to 28 U.S.C. § 1291. The district court had subject matter jurisdiction over this diversity of citizenship case pursuant to 28 U.S.C. § 1332.
Our review of the district court's grant of a motion for summary judgment is plenary and we apply the same standard employed by the district court under Fed.R.Civ.P. 56(c). See Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 87-88 (3d Cir.2000). Accordingly, we will affirm the district court's grant of summary judgment in favor of Allstate if it appears that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). In reviewing the record, we are required to view the inferences to be drawn from the underlying facts in the light most favorable to Haugh, as the party opposing the motion, and to take his allegations as true when supported by proper proofs whenever these allegations conflict with those of Allstate. See Meritcare, Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 223 (3d Cir.1999).
We first consider when the statute of limitations started to run.4 The district court found that the "bad faith claim accrued, at the latest, in 1994 when plaintiff withdrew the offer to settle the claim for the policy limits." Op. at 232. While Haugh agrees with the district court that Allstate's breach of fiduciary duty "necessarily crystalized on May 16, 1994 when Mr. Haugh withdrew his offer to settle within the meager limits of Mr. Uher's auto policy," Br. of Appellant at 17, Haugh argues that Uher was unaware of Allstate's breach of fiduciary responsibility until 1998, well within the two-year statute of limitations that the district court applied, and that the district court should have applied the discovery rule and tolled the running of the statute of limitations until that time.
In making this contention Haugh views the matter from Uher's perspective. We agree with this approach for Haugh brings this suit as assignee of Uher's cause of action against Allstate and thus "stands in [Uher's] shoes." See Banks v. Chiffy, 24 Pa. D. & C. 4th 340, 343-44 (1995).5 Inasmuch as Haugh does not argue that the bad faith cause of action did not accrue until after the excess judgment was rendered, for purposes of this appeal the bad faith claim against Allstate arose in 1994 when Allstate declined to accept Haugh's offer to settle for the policy limits and accordingly Uher could have sued Allstate at that time.6
The general rule is that the statute of limitations begins to run as soon as a right to institute and maintain suit arises, Crouse v. Cyclops Industries, 560 Pa. 394, 745 A.2d 606, 611 (2000), and, as we have indicated, for purposes of this appeal Uher could have sued Allstate in 1994 when it rejected Haugh's settlement offer. Nevertheless the statute of limitations may not have started running in 1994 because Pennsylvania law recognizes that "in some circumstances, although the right to institute suit may arise, a party may not, despite the exercise of diligence, reasonably discover that he has been injured." Id. In such cases, the discovery rule applies. Id. As the Pennsylvania Supreme Court explained in Crouse, "[t]he discovery rule is a judicially created device which tolls the running of the applicable statute of limitations until the point where the complaining party knows or reasonably should know that he has been injured and that his injury has been caused by another party's conduct." Id. In disputed cases the trier of the facts must determine the point at which a party reasonably should have been aware that he suffered an injury. See id. Once the running of the statute of limitations properly is tolled, "only where the facts are so clear that reasonable minds cannot differ may the commencement of the limitations period be determined as a matter of law." Id.
Allstate argues...
To continue reading
Request your trial
-
Charleswell v. Chase Manhattan Bank, N.A.
...a federal court determining state law must predict how that court would rule on the matter if confronted with it." Haugh v. Allstate Ins. Co., 322 F.3d 227, 234 (3d Cir.2003). According to one author, "[c]ourts which have considered the matter have recognized that a mortgagee may have a dut......
-
Charleswell v. Chase Manhattan Bank, N.A.
...a federal court determining state law must predict how that court would rule on the matter if confronted with it.” Haugh v. Allstate Ins. Co., 322 F.3d 227, 234 (3d Cir.2003). According to one author, “[c]ourts which have considered the matter have recognized that a mortgagee may have a dut......
-
Pellegrino v. U.S. of Am. Transp. Sec. Admin.
...1080 (3d Cir.1988) (holding that Bivens actions are governed by the applicable state law statute of limitations); Haugh v. Allstate Ins. Co., 322 F.3d 227, 233 (3d Cir.2003) (noting that the Pennsylvania limitations period in tort cases is two years). Plaintiff did not file this action unti......
-
Germinaro v. Fid. Nat'l Title Ins. Co.
...is that the statute of limitations begins to run as soon as a right to institute and maintain suit arises." Haugh v. Allstate Ins. Co., 322 F.3d 227, 231 (3d Cir.2003) (citing Crouse v. Cyclops Indus., 560 Pa. 394, 745 A.2d 606, 611 (2000) ). However, Pennsylvania also employs a "discovery ......