Berg v. Nationwide Mut. Ins. Co., No. 33 MAP 2019

CourtPennsylvania Supreme Court
Writing for the CourtPER CURIAM.
Citation235 A.3d 1223 (Mem)
Parties Daniel BERG, Individually and as the Executor of the Estate of Sharon Berg a/k/a Sheryl Berg, Appellant v. NATIONWIDE MUTUAL INSURANCE COMPANY, INC., Appellee
Docket NumberNo. 33 MAP 2019
Decision Date25 August 2020

235 A.3d 1223 (Mem)

Daniel BERG, Individually and as the Executor of the Estate of Sharon Berg a/k/a Sheryl Berg, Appellant
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, INC., Appellee

No. 33 MAP 2019

Supreme Court of Pennsylvania.

Argued: November 21, 2019
Decided: August 25, 2020


ORDER

PER CURIAM

AND NOW, this 25th day of August, 2020, the Court being divided in a fashion which prevents a majority disposition, the appeal is DISMISSED. The application to file a post-argument submission is DISMISSED as moot.

Justice Donohue did not participate in the consideration or decision of this matter.

OPINION IN SUPPORT OF REVERSAL

JUSTICE WECHT

Twenty-four years ago, Sharon Berg was involved in a collision while driving a vehicle insured by Nationwide Mutual Insurance. Although there were no injuries, the vehicle sustained extensive damage. After a botched repair job, the vehicle remained uncrashworthy. Yet Nationwide knowingly permitted its insured to continue driving this vehicle, while refusing to acknowledge what it already knew: that the repairs had failed.1 Sharon and her husband, Daniel Berg, eventually sued Nationwide

235 A.3d 1224

for insurance bad faith. See 42 Pa.C.S. § 8371. After three trials and multiple appeals, the trial court made extensive factual findings and legal conclusions to support a judgment in bad faith against Nationwide. The Superior Court reversed, finding no record support for the trial court's judgment. The Bergs appealed to this Court. Being divided in a fashion which prevents a majority disposition, this Court is dismissing the Bergs' appeal. Because we would find ample evidentiary support for the trial court's judgment, we would reverse the order of the Superior Court and remand to the Superior Court for consideration of Nationwide's outstanding appellate issues.

I. Background

The genesis of this lengthy litigation was a car accident on September 4, 1996, when Sharon was driving a Jeep Grand Cherokee that she leased and which Nationwide insured. The Nationwide policy covered losses caused by collision, and obligated Nationwide to "repair or replace [the] auto or its damaged parts."2 After contacting Nationwide to report the accident, the Bergs took their damaged vehicle to Lindgren Chrysler-Plymouth, Inc. ("Lindgren"). Lindgren was an established participant in Nationwide's direct repair program, known as the "Blue Ribbon Repair Program" ("BRRP").

Through the BRRP, Nationwide entered into a confidential contractual relationship with participating shops like Lindgren, with Nationwide receiving a discount on parts and other cost savings. In exchange, Nationwide would refer its policy holders to contracted shops participating in the BRRP for appraisal and repair. The program purports to benefit policy holders as well, because shops participating in the BRRP provide both appraisals and repairs without the need for the customer to take the vehicle from one place to another. A Blue Ribbon appraisal, from a Blue Ribbon repair facility, is backed by Nationwide's Blue Ribbon Guarantee. N.T., 6/5/2007, at 35; R.R. 1964a.

After four months of repairs, Lindgren returned the Jeep to the Bergs. Right away, the Bergs noticed problems with their vehicle, prompting them to return to Lindgren several times to remedy structural issues that Lindgren had not resolved. Although Lindgren assured them that it had corrected the problems, this was not the case.

In October 1997, the Bergs received a telephone call from David Wert, a former employee of Lindgren. Wert reported that the Lindgren employees who worked on the Jeep may not have repaired the Jeep's structural failures. Alarmed by this revelation, as well as the repair issues they had experienced, the Bergs retained counsel and prepared to file suit against Lindgren. On November 25, 1997, Donald Phillips inspected the Jeep on behalf of the Bergs, and, on December 23, 1997, Charlie Barone conducted a second inspection for the Bergs. Both inspections concluded that the Jeep was not safe to drive given the inadequate structural repairs. On January 23, 1998, the Bergs filed a writ of summons against Lindgren. In March of 1998, the Bergs purchased another vehicle to drive, having come to understand that the Jeep was unsafe.

During pre-complaint discovery, the Bergs deposed employees of Lindgren and learned that Doug Joffred, the appraiser assigned to assess the Jeep, initially had declared that the Jeep was a structural total loss due to its twisted frame. It was

235 A.3d 1225

only when Nationwide's claim representative, Doug Witmer, was dispatched to review this assessment that Nationwide decided to repair, rather than replace, the damaged Jeep. Also unbeknownst to the Bergs, Nationwide had moved the Jeep to another facility to attempt structural repairs. On April 28, 1998, Bruce Bashore, who managed statewide BRRP operations for Nationwide, had the Jeep inspected by one of Nationwide's property damage specialists, Stephen Potosnak. Potosnak documented extensive structural repair failures in a report in Nationwide's claims log.3 Nationwide did not disclose the Potosnak report to the Bergs or inform them of the structural defects he observed.

On May 4, 1998, the Bergs filed suit against Nationwide and Lindgren. As to Nationwide, the complaint raised claims sounding in contract, negligence, fraud, civil conspiracy, insurance bad faith,4 and pursuant to the Unfair Trade Practices and Consumer Protection Law ("UTPCPL").5

These claims arose from Nationwide's handling of the Bergs' first-party collision claim. In particular, in their final amended complaint, the Bergs alleged that, after the accident, Nationwide acted in bad faith in not effectuating "the prompt, fair, and equitable settlement of [the Bergs'] claim where [Nationwide's] statutory and contractual duty to do so is reasonably clear." Eighth Amended Complaint ¶ 93; R.R. 609a-10a. According to the Bergs, Lindgren initially appraised the Jeep as a structural "total loss." Id . ¶ 13; R.R. 581a. The Bergs averred that Nationwide interfered with the total loss appraisal and later returned the Jeep despite known structural repair deficiencies that left the Jeep in a dangerous condition. Id . at ¶¶ 15-18, 26, 27; R.R. 581a-582a, 584a.

After the Bergs filed their complaint, Bashore requested the opportunity to have an independent expert inspect the Jeep. Implying that he was not already aware of repair deficiencies notwithstanding the Potosnak report, Bashore assured the Bergs that, if this inspection revealed problems,

235 A.3d 1226

Nationwide would have the problems corrected or, if the Jeep could not be repaired, that it would purchase the vehicle. 2004 Tr. Ex. 15 (letter dated 5/19/1998); R.R. 1891a.

On August 21, 1998, Nationwide's expert, William Anderton, conducted a visual inspection of the Jeep, and confirmed that the Jeep had not been repaired adequately. Because Anderton was unable to complete a full inspection, counsel for the Bergs and Nationwide began to discuss (and to disagree), about what to do with the Jeep when the Bergs' lease expired in December 1998. Nationwide indicated its intent to purchase the Jeep so that its experts could complete a full inspection. Counsel for the Bergs, concerned about Nationwide's willingness to preserve the integrity of the Jeep and to make it available for inspections by the Bergs, sought assurances from Nationwide about the Jeep's storage. Meanwhile, Nationwide sent a check for $18,000, representing the actual cash value of the Jeep at that time, to Summit Bank, the title holder. The Bergs' counsel, remaining unsatisfied with Nationwide's willingness to preserve the integrity of the Jeep, indicated that the Bergs may want to exercise their option to purchase the Jeep. Nationwide sent a letter to Summit Bank, in which it insisted that Summit Bank honor Nationwide's purchase, and threatened legal action.

After Nationwide purchased the Jeep, the parties agreed that they would split the storage costs. On April 20, 1999, Anderton completed a full inspection of the Jeep on behalf of Nationwide. Like Potosnak, Anderton confirmed that the Jeep's primary structural components remained significantly misaligned with no identifiable benefit from Lindgren's structural repair attempts. Notwithstanding the Potosnak report and Anderton's two inspections, Nationwide filed an answer to the Bergs' complaint on January 20, 2000, denying allegations that the vehicle was unsafe.

In 2004, the trial court bifurcated the trial. The claims for common law fraud, conspiracy, and liability under the UTPCPL proceeded to a jury trial before Judge Stallone, while the trial court reserved the bad faith claim against Nationwide for a bench trial. Following several days of testimony, the jury found by clear and convincing evidence that Nationwide had violated the UTPCPL by "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding." 73 P.S. § 201-2(4)(xxi). The jury reached a defense verdict on the common law fraud and civil conspiracy counts, and awarded damages of $1,925 against Lindgren and $295 against Nationwide.

In 2007, the trial court held a bench trial on the insurance bad faith claim. At the conclusion of trial, the trial court granted a directed verdict for Nationwide based upon the court's mistaken belief that the case did not involve an "action arising under an insurance policy" as required by Section 8371. Rather, according to the trial court, the action arose under Nationwide's BRRP, which, the court believed, was not part of Nationwide's automobile insurance policy. Further, the trial court held that the jury's verdict in the Bergs' favor on their UTPCPL claim against Nationwide was not sufficient evidence, in and of itself, to support a finding of bad faith.6

235 A.3d 1227

Meanwhile, Nationwide sought permission from the trial court to dispose of the Jeep, asserting that it no longer held any evidentiary value. The trial court...

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7 practice notes
  • Ironshore Specialty Ins. Co. v. Conemaugh Health Sys., Civil Action 3:18-cv-153
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
    • May 16, 2022
    ...knew or recklessly disregarded its lack of reasonable basis in denying the claim.'" Berg v. Nationwide Mutual Insurance Company, Inc., 235 A.3d 1223, 1232 (Pa. 2020) (quoting Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 376-77 (Pa. 2017) (adopting the two-part test articulated in Te......
  • Westport Ins. Corp. v. McClellan, CIVIL ACTION NO. 20-1372
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • October 8, 2020
    ...Prop. and Cas. Ins. Co. , 437 Pa.Super. 108, 649 A.2d 680, 688 (1994) ).128 Id.129 Berg v. Nationwide Mut. Ins. Co., Inc., ––– Pa. ––––, 235 A.3d 1223, 1225–26, (2020).130 See Am. Auto. Ins. Co. v. Murray , 658 F.3d 311 (3d Cir. 2011) ; Fed. Kemper Ins. Co. v. Rauscher , 807 F.2d 345 (3d Ci......
  • Lauf v. Allstate Ins. Co., Civil Action 22-65
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • April 1, 2022
    ...in denying the claim." Rcmcosky v. Wash, Natl Ins. Co., 170 A.3d 364, 377 (Pa. 2017); accord Berg v. Nationwide Mitt. Ins. Co., Inc., 235 A.3d 1223, 1245-46 (Pa. 2020). "[A]n insurer's conduct need not be fraudulent, but mere negligence or bad judgment will not suffice." Atiyeh v. Nat'l Fir......
  • Alumisource Corp. v. Kantner Iron & Steel, Inc., 764 WDA 2021
    • United States
    • Superior Court of Pennsylvania
    • May 23, 2022
    ...to assess the credibility of the 17 witnesses," we cannot grant Appellant relief on its second issue. Berg v. Nationwide Mut. Ins. Co., 235 A.3d 1223, 1228 (Pa. 2020). Issue 3 Appellant next challenges the trial court's failure to apply the doctrines of waiver, estoppel and/or laches to bar......
  • Request a trial to view additional results
7 cases
  • Ironshore Specialty Ins. Co. v. Conemaugh Health Sys., Civil Action 3:18-cv-153
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
    • May 16, 2022
    ...knew or recklessly disregarded its lack of reasonable basis in denying the claim.'" Berg v. Nationwide Mutual Insurance Company, Inc., 235 A.3d 1223, 1232 (Pa. 2020) (quoting Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 376-77 (Pa. 2017) (adopting the two-part test articulated in Te......
  • Westport Ins. Corp. v. McClellan, CIVIL ACTION NO. 20-1372
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • October 8, 2020
    ...Prop. and Cas. Ins. Co. , 437 Pa.Super. 108, 649 A.2d 680, 688 (1994) ).128 Id.129 Berg v. Nationwide Mut. Ins. Co., Inc., ––– Pa. ––––, 235 A.3d 1223, 1225–26, (2020).130 See Am. Auto. Ins. Co. v. Murray , 658 F.3d 311 (3d Cir. 2011) ; Fed. Kemper Ins. Co. v. Rauscher , 807 F.2d 345 (3d Ci......
  • Lauf v. Allstate Ins. Co., Civil Action 22-65
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • April 1, 2022
    ...in denying the claim." Rcmcosky v. Wash, Natl Ins. Co., 170 A.3d 364, 377 (Pa. 2017); accord Berg v. Nationwide Mitt. Ins. Co., Inc., 235 A.3d 1223, 1245-46 (Pa. 2020). "[A]n insurer's conduct need not be fraudulent, but mere negligence or bad judgment will not suffice." Atiyeh v. Nat'l Fir......
  • Alumisource Corp. v. Kantner Iron & Steel, Inc., 764 WDA 2021
    • United States
    • Superior Court of Pennsylvania
    • May 23, 2022
    ...to assess the credibility of the 17 witnesses," we cannot grant Appellant relief on its second issue. Berg v. Nationwide Mut. Ins. Co., 235 A.3d 1223, 1228 (Pa. 2020). Issue 3 Appellant next challenges the trial court's failure to apply the doctrines of waiver, estoppel and/or laches to bar......
  • Request a trial to view additional results

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