Keefe v. Prudential Property & Casualty Ins. Co
| Decision Date | 27 September 1999 |
| Citation | 203 F.3d 218 |
| Parties | (3rd Cir. 2000) CINDY KEEFE, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant NO. 99-1292 Argued: |
| Court | U.S. Court of Appeals — Third Circuit |
On Appeal From the United States District Court For the Eastern District of Pennsylvania (D.C. Civ. No. 97-cv-03312) District Judge: Honorable Robert S. Gawthrop, III
[Copyrighted Material Omitted]
BENJAMIN E. ZUCKERMAN, ESQUIRE (ARGUED) Cozen and O'Connor The Atrium - 5th Floor 1900 Market Street Philadelphia, PA 19103, Counsel for Appellant
JOSEPH F. RODA, ESQUIRE (ARGUED) Roda & Nast 801 Estelle Drive Lancaster, PA 17602, Counsel for Appellee
Before: BECKER, Chief Judge, McKEE, and NOONAN,* Circuit Judges.
This bad faith insurance claim, founded on diversity jurisdiction, presents an important question of Pennsylvania insurance law: whether a carrier offering uninsured motorist (UM) coverage has a duty to pay an undisputed part of a UM claim while another part remains in dispute. However, because this case is before us in the unusual procedural posture of an appeal from a consent judgment, before we reach this question we must consider whether the stringent conditions for appellate jurisdiction over a consent judgment have been met. The case also presents an interesting issue of justiciability insofar as the consent judgment is founded on a settlement of the underlying claim under which the plaintiff gets more or less depending on the legal rule we apply on appeal.
The plaintiff, Cynthia Keefe, suffered three injuries in a motor vehicle accident with an uninsured motorist. Two of her injuries--to her knee and to her shoulder--were clearly caused by the accident. The third, an injury to her wrist, was more difficult to evaluate because Keefe had a preexisting problem with her wrist, and it was not immediately clear how much of the post-accident condition of her wrist was attributable to the accident. About eighteen months after the accident, the defendant, Prudential Property and Casualty Insurance Company, Keefe's insurance carrier, settled her UM claim for the highest amount available to her under her policy. Although Keefe acknowledges that she failed to provide medical records regarding the preexisting problems with her wrist until less than a month before Prudential agreed to settle her claim, she asserts in this suit that Prudential acted in bad faith by failing to settle her claims for her knee and shoulder injuries while it was awaiting more information regarding her wrist injury.
At close of discovery, the parties filed cross motions for summary judgment. In ruling on the motions the district court held that: (1) Pennsylvania would recognize a UM claim under the circumstances; (2) a reasonable jury could conclude that Prudential, in administering Keefe's uninsured motorist claim, violated its duty of good faith; and (3) genuine issues of material fact nonetheless precluded the entry of summary judgment in favor of either party. The parties thereupon settled the case and stipulated to the entry of judgment in favor of the plaintiff in the amount of one dollar. Prudential now seeks to appeal from that judgment.
We consider first whether Prudential waived the right to an appeal by consenting to the entry of judgment against it, but are satisfied that the understanding between the parties that Prudential would appeal was sufficiently clear to avoid waiver. We also conclude that the parties remain adverse and hence that this appeal presents a genuine case or controversy under Article III of the Constitution. We then turn to the merits, predicting that the Pennsylvania Supreme Court would not recognize a bad faith claim under the circumstances of this case, and we therefore reverse and remand with directions to enter judgment for Prudential.
In August 1995, Keefe was injured in an automobile accident with an uninsured motorist. The next day, she contacted Prudential to report the accident. Her policy with Prudential included $200,000 in UM coverage, under which an insured can recover damages from his or her own insurer for personal injuries sustained in an accident caused by the owner or driver of an uninsured vehicle. The contract provided that, if Prudential and Keefe could not agree on the amount of compensatory damages due, either party could make a written demand for arbitration. Subject to coverage limits, compensatory damages are "the amount that an insured is legally entitled to recover for bodily injury but could not collect from the owner or driver of the uninsured motor vehicle," including damages for pain and suffering. Prudential's representative determined that the driver of the vehicle with whom Keefe had had the accident was uninsured and sent her an application for UM benefits.
Keefe initially reported two injuries in the accident: an injury to her right shoulder and an injury to her left knee. Keefe underwent arthroscopic surgical repair of her shoulder in February 1996 and her knee in July 1996, and provided records regarding these injuries to Prudential. In February 1996, Keefe added a report of an injury to her right wrist. Keefe's wrist injury was the most serious of her injuries, but assessing it was difficult because Keefe had a preexisting condition in her wrist. In June of 1995, about three months before the accident, Keefe had undergone a partial wrist fusion surgery. Several weeks after the accident, Keefe visited her wrist specialist, who monitored her progress throughout the fall and eventually concluded both that the partial fusion had not healed properly and/or was aggravated by the accident and that Keefe required a full wrist fusion. Keefe underwent the surgery to fuse her wrist in April 1996.
The medical records that Keefe initially provided to Prudential lacked any information regarding the condition of her wrist prior to the accident. Without adequate records regarding the preexisting condition in her wrist, Prudential could not determine whether the wrist fusion was required because of the accident or because of the preexisting condition. As a result, Prudential requested, and Keefe's lawyer agreed to provide, medical records regarding her preexisting condition. Despite the fact that he had not yet produced the promised medical records relevant to Keefe's preexisting wrist problems, Keefe's lawyer asked Prudential to settle her claim at or near the policy limits on three occasions between March and June of 1996. These requests were for settlement of the entire claim, including the wrist injury.
Keefe's attorneys finally made the full records regarding Keefe's wrist condition available to Prudential in mid- December 1996. On January 21, 1997, Keefe's lawyer advised Prudential that Keefe was having financial difficulty and, for the first time, requested that Prudential make at least a partial payment. Keefe concedes that she never requested a partial settlement for the shoulder and knee injuries before January 1997. In response to this request, Prudential decided to make a settlement offer. By the end of January 1997, Prudential agreed to settle Keefe's claim for $200,000, her policy limit, which they paid her on March 3, 1997. Prudential represents that the decision to settle for the policy limits was made before it conducted a full review of the medical records and even though there were several grounds for believing that the case was not worth $200,000.
In May 1997, Keefe filed this suit, alleging (1) that Prudential violated PA. Stat. Ann., tit. 42, S 8371 (West 1998), Pennsylvania's law imposing a duty of good faith with respect to insurance claims; and (2) that Prudential was liable for breach of the common law contractual duty of good faith and fair dealing for failing to compensate her for her knee and shoulder injuries while it gathered more information about the preexisting condition in her wrist. Prudential counterclaimed alleging violation of PA. Stat. Ann., tit. 42, S 8371 (West 1998), and a breach of the duty of good faith and fair dealing based on Keefe's delay in providing medical records. The district court had jurisdiction over these claims pursuant to 28 U.S.C. S 1332.
At the close of discovery, the parties filed cross motions. Prudential sought judgment on the pleadings, or, in the alternative, summary judgment, on Keefe's claims that Prudential violated S 8371 and committed a breach of the common law contractual duty of good faith and fair dealing. Keefe sought summary judgment on Prudential's counterclaim. The district court denied Prudential's motion and granted in part and denied in part Keefe's motion, ruling that there were genuine issues of material fact regarding (1) whether Prudential ever placed a specific value on Keefe's knee and shoulder injuries; and (2) whether Keefe's delay in providing medical records regarding her wrist was a reasonable basis for the delay in payment. In so doing, the court concluded that a reasonable jury could find that a defendant's refusal to make an unconditional payment of an undisputed amount of a UM claim while some additional portion of the claim remained in dispute violated S 8371.
Prudential moved for reconsideration on this issue, arguing that UM insurers have no duty under Pennsylvania law to pay an undisputed part of a UM claim while any other part remains in dispute. The district court denied Prudential's motion to reconsider, but certified an interlocutory appeal pursuant to 28 U.S.C. S 1292(b). This court denied Prudential's S 1292(b) petition (in which Keefe had joined). The parties thereupon entered into a stipulation providing that the district court would enter judgment in favor of Keefe in the amount of one dollar. The district court entered a one paragraph final judgment pursuant to the stipulation, and Prudential now appeals from that consent judgment.
To continue reading
Request your trial
-
Oehlmann v. Metropolitan Life Ins. Co.
...consideration it gave to its own interest" and evaluate the case honestly, intelligently, and objectively. Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 227 (3d Cir.2000). We find that MetLife did give Plaintiff's interest the same consideration as its own. MetLife processed the ......
-
Democratic Nat'l Comm. v. Republican Nat'l Comm.
...appellate jurisdiction over the enforcement of the settlement terms, pursuant to 28 U.S.C. § 1291. See Keefe v. Prudential Prop. & Cas. Insurance Co., 203 F.3d 218, 223 (3d Cir.2000); see also Halderman v. Pennhurst State Sch. & Hosp., 901 F.2d 311, 317 (3d Cir.1990) (holding that courts ha......
-
Gator.Com Corp. v. L.L. Bean, Inc.
...twice, holding both times that contingent obligations to pay money saved appeals from mootness. In Keefe v. Prudential Property and Casualty Insurance Co., 203 F.3d 218 (3rd Cir.2000), the parties entered into a partial settlement while the case was on Prudential has agreed to pay Keefe one......
-
Empire Fire and Marine Ins. Co. v. Jones
...stated as follows:The standard for assessing insurer bad faith under § 8371 was recently restated in Keefe v. Prudential Property and Casualty Ins. Co., 203 F.3d 218, 225 (3d Cir.2000): [T]he term bad faith includes 'any frivolous or unfounded refusal to pay proceeds of a policy.' 'For purp......