Supreme Court of Pennsylvania dismisses appeal in mammoth bad faith judgment case.

“[T]he Court being divided in a fashion which prevents a majority disposition, the appeal is DISMISSED.” In those sixteen words, the Pennsylvania Supreme Court surprised many on both sides of the insurance litigation community. The long-running case involves the plaintiffs’ claim of bad faith against their auto insurer for the manner in which it handled a property damage claim. The judge in the first trial found no bad faith, but a jury awarded $295 to the plaintiffs on its finding of unfair trade practices. On appeal, the Superior Court reversed, holding that the trial judge’s rejection of bad faith was on an erroneous basis and remanded to give the plaintiffs another chance to make their case. Assigned to a new trial judge, the remand resulted in a $21 million bad faith verdict against Nationwide. On appeal, the Superior Court again reversed, this time concluding that the evidence was insufficient to sustain the finding of bad faith. The Supreme Court accepted the plaintiffs’ appeal—but in the above language dismissed it. Two justices joined an opinion in support of affirmance, and two joined an opinion in support of reversal. But the per curiam order dismissing the appeal evidences no dissent. Of particular import is the fact that the Supreme Court’s dismissal allows this holding of the Superior Court to stand: “To the extent the trial court based its finding of bad faith upon discovery violations, it committed clear error. While it is true that a finding of bad faith under section 8371 may be premised upon an insurer’s conduct occurring before, during or after litigation, we have refused to recognize that an insurer’s discovery practices constitute grounds for a bad faith claim under section 8371, absent the use of discovery to conduct an improper investigation.” Berg v. Nationwide Mut. Ins. Co., Inc., 189 A.3d 1030, 1055 (Pa. Super. 2018) (citations omitted). The law governing bad faith claims in Pennsylvania is unchanged after the Supreme Court’s dismissal, though this case remains an indication of just how punishing a bad faith verdict can be.

Case Law Alerts, 4^th Quarter, October 2020 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2020 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.