Anderson v. Nationwide Ins. Enterprise

• Decision Date: 01 March 2002
• Docket Number: Civil Action No. 99-71 Erie.
• Citation: 187 F.Supp.2d 447
• Parties: David C. ANDERSON and Suzanne M. Anderson, Plaintiffs, v. NATIONWIDE INSURANCE ENTERPRISE, Nationwide Insurance Company, Nationwide Mutual Insurance Company, and Nationwide Mutual Fire Insurance Company, Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

187 F.Supp.2d 447

David C. ANDERSON and Suzanne M. Anderson, Plaintiffs, v. NATIONWIDE INSURANCE ENTERPRISE, Nationwide Insurance Company, Nationwide Mutual Insurance Company, and Nationwide Mutual Fire Insurance Company, Defendants.

Civil Action No. 99-71 Erie.

United States District Court, W.D. Pennsylvania.

March 1, 2002.

COPYRIGHT MATERIAL OMITTED

John W. McCandles, Anthony J. Sciarrino, Swenson, Perer, McCandless & Kontos, Erie, PA, for Plaintiffs.

William K. Conkin, Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

McLAUGHLIN, District Judge.

This case arises out of a motor vehicle accident that occurred on January 4, 1995 in Erie County, Pennsylvania and the uninsured motorist claim that Plaintiff Suzanne Anderson filed in connection therewith. Plaintiffs, who at all relevant times were insureds under an automobile insurance policy with Nationwide, allege that the treatment of this uninsured motorist claim constituted a breach of their insurance contract, bad faith pursuant to Pennsylvania's bad faith statute, 42 Pa.C.S.A. § 8371, and an unfair trade practice prohibited by Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. Presently pending before the Court are cross-motions for partial summary judgment filed by Plaintiffs and Nationwide.

I. BACKGROUND

As previously mentioned, the accident that gave rise to Suzanne Anderson's uninsured motorist claim occurred on January 4, 1995 in Erie County, Pennsylvania. On that date, David Anderson was driving eastbound on Interstate 90 with his wife, Plaintiff Suzanne Anderson, who was sitting in the passenger seat. Weather conditions were poor, with heavy snow, wind and whiteouts. David Anderson testified that his vision was limited to approximately five car lengths ahead of him. Dep. of David Anderson, Nationwide Ex. S at 12. The Anderson vehicle collided with a tractor trailer that was sideways across both eastbound lanes of the highway. This tractor trailer was owned by Ward Kratzer Trucking and operated by Robert M. Wilkie. Shortly before the accident, another tractor trailer passed the Anderson vehicle. The Andersons came to believe that the unknown tractor trailor struck the Wilkie truck which in turn caused it to lose control. In essence, they concluded that the unknown truck was the proximate cause of the accident. This conclusion was supported in part by the police report which indicated that another vehicle had struck the Wilkie truck and the fact that there was damage to the Wilkie vehicle in an area that had not been struck by the Anderson vehicle. As a result of this accident, only Suzanne Anderson sustained personal injuries.

The Andersons filed a writ of summons against Ward Kratzer Trucking and Robert Wilkie in the Court of Common Pleas of Erie County, Pennsylvania on December 3, 1996 in order to protect Nationwide's subrogation rights against these parties. On January 28, 1997, Wallace Knox, Esq., counsel for Wilkie and Ward Kratzer Trucking, filed a Rule to File a Complaint in the case. Plaintiffs' counsel notified Nationwide that the Rule had been filed and offered it the opportunity to assume the prosecution of the case. Nationwide did not take any action in the matter. On March 4, 1997, Suzanne Anderson, through her attorney, Anthony J. Sciarrino, Esq., made a formal claim for uninsured motorist benefits pursuant to her Nationwide policy.¹ Mr. Sciarrino's letter provided in relevant part:

[p]lease let this letter operate as a claim for uninsured motorist benefits on behalf of my client Suzanne Anderson. As you will recall from a review of the accident of January 4, 1995 the accident was precipitated by the actions of a unidentified tractor trailer. Accordingly, we are making a claim for Mrs. Anderson's injuries under her uninsured motorist coverage.

I have enclosed a copy of a Writ of Summons filed on behalf of my client against the second tractor-trailer operated by Robert M. Wilkie and owned by Ward Kratzer Trucking. I have filed said Writ to protect your interest in the event that Nationwide should wish to pursue a claim against Robert M. Wilkie and Ward Kratzer Trucking.

Counsel for the Defendants Wilkie and Ward Kratzer Trucking filed a Rule to File a Complaint in the above referenced case. I have secured a reasonable extension from Counsel for the Defendants in which to file that Complaint. Accordingly, Nationwide Insurance has the option to assume the prosecution of the case and proceed against the Defendants Wilkie and Ward Kratzer Trucking.

Ex. B to Pls.' Complaint at 1. By correspondence dated March 7, 1997, Nationwide advised counsel for Plaintiffs that the unknown vehicle "must have contact with our insured's vehicle for an effective Uninsured Motorist Claim." Ex. C to Pls' Complaint. Plaintiffs replied through counsel that Nationwide's denial was not consistent with Pennsylvania law. On April 7, 1997, Nationwide reversed its previous position and informed Plaintiffs' counsel that it "recognize[d] the uninsured claim and the fact that you have preserved the statute."² Ex. D to Pls' Complaint. On June 16, 1997, through counsel, Plaintiffs made a demand for settlement of Suzanne Anderson's claim under the uninsured provisions of her policy. Nationwide made no offer under the uninsured motorist provisions. Plaintiffs, on numerous occasions and to no avail, thereafter requested that Nationwide arbitrate the claim.³

On September 25, 1997, Nationwide, through the claims person on the file, Odell Graves, wrote to Plaintiffs' counsel. In that letter (which in pertinent part is set forth below), Mr. Graves offered to settle Suzanne Anderson's claim under David Anderson's liability coverage for $3500 and advised Plaintiffs' counsel that it would be necessary to proceed with a declaratory action if he felt that his clients qualified for presentation of an uninsured motorist claim.⁴ Plaintiffs continued to assert that they were pursuing an uninsured motorist claim and continued to request arbitration of the claim in accordance with their policy.

By correspondence dated October 9, 1997, Mr. Graves reiterated that he viewed Suzanne Anderson's claim as a bodily injury claim under the liability provisions of David Anderson's policy and concluded with the following: "[i]f you wish to pursue this matter as an uninsured motorist claim, you can proceed with a declaratory action, which we will respond accordingly." Ex. A to Pls' Motion for Partial Summary Judgment. In response to this letter, the Andersons filed a Petition to Compel Uninsured Motorist Arbitration in the Court of Common Pleas of Erie County on October 16, 1997. Ex. P. of Nationwide's Exhibits. Plaintiffs also filed a Complaint against Ward Kratzer Trucking and Robert Wilkie around this time in the Court of Common Pleas, having exhausted a number of extensions their counsel obtained on the Rule to File a Complaint and having been unsuccessful in numerous attempts to have Nationwide assume the prosecution of the action. In this Complaint, Plaintiffs alleged that an unidentified tractor trailer caused the accident when it struck the Wilkie truck and caused it to move to the right. Ex. L of Nationwide's Exhibits at ¶¶ 7-8. On preliminary objections filed by the Defendants, the Complaint was dismissed with prejudice because no allegations of fault were made against Ward Kratzer Trucking or Wilkie. Exs. M and N of Nationwide's Exhibits.

The record reflects that Nationwide sought advice from its counsel on the viability of the Andersons' Petition to Compel Uninsured Motorist Arbitration and its prospect for successfully opposing it. By correspondence dated November 19, 1997, Craig Murphey, Esq. advised Odell Graves that the court was likely to grant the Petition. Mr. Murphey's letter provided in pertinent part that:

[y]ou have asked me to review the merits of the claimant's Petition to Compel Uninsured Motorist Arbitration, which is presently scheduled for argument before Judge Bozza on December 4, 1997.

As it is constituted right now, the petition would probably be granted. Nationwide's policy provides for arbitration of disputes regarding a claim for uninsured motorist benefits, except for cases in which Nationwide contends that the claimant is not an "insured" under the policy from which UM benefits are sought, or if there is a dispute about the limits of the UM coverage. As I understand it, there is no dispute that Ms. Anderson is an "insured" under Nationwide policy number 54 37 A 749150, or that said policy contained UM benefits of $50,000/$100,000.

Letter of Craig Murphey, Esq. dated November 19, 1997, Nationwide Ex. O at 1. Mr. Murphey's opinion is consistent with the deposition testimony of Nationwide's corporate designee, Jack Lenwood Bowling, Jr., to the effect that it was Nationwide's policy and practice in January, 1995 to arbitrate issues of both fault and damages in uninsured motorist claims. Ex. J to Plaintiffs' Motion for Summary Judgment at 124. In his letter, Mr. Murphey also observed that the Andersons appeared to seek recovery solely under the uninsured motorist provisions and therefore would not be barred by the prohibition on recovering under both the liability and the uninsured motorist provisions for one accident. He also noted that the state court complaint filed on behalf of the Andersons attributed no fault to Ward Kratzer or Wilkie but did attribute fault to the unknown tractor trailer. In sum, Mr. Murphey stated:

[t]he upshot of all this rather confusing procedural maneuvering is that, since the statute of limitations has expired and it appears that the original defendant is going to get the complaint against him dismissed, there is no possibility that Ms. Anderson will recover any of the liability benefits from the Nationwide policy from which she seeks UM benefits. Thus, the above-referenced policy provision which would preclude Ms. Anderson from...