Brown v. Progressive Ins. Co.

• Decision Date: 08 September 2004
• Citation: 2004 Pa. Super. 346,860 A.2d 493
• Parties: John Lee BROWN, Administrator of the Estate of Michael P. Brown, Deceased, Appellee v. PROGRESSIVE INSURANCE COMPANY and MOUNTAIN LAUREL ASSURANCE COMPANY, Appellants.
• Court: Pennsylvania Superior Court

860 A.2d 493

2004 Pa. Super. 346

John Lee BROWN, Administrator of the Estate of Michael P. Brown, Deceased, Appellee v. PROGRESSIVE INSURANCE COMPANY and MOUNTAIN LAUREL ASSURANCE COMPANY, Appellants.

Superior Court of Pennsylvania.

Argued March 30, 2004.

Filed September 8, 2004.

Reargument Denied November 18, 2004.

Jeffrey A. Ramaley, Pittsburgh, for Progressive, appellant.

Kelly M. Tocci, Aliquippa, for appellee.

Before: FORD ELLIOTT, LALLY-GREEN, and TODD, JJ.

LALLY-GREEN, J.:

¶ 1 Appellants, Progressive Insurance Company ("Progressive") and Mountain Laurel Assurance Company ("Mountain Laurel"), appeal from the judgment dated August 14, 2003, in favor of Plaintiff/Appellee, John Lee Brown, administrator of the estate of Michael P. Brown. We vacate the judgment and remand for entry of judgment notwithstanding the verdict (jnov) in favor of Appellants.

¶ 2 The factual and procedural history of the case is as follows. Michael Brown was injured in an auto accident on January 13, 1996. All parties agreed that the other driver was solely liable for the accident. Brown retained an attorney and filed claims against both his own insurance carrier (Progressive)¹ and the tortfeasor's carrier, Nationwide Insurance Company (Nationwide).² The tortfeasor's Nationwide policy had a bodily injury (BI) limit of $50,000.00. The declarations page of the Progressive policy indicated that Brown had uninsured/underinsured motorist (UM/UIM) coverage of $25,000.00 per person and $50,000.00 per accident, unstacked.³ These limits were lower than the $50,000.00/$100,000.00 limits for liability in the Progressive policy.

¶ 3 On June 20, 1996, Brown's attorney requested documentation from Progressive that would show that his client had requested the UM/UIM coverages shown on the declarations page. There was disputed testimony at trial as to whether or not Progressive responded to this request.

¶ 4 On December 31, 1997, Brown died of causes unrelated to the accident. Brown's attorney forwarded documentation of his accident-related medical treatment to Progressive on January 10, 1998. Shortly thereafter, Brown's attorney indicated that he planned to pursue a UIM claim against Progressive. Progressive valued the claim at $35,000.00 to $40,000.00, an amount which was less than the $50,000.00 BI limit of the tortfeasor's policy. Therefore, Progressive did not settle the claim or make an offer at that point.

¶ 5 At this time, the insured's claim included lost wages from the date of the accident until Brown's death. Brown was employed by a family business, which continued to pay him after the accident. Brown contended that these payments were not wages, but an advance against his inheritance. Progressive requested additional tax and wage information to value this part of the claim. This information was never received.

¶ 6 In September of 1998, Brown entered into an agreement to settle the BI claim with Nationwide for $25,000.00. Progressive agreed to this settlement, and waived its subrogation rights. For the pending UIM claim, the parties agreed that Progressive would have a credit in the amount of $50,000.00, the limits of the tortfeasor's policy.

¶ 7 At this time, Brown's attorney repeated his request for information concerning Brown's coverage, i.e., the sign-down of UM/UIM coverage and the waiver of stacking. Brown's attorney testified at trial that his two-year delay in repeating his request for this information was due to Brown's death and the attorney's decision to focus on the BI claim before addressing the UIM claim. Progressive provided this information two months later.

¶ 8 In the October 1998 letter from Progressive to Brown's attorney agreeing to the Nationwide settlement, Progressive stated that arbitration would be necessary to settle the UIM claim due to the divergent opinions as to the value of the underlying claim. Progressive placed the total value of the claim at $35,000.00 to $40,000.00; Brown's attorney believed it to be worth $60,000.00 to $75,000.00.

¶ 9 The parties selected arbitrators in December 1998 and January 1999. The neutral arbitrator was appointed in March 1999. A hearing was set for May 6, 1999. Progressive's outside counsel requested a delay in the proceedings to conduct further discovery. On May 14, 1999, Brown's attorney informed Progressive that no claim for lost wages would be presented, eliminating the need for further discovery on that issue. The arbitration was rescheduled for August 5, 1999.

¶ 10 On August 4, 1999, Progressive's attorney was informed that Brown intended to argue that the sign-down and rejection of stacking on his UIM coverage were insufficient as a matter of law. Progressive's attorney requested a postponement of the hearing to allow him to prepare to argue these issues. The arbitration was rescheduled. The claim settled for $25,000.00 on September 2, 1999, on the eve of the rescheduled arbitration date.

¶ 11 On January 24, 2000, Brown filed a bad faith claim against Progressive under 42 Pa.C.S.A. § 8371. On November 21, 2001, the trial court granted Brown's motion to add Mountain Laurel as an additional defendant. The Honorable C. Gus Kwidis held a non-jury trial on August 30, 2002.

¶ 12 Almost four months later, on December 24, 2002, the trial court issued an opinion and order. The court found that Progressive acted in bad faith. The court entered a "punitive damages verdict" of $100,000.00 against Progressive. On January 3, 2003, the court molded the verdict to add interest and costs, and to indicate that Mountain Laurel was liable as well. On the same day, Progressive and Mountain Laurel filed motions for post-trial relief, seeking jnov or a new trial. The trial court denied these motions in an order dated July 18, 2003. This order was docketed on July 22, 2003. On August 14, 2003, the court entered judgment against Progressive and Mountain Laurel. This timely appeal followed.⁴

¶ 13 Appellants raise the following issues on appeal:

1) Whether the trial court erred in denying Progressive Insurance Company's Motion for Judgment Notwithstanding the Verdict as Progressive Insurance Company, as a matter of law, cannot be liable for alleged bad faith and/or punitive damages, as it was not a party to the insurance contract.

2) Whether the trial court erred in denying Progressive/Mountain Laurel's request for Judgment Notwithstanding the Verdict when the evidence presented was insufficient as a matter of law to support a finding that Progressive/Mountain Laurel acted in bad faith.

3) Whether the trial court abused its discretion in denying Progressive's Motion for Judgment Notwithstanding the Verdict, when the evidence presented was insufficient as a matter of law to satisfy the burden of clear and convincing evidence that Progressive/Mountain Laurel acted in bad faith and was based on findings of fact not supported by the record, in the alternative, the trial court abused its discretion in denying Progressive's Motion for a New Trial, as the findings of fact asserted in the verdict were unsupported by the record such that the verdict was against the weight of the evidence.

4) Whether the trial court erred in denying the motion for a new trial when the finding of bad faith was based upon an issue impermissibly raised, sua sponte, by the trial court.

5) Whether the trial court erred in denying Progressive/Mountain Laurel's request for a new trial as to the issue of punitive damages when the evidence presented failed, as a matter of law, to establish the level of outrageous conduct necessary to justify an award of punitive damages.

6) Whether the trial court erred in denying Progressive/Mountain Laurel's request for a new trial as to the issue on punitive damages when the award was against the weight of the evidence, and based upon the evidence contained within the record was excessive, in violation of the Fourteenth Amendment and bore no rational relationship to the harm allegedly suffered by Brown.

Appellants' Brief at 5.

¶ 14 In this appeal, Appellants seek jnov.⁵ Our Supreme Court has stated that the standard of review for an order "granting or denying judgment notwithstanding the verdict... [is] whether there was sufficient competent evidence to sustain the verdict." The Birth Ctr. v. The St. Paul Cos., 567 Pa. 386, 787 A.2d 376, 383 (2001). We must view the evidence in the light most favorable to the verdict winner. Id. Jnov should be entered only in a clear case, where the evidence is such that no reasonable minds could disagree that the moving party is entitled to relief. Id. Review of the denial of jnov has two parts, one factual and one legal:

Concerning any questions of law, our scope of review is plenary. Concerning questions of credibility and weight accorded evidence at trial, we will not substitute our judgment for that of the finder of fact.

Van Zandt v. Holy Redeemer Hosp., 806 A.2d 879, 886 (Pa.Super.2002) (citation omitted), appeal denied, 573 Pa. 686, 823 A.2d 145 (2003).

¶ 15 We review the decision of a trial court in a non-jury case to determine "whether the findings of the trial court are supported by competent evidence, and whether the trial court committed error in the application of law." Bonenberger v. Nationwide Mut. Ins. Co., 791 A.2d 378, 380 (2002). We also note that the factfinder's conclusions must be based upon competent evidence and reasonable inferences therefrom:

The [factfinder] may not be permitted to reach its verdict merely on the basis of speculation and conjecture, but there must be evidence upon which logically its conclusion may be based. Therefore, when a party who has the burden of proof relies upon circumstantial evidence and inferences reasonably deducible therefrom, such evidence, in order to prevail, must be adequate to establish the conclusion sought and must so preponderate in favor of that conclusion as to outweigh in the mind of the fact-finder any other evidence and reasonable inferences therefrom which

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