May 25, 2022

Volume XII, Number 145

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Standards for Bad Faith Awards to Be Reviewed by Pennsylvania Supreme Court

Berg v. Nationwide Ins. Co.

This case is making its second trip to the Pennsylvania Supreme Court, which agreed to hear the current appeal in March 2019. Briefing is underway, with the Court expected to rule later this year or early next.

The facts of the case are relatively simple, but it suffers from an unfortunately long and convoluted procedural posture. After a 1996 auto accident, plaintiffs claimed damage to their auto. When the litigation was commenced in 1998, the insureds argued that their insurer had wrongly refused to pay for a total loss of the vehicle, instead paying only for repairs which rendered the vehicle unsafe. The first trial in the case occurred in 2004, with the jury finding in favor of the insurer on almost all claims, with the exception of an unidentified violation of a Pennsylvania unfair or deceptive acts and practices statute. The insureds were awarded just over $2,000. Three years later, the trial court took up the bad faith claim, finding in favor of the insurer. That judgment was appealed and affirmed by an appellate court. It was then reversed and remanded by the Pennsylvania Supreme Court in 2010. On remand, the appellate court found that the trial court had erred and further remanded the case back to the trial court in 2012.

In round two, the trial court (with a new judge assigned to the case) found in favor of the insureds, awarding them $18 million in punitive damages and $3 million in attorneys’ fees in 2015. That judgment was also appealed. The appellate court overturned the award, finding insufficient evidence in the record to support bad faith, essentially substituting its judgment on the issue for the trial court’s (and noting in the process that the trial judge may have been biased against the insurer). This is the case currently pending before the Pennsylvania Supreme Court where that Court will need to decide to what extent and under what circumstances can an appellate court may overturn findings of bad faith by trial courts.

While bad faith claims are typically fact dependent (and in this case, the passage of over 20 years and the expenditure of millions of dollars in legal fees did not help), the ultimate resolution in the case may have a strong impact on future insurance coverage litigation in Pennsylvania. We will, therefore, follow the case with interest.

© 1998-2022 Wiggin and Dana LLPNational Law Review, Volume IX, Number 280
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About this Author

Timothy Diemand Litigation Attorney Wiggin and Dana
Partner

Tim is a Partner in the Litigation Department, a member of the firm’s Executive Committee, and Co-Chair of the Insurance Practice Group. He has made his mark defending and representing clients around the country in high stakes matters such as complex insurance class actions, copyright claims against major record labels and recording artists, professional malpractice defense, catastrophic injury claims, and contractor disputes stemming from Iraq and Afghanistan war reconstruction projects.

Tim has been recognized by Chambers USA in the Commercial Litigation category,...

860 297 3738
Joseph Grasso Litigation Attorney Wiggin and Dana Philadelphia
Partner

Joe has spent over three decades advising and defending clients in a wide range of litigation and insurance matters, helping underwriters and other clients avoid litigation when possible and prevail when it is unavoidable. He possesses deep knowledge in particular of the marine insurance industry, as well as the London insurance market. Joe's clients describe him as pragmatic, responsive and efficient. He understands the nature of his clients' businesses and tries to add value to that business whenever possible.

Joe co-chairs Wiggin and Dana’s Insurance Practice Group. He is also a...

215 988 8312
Michael Menapace Insurance lawyer Wiggin Dana
Partner

Michael is an insurance lawyer, primarily a litigator defending insurance companies, reinsurers, and insured parties from a wide range of claims that threaten clients’ businesses. He is also a counselor, law school professor, and litigator in areas beyond insurance.

Michael represents insurers in state and federal courts as well as in arbitrations across the country, litigating insurance disputes concerning business practices, bad faith, insurance coverage, reinsurance, premium calculations, and allocation among policies. As a general litigator, he has tried cases concerning utility...

+1 860 297 3733
Robyn Gallagher Litigation lawyer Wiggin Dana
Counsel

Robyn is Counsel in Wiggin and Dana's Litigation Department.  Her litigation experience has involved a wide range of practice areas and clients, including, insurance, franchise, aviation, product liability, and education.  She has experience litigating in state and federal courts and before various government agencies and arbitral bodies.

Robyn has litigated claims under the Connecticut Product Liability Act ("CPLA"), the Connecticut Unfair Trade Practices Act ("CUTPA"), trademark infringement actions, breach of contract claims, and actions to enforce arbitration clauses. She has...

860-297-3704
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