Terletsky v. Prudential Property and Cas. Ins. Co.
| Decision Date | 25 October 1994 |
| Parties | Alexander TERLETSKY, Appellant, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellee. (Two Cases) Alexander TERLETSKY and Marina Terletsky, Appellants, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellee. (Two Cases) Alexander TERLETSKY, Appellee, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellants. Alexander TERLETSKY and Marina Terletsky, Appellees, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellants. |
| Court | Pennsylvania Superior Court |
Leonidas N. Koletas, Philadelphia, for Terletsky.
Daniel J. Ryan, Jr., Philadelphia, for Prudential.
Before CAVANAUGH, KELLY and BROSKY, JJ.
In this appeal and cross-appeal, we must determine whether the trial court's findings of fact are adequately supported by evidence. In addition, we are asked to determine whether the trial court properly concluded that appellee, Prudential Property and Casualty Insurance Company, acted in bad faith in partially disputing payment of appellant's, Alexander Terletsky's, uninsured motorist claim. We hold that the trial court's factual findings have adequate support in the evidence. We further hold that appellee had a rational basis for disputing appellant's claim; thus, the trial court's determination of bad faith was improper. Accordingly, we reverse.
The relevant facts and procedural history are as follows. On March 5, 1989, appellants, Alexander and Marina Terletsky (the Terletskys) were involved in a motor vehicle accident with uninsured motorist, Michael Brown. The police report of the accident indicated that no injuries were sustained. Following the accident, the Terletskys filed uninsured motorist claims against their carrier, appellee, Prudential Property and Casualty Insurance Company (Prudential). In addition, Michael Brown filed a liability claim against Prudential which was assigned to the same claims adjuster as the Terletskys' uninsured motorist claims. On September 5, 1989, Prudential settled Michael Brown's liability claim for $2,000.00 and a waiver of subrogation rights. On September 27, 1989, in connection with the investigation of the accident and in an attempt to resolve medical questions relating to the Terletskys, Prudential requested independent medical examinations at Penn Diagnostic Center of both Marina and Alexander Terletsky. Counsel for the Terletskys refused the request. However, the Terletskys' counsel proposed an alternative plan for the examinations which was subsequently rejected by Prudential. 1
As of December, 1989, the Terletskys had submitted to Prudential $5,600.00 in medical bills for the treatment of Marina Terletsky's alleged injuries and $9,100.00 in medical bills for the treatment of Alexander Terletsky. Alexander Terletsky did not sustain a wage loss in his employment as an engineer. Marina Terletsky sustained, but did not claim, a few days wage loss as a paralegal.
The Terletskys demanded settlement of their uninsured motorist claims on December 14, 1989, in the amount of their policy limits. The Terletskys' policy provided $100,000.00/$300,000.00 coverage which allowed $100,000.00 of uninsured motorist coverage for each of the two cars they owned and $300,000.00 per accident. Also, on December 14, 1989, the Terletskys demanded arbitration of their claim disputes pursuant to the arbitration clause in their policy. The clause provided that arbitration could be invoked when the insurer and insured could not reach an agreement. 2
The neutral arbitrator for the arbitration panel was selected in June, 1990. Prudential then petitioned the arbitrators to compel the independent medical examinations of the Terletskys. On July 6, 1990, the arbitrators ordered the independent medical examinations; however, on July 19, 1990, the Terletskys sought reconsideration. After hearing arguments on September 19, 1990, the arbitrators again ordered that the Terletskys submit to the independent medical examinations as well as provide Prudential with statements under oath. Consequently, the independent medical examinations took place on October 3, 1990.
On October 17, 1990, Prudential offered $40,000.00 for the bodily injury claim of Alexander Terletsky and $17,500.00 for the bodily injury claim of Marina Terletsky. In response, counsel for the Terletskys indicated that he would "not blink" at any offer below $100,000.00 for each claimant.
An arbitration hearing was held on December 27, 1990, at which Alexander Terletsky testified. The hearing on Marina Terletsky's claim, however, was continued for the purpose of receiving the videotaped testimony of the Terletskys' orthopedist. In connection with the December 27, 1990 hearing, Prudential's house counsel, Anna Pace, interviewed Michael Brown by telephone. Michael Brown agreed to accept a subpoena and testify before the arbitrators on behalf of Prudential; however, he never received the subpoena and he never testified. Following the hearings, Anna Pace spoke with Prudential's arbitrator regarding the status of the arbitration awards.
On January 22, 1991, the arbitrators awarded Alexander Terletsky the amount of $125,000.00 for his uninsured motorist claim with the following caveat: 3
The Award is governed by the coverage available, that is to say, if the coverage is less than the amount of the Award, the claimant may only receive the amount of the coverage.
Arbitration Award of Alexander Terletsky, January 22, 1991.
Subsequently, Prudential decided to appeal the award of the arbitrators. On February 7, 1991, Prudential's claims representative for the case, Laurie Trythall, instructed Prudential's house counsel to appeal the award on the grounds that the Terletskys policy provided for only $100,000.00 liability and "stacking" 4 was not permitted. The appeal was based on Chartan v. Chubb Corp., 725 F.Supp. 849 (E.D.Pa.1989) (Chartan I ). 5 However, Prudential's corporate counsel, Clayton W. Boulware, had advised management that "stacking" was now permitted in Pennsylvania. The "Boulware memo" stated in part:
Act 6 and recent Court decisions have effectively attenuated the Chartan holding; so much so that UM and UIM coverages are not capped at the maximum single policy liability limit.
* * * * * *
It can be reasonably concluded that an insured retains his or her right to stack uninsured and underinsured coverages, even if that stack amount exceeds the maximum single policy liability limit.[ 6
Memorandum of Clayton W. Boulware, January 8, 1991.
On February 20, 1991, Prudential, represented by outside counsel, filed a petition to modify the award of the arbitrators. The petition did not refer to the stacking issue, but stated that the award of the arbitrators was deficient in form. Prudential requested that the award to Alexander Terletsky be reduced to $100,000.00. A hearing on the request for modification was scheduled for July 12, 1991.
Between February and June of 1991, Prudential paid Marina Terletsky $125,000.00 in satisfaction of the arbitration award in her favor and paid Alexander Terletsky $100,000.00 of the $125,000.00 award in his favor. Subsequently, in June of 1991, Prudential paid Alexander Terletsky the $25,000.00 outstanding on his arbitration award. Thereafter, the hearing on the request for modification of the arbitration award was cancelled.
On February 22, 1991, Alexander Terletsky filed a complaint against Prudential which alleged that Prudential had acted in bad faith during the handling of his uninsured motorist claim. Additionally, on November 12, 1991, the Terletskys jointly filed a complaint against Prudential which alleged that Prudential had acted in bad faith during the handling of Marina Terletsky's uninsured motorist claim. The complainants sought damages pursuant to 42 Pa.C.S.A. § 8371. 7 The actions were consolidated for trial and heard by arbitrators of the Philadelphia Court of Common Pleas on August 17, 1992. An appeal was taken from the arbitrator's award.
A four day non-jury trial was held before the trial court from February 18, 1993 to February 23, 1993. The trial court found in favor of Alexander Terletsky on April 2, 1993, and concluded as a matter of law that Prudential had acted in bad faith with respect to the handling of Alexander Terletsky's uninsured motorist claim. The trial court found that the bad faith commenced on or about February 6, 1991 and ended in mid-July when Prudential satisfied all claims and cancelled the petition to modify the arbitration award. For the bad faith claim, the trial court awarded Alexander Terletsky $15,000.00 in counsel fees for services in connection with the proceedings. The trial court, however, did not award punitive damages. Further, the trial court found in favor of Prudential on Marina Terletsky's bad faith claim and issued extensive findings of fact and conclusions of law. Following the award, the Terletskys and Prudential filed motions for post-trial relief. Prudential filed post-trial motions seeking judgment notwithstanding the verdict. The Terletskys filed post-trial motions requesting additional findings of fact and alleging error on the part of the trial court in not awarding punitive damages. Additionally, the Terletskys filed an objection to Prudential's post-trial motions. 8 The trial court issued its opinion on January 19, 1994 which incorporated its original findings of fact and conclusions of law. The trial court denied all post-trial motions. This timely appeal and cross-appeal followed.
On appeal, the Terletskys present the following issues for our review:
1. WAS JUDGE CAESAR CORRECT IN NOT CONSIDERING PLAINTIFFS' REQUEST FOR ADDITIONAL FINDINGS OF FACT, THEREBY NOT TAKING INTO ACCOUNT ALL OF THE EVIDENCE AGAINST DEFENDANT PRIOR TO ENTERING JUDGMENT.
2. DID THE TRIAL COURT HOLD PLAINTIFFS TO AN INORDINATELY HIGH BURDEN OF PROOF TO OBTAIN PUNITIVE DAMAGES?
3. IS ALEXANDER TERLETSKY ENTITLED TO...
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