ALLEGHENY PLANT SERVICES, INC. v. CAROLINA CASUALTY INSURANCE COMPANY et al

Filing 103

OPINION. Signed by Judge Kevin McNulty on 03/17/2016. (JB, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ALLEGHENY PLANT SERVICES,
INC.,

Civ. No. 14-4265 (KM)

Plaintiff,

:

OPINION

V.

CAROLINA CASUALTY
INSURANCE COMPANY; THE LAW
OFFICES OF FLOYD G.
COTTRELL, P.A.,
Defendants.
THE LAW OFFICES OF FLOYD G.
COTTRELL, P.A., n/k/a Cottrell,
Solensky & Semple, P.A.
Third-Party Plaintiff,
V.

WELLS FARGO INSURANCE
SERVICES USA, INC.,
Third-Party Defendant.

KEVIN MCNULTY, U.S.D.J.:
Introduction
This action grows out of a state court motor vehicle collision action
against Allegheny Plant Services, Inc. (“Allegheny”). Allegheny, plaintiff here,
sues its insurer, Carolina Casualty Insurance Company (“Carolina”). Carolina,
says Allegheny, allowed a verdict that exceeded the limits of Allegheny’s general
liability policy. Allegheny asserts against Carolina claims of breach of fiduciary
duty (Count 1), breach of contract (Count 2), and bad faith under 42
1

Pennsylvania Cons. Stat.

§ 8371 (Count 3). Allegheny also sues the attorney

that handled the personal injury case, the Law Offices of Floyd G. Cottrell,
n/k/a Cottrell, Solensky & Semple, P.A. (“Cottrell”) for breach of fiduciary duty
and professional negligence. Cottrell has filed a third-party claim for
contribution against Wells Fargo Insurance Services USA, Inc. (“Wells Fargo”).
Now before the Court are two motions:
(a) the motion (ECF no. 78) of defendant Carolina for partial summary
judgment dismissing Count 3 of the Amended Complaint (“AC”, ECF no. 14);
and
(b) the motion (ECF no. 90) of Third-Party Defendant Wells Fargo to
dismiss the Third-Party Complaint (“3PC”, ECF no. 75) filed by Cottrell.
For the reasons expressed herein, both motions will be denied.
Background
Allegheny, a Pennsylvania motor carrier, obtained a policy of commercial
transportation insurance from Carolina, a Florida insurer. On January 18,
2007, Robert Whitmore, an Allegheny employee, was involved in a collision in
Maywood, New Jersey. The other vehicle involved was driven by Robert Curley;
Curley’s passenger was named Louis Capurso.
Curley sued Allegheny in Superior Court, Essex County, New Jersey.
Curley v. Allegheny Plant Services, Docket No. L-772 1-08 (the “Curley
Lawsuit”). Carolina retained Cottrell, a law firm located in Newark, New Jersey,
to defend the Curley Lawsuit. The jury returned a verdict of $1,440,000. That
turned out to be $673,162.21 in excess of Allegheny’s remaining policy limit.
Allegheny brought this action in the Western District of Pennsylvania.
(Venue was transferred here.) Allegheny alleges that Carolina did not inform it
of Curley’s claims or multiple demands for settlement which, if accepted, would
have settled the lawsuit within the policy limits. Allegheny alleges that
Cottrell’s substandard performance also caused it to be incur liability beyond
the policy limits.
Cottrell has brought a third party claim against Wells Fargo. Cottrell
does not acknowledge liability, but alleges that, if he is liable, Wells Fargo is
2

liable for contribution. According to Cottrell’s Third Party Complaint, Wells
Fargo is an insurance broker that also provides its clients with risk
management services, claims assistance, and claims analysis. (3PC

¶

6) On

behalf of Carolina, Wells Fargo monitored and rendered services as to the
Curley claim and trial. (3PC

¶f

14—19) Wells Fargo, which knew the claims

exceeded the policy limits, allegedly had a duty to manage the claim prudently,
but failed to do so, thus contributing to the loss for which Allegheny sues. (3PC

¶J

25—36)

I.

CAROLINA CASUALTY’S MOTION FOR PARTIAL SUMMARY
JUDGMENT
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56(a) provides that summary judgment

should be granted “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000).
In deciding a motion for summary judgment, a court must construe all facts
and inferences in the light most favorable to the nonmoving party. See Boyle v.
Cnty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party
bears the burden of establishing that no genuine issue of material fact
remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322—23 (1986). “[W]ith
respect to an issue on which the nonmoving party bears the burden of proof
the burden on the moving party may be discharged by ‘showing’—that is,
pointing out to the district court—that there is an absence of evidence to
support the nonmoving party’s case.” Celotex, 477 U.S. at 325.
Once the moving party has met that threshold burden, the non-moving
party “must do more than simply show that there is some metaphysical doubt
as to material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.s. 574, 586 (1986). The opposing party must present actual evidence that
3

creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at
248; see also Fed. R. Civ. p. 56(c) (setting forth types of evidence on which
nonmoving party must rely to support its assertion that genuine issues of
material fact exist). “[U}nsupported allegations
and pleadings are insufficient
...

to repel summary judgment.” Schoch v. First Fid. Bancorporation, 912 F.2d 654,
657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138
(3d Cir. 2001) (“A nonmoving party has created a genuine issue of material fact
if it has provided sufficient evidence to allow a jury to find in its favor at trial.”).
If the nonmoving party has failed “to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial,

there can be ‘no genuine issue of

...

material fact,’ since a complete failure of proof concerning an essential element
of the nonmoving party’s case necessarily renders all other facts immaterial.”
Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,
477 U.S. at 322—23).
In deciding a motion for summary judgment, the court’s role is not to
evaluate the evidence and decide the truth of the matter, but to determine
whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.
Ct. 2505. Credibility determinations are the province of the fact finder. Big
Apple BMW Inc. u. BMWof N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992).
B.

Analysis

On this motion for partial summary judgment, Carolina makes one
simple contention: Count 3, asserted under a Pennsylvania insurer bad faith
statute, 42 Pa. Cons. Stat.

§ 8371, must be dismissed because New Jersey, not

Pennsylvania, law applies. Finding that these two states’ laws present no true
conflict, I will deny the motion.
1.

Applicable choice of law standard

a diversity action, a district court must apply the choice of law rules
of the forum state to determine what law will govern the substantive issues of a
case.” Warriner v. Stanton, 475 F.3d 497, 499-500 (3d Cir. 2007) (citing Klaxon

4

Co. v. StentorElec. Mfg. Co., 313 U.S. 487, 496 (1941)). The “forum state,”
however, has a particular meaning when venue has been transferred from
another district. In such a case, the transferee court must apply the choice of
law rules of the transferor district. Ferens v. John Deere Co., 494 U.S. 516, 110
S. Ct. 1274 (1990); Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S, Ct, 252
(1981). The overarching policy is that a change of venue is just a change of
courtrooms that should not alter the substantive law governing the case,
whether directly or via a change of choice of law rules.
This action was originally filed in the Western District of Pennsylvania.
By so-ordered Stipulation, the action was transferred to this District. (ECF nos.
44, 45) I must therefore apply Pennsylvania’s choice of law principles to
determine whose law applies to the Allegheny’s bad faith claim.
The Pennsylvania Supreme Court’s leading choice of law decision
is Griffith v. United AirLines, Inc., 416 Pa. 1, 203 A.2d 796 (1964).
See Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir. 1991).
In Griffith the court abandoned the traditional lex loci delicti
conflicts rule for “a more flexible rule which permits analysis of the
policies and interests underlying the particular issue before the
court.” Griffith, 203 A.2d at 805. In commenting on the
development of Pennsylvania’s flexible rule, we have indicated:
this new conflicts methodology has evolved into a hybrid
approach that ‘combines the approaches of both
Restatement II (contacts establishing significant
relation ships) and “interest analysis” (qualitative appraisal of
the relevant States’ policies with respect to the controversy).’
Lacey, 932 F.2d at 187 (quoting Melville v. American Home
Assurance Co., 584 F’.2d 1306, 1311 (3d Cir.1978)).
The Pennsylvania Supreme Court has not rendered any opinion
after Lacey impugning the validity of Lacey’s exposition of
Pennsylvania’s flexible choice of law rule. Moreover, the
Pennsylvania Supreme Court has summarized succinctly its major
choice of law rules as follows:
(1) This Court in Griffith v. United Air Lines, Inc., held that in
resolving a potential conflict between the application of state
laws we must consider the policies and interest underlying
the particular issue before the court. Id. at 21, 203 A.2d at
805.
5

(2) As further explained in McSwczin v. McSwain, 420 Pa. 86,
215 A.2d 677 (1966), we must analyze
the extent to which
one state rather than another has demonstrated, by reason
of its policies and their connection and relevance to the
matter in dispute, a priority of interest in the application of
its rule of law.
...

(3) Furthermore, in evaluating the interests of one
jurisdiction over another, we must view the factors
qualitatively as opposed to quantitatively, Czolla v.
Shaposko, 439 Pa. 563, 267 A.2d 854 (1970).
Myers v. Commercial Union Assurance Companies, 506 Pa. 492,
485A.2d 1113, 1115 (1984).
Carrick v. Zurich-Am. Ins. Grp., 14 F.3d 907, 909-10 (3d Cir. 1994)
(footnote omitted).’ Although first developed in the tort context,
Pennsylvania’s hybrid “interests/contacts” approach has been extended
to contracts, including contracts of insurance. Hammersmith v. TIG Ins.
Co., 480 F.3d 220, 227—28 (3d Cir. 2007).
The threshold issue is whether the two states’ laws differ in any way that
matters. If they do clash, the court must determine whether that clash
presents a “false conflict,” i.e., one in which only one state’s interests would be
impaired by application of the other’s law. If there is a true conflict, then the
court must undertake the choice-of-law analysis and apply the law of the state
with the “most significant contacts or relationships with the particular issue.”
Hammersmith, 480 F.3d at 229—30.

Carolina cites New Jersey’s choice of law rules, and makes much of the
supposed difference. But the leading New Jersey case cited by Carolina, like the
Pennsylvania cases, more or less straddles the divide between the “state interests” and
the Restatement “significant relationship” approach. P. V. v. Camp Jaycee, 962 A.2d
453, 455 (N.J. 2008) (“although we have traditionally denominated our confficts
approach as a flexible ‘governmental interest’ analysis, we have continuously resorted
to the Restatement (Second) of Conflict of Laws (1971) in resolving conflict disputes
arising out of tort... .That approach is the ‘most significant relationship’ test.”) As P. V.
put it, the most significant relationship approach “embodies all of the elements of the
governmental interest test plus a series of other factors deemed worthy of
consideration.” 962 A.2d at 459 n.4.
6

1.

True conflict

Count 3 is asserted under 42 Pa. Cons. Stat.

§ 8371, a Pennsylvania

statutory cause of action for insurer bad faith. That statute, says Carolina,
conflicts in certain respects with a New Jersey cause of action for insurer bad
faith. Carolina suggests two distinctions: one as to the substantive standard of
bad faith, and the other as to punitive damages.
a. Comparison of standards of bad faith
Pennsylvania’s

§ 8371 statutory claim has two essential elements: “(1)

that the insurer lacked a reasonable basis for denying benefits; and (2) that the
insurer knew or recklessly disregarded its lack of reasonable basis.” Klinger v.
State Farm Mut. Automobile Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997); accord
Northwestern Mut. Life Ins. Co. v. Babayan, 430 F.3d 121, 137 (3d Cir. 2005).
A Pennsylvania Superior Court decision, Terletsky v. Prudential Prop. &
Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994), suggests that, in addition,
the insurer must have had some ill motive:
For purposes of an action against an insurer for failure to pay a
claim, such conduct imports a dishonest purpose and means a
breach of a known duty (i.e., good faith and fair dealing), through
some motive of self-interest or ill will; mere negligence or bad
judgment is not bad faith.
Id. at 688 (quoting Black’s Law Dictionary 139 (6th ed. 1990)). Klinger,
however, quoted and rejected this Terletsky formulation as extraneous dictum.
Klinger held squarely that the two-part test applies, and that there is no third
requirement of an improper subjective purpose, such as ill will or self-interest.
115 F.3d at 233; see also McMahon v. Med. Protective Co., 92 F. Supp. 3d 367,
389 n.13 (W.D. Pa. 2015) (“The presence of an improper motive, however, is not
an element of a statutory bad faith claim under Pennsylvania law.”).
2

It must be said, however, that cases continue to reproduce the quotation from
Terletsky in conjunction with the Klinger two-part test, without explaining how they
interact. See, e.g., Kosierowski v. Allstate Ins. Co., 51 F. Supp. 2d 583, 588 (E.D. Pa.
1999) affd, 234 F.3d 1265 (3d Cir. 2000); Adamski v. Allstate Ins. Co., 738 A.2d 1033,
1036 (Pa. Super. Ct. 1999). Others more clearly cite Terletsky as the source of the two
pronged standard, implicitly accepting that the rest was dictum. See, e.g., Oehlmann v.
2

7

In New Jersey, an insurer bad faith claim is a common law claim, not a
statutory one. A cause of action for an insurance company’s bad-faith refusal
or delay of payment of a first-party claim was definitively recognized in Pickett
v. Lloyd’s, 621 A.2d 445, 452 (N.J. 1993).
Pickett holds that the insured has a “bad faith” cause of action where the

insurer knew or was recklessly indifference to the absence of a reasonable
basis to deny a claim:
“If a claim is ‘fairly debatable,’ no liability in tort will arise.”
“To show a claim for bad faith, a plaintiff must show the
absence of a reasonable basis for denying benefits of the
policy and the defendant’s knowledge or reckless disregard of
the lack of a reasonable basis for denying the claim. It is
apparent, then, that the tort of bad faith is an intentional
one. * * * implicit in that test is our conclusion that the
knowledge of the lack of a reasonable basis may be inferred
and imputed to an insurance company where there is a
reckless * * * indifference to facts or to proofs submitted by
the insured.”
Id. (internal citations omitted). See also Badiali v. New Jersey Mfrs. Ins. Grp.,
107 A.3d 1281, 1286 (N.J. 2015) (negligence not sufficient).
That sounds, and is, identical to the two-part Pennsylvania standard as
articulated in Klinger lack of a reasonable basis for rejecting a claim, plus the
insurer’s knowledge or reckless disregard. True, Klinger does not use the words
“fairly debatable.” That, however, is just an alternative formulation of a
“reasonable basis”; it is not essential.
Pickett specifically invoked as a comparison the Pennsylvania statute at

issue here. Unlike the Third Circuit in Klinger, the Pickett court believed that
Pennsylvania had adopted the Terletsky requirement of a subjective, dishonest
3
purpose. It made that observation in dictum, however; it was merely
Metro. Life Ins. Co., 644 F. Supp. 2d 521, 531 (M.D. Pa. 2007) (“the two-prong
Terletsky test”).
Pickett quoted, not Terletsky, but a very similar passage from a federal court
case. 621 A.2d at 453 (quoting Coyne u. Allstate Ins. Co., 771 F. Supp. 673, 677 (E.D.
Pa. 1991) (which, like Terletsky, quoted Black’s Law Dictionary 139 (6th ed. 1990)).
8

contrasting the Pennsylvania approach with its own. Pickett clearly and
explicitly declined to adopt any requirement of an ill motive. Id. at 453.
The conflict perceived by the New Jersey Supreme Court was a false one;
the two states’ bad faith standards do not clash, as Klinger has made clear.
Klinger is of course unstable precedent in the sense that it interprets state law
and could be undermined by subsequent decisions of the Pennsylvania courts.
But unless and until that happens, it is binding on me.
As to the standard of bad faith, I perceive no substantial conflict between
the laws of Pennsylvania and New Jersey.

b. Comparison of standards of punitive damages
I next examine whether New Jersey and Pennsylvania law conflict as to
punitive damages. In general, punitive damages are available under each
state’s law. I see no substantial conflict as to the applicable standards, or as to
the availability of such damages in an appropriate case.
New Jersey’s Pickett case states that punitive damages are available in a
bad faith case only in “egregious circumstances.” They are not available as a
matter of course, merely because a bad faith claim has been made out;
something more than “a breach of the good-faith obligation” is required. Id. at
455.
In so holding, Pickett did not fashion a separate standard for punitive
damages in a bad faith case, but cited general New Jersey punitive damages
law:
See Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 4950, 477 A.2d 1224 (1984) (finding that defendant’s conduct must
be wantonly reckless or malicious; wrongfulness of defendant’s
intentional act is critical).
Pickett, 621 A.2d at 455. The cited Nappe decision states familiar standards:
“To warrant a punitive award, the defendant’s conduct must have been
wantonly reckless or malicious. There must be an intentional wrongdoing in

9

the sense of an ‘evil-minded act’ or an act accompanied by a wanton and wilful
disregard of the rights of another.” 477 A.2d at 1230.
New Jersey’s general punitive damages statute likewise requires “clear
and convincing evidence that the defendant’s acts or omissions were actuated
by actual malice or accompanied by a wanton and willful disregard of persons
who foreseeably might be harmed by those acts or omissions.” N.J. Stat. Ann.
§
2A: 15-5.12(a). Actual malice is defined as “an intentional wrongdoing in the
sense of an evil-minded act.” N.J. Stat. Ann.

§ 2A:15-5.10. Wanton and willful

disregard is defined as “a deliberate act or omission with knowledge of a high
degree of probability of harm to another and reckless indifference to the
consequences of such act or omission.” Id.
Under the Pennsylvania bad faith statute, if bad faith is proven by clear
and convincing evidence, the court may
(1) Award interest on the amount of the claim from the date the claim
was made by the insured in an amount equal to the prime rate of
interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
42 Pa. Cons. Stat.

§ 8371 (emphasis added). The burden of proof for all issues

under the statute is “clear and convincing” evidence. See Terletsky, 649 A.2d
at 688; Bostick v. ITT Hartford Grp., 56 F. Supp. 2d 580, 587 (E.D. Pa. 1999).
Pennsylvania would offer an advantage over New Jersey if it relaxed the
standard for punitive damages, and permitted an award based solely on a
violation of the bad faith statute. Does it?
The Pennsylvania statute does not clarify whether punitive damages are
available based solely on a finding of bad faith. Nor, to add a little nuance, does
it specify that punitive damages may be available, if the finding of bad faith
happens to encompass the usual prerequisites for punitive damages, such as
willful and wanton conduct.

10

The court’s job, in a diversity case, is to predict what the state’s highest
court would do. That is what the Third Circuit attempted to do in W. V. Realty,
Inc. v. N. Ins. Co., 334 F.3d 306, 318 (3d Cir. 2003). There, it applied the usual
Pennsylvania punitive damages standard, based on Restatement (Second) of
Torts

§ 908. It upheld a bad faith verdict, but overturned punitive damages. In

effect, W. V held that there was nothing special about punitive damages in a
Pennsylvania bad faith case.
In a nonprecedential case, the Third Circuit has recognized that
subsequent Pennsylvania lower court cases may have undercut the reasoning
of W.V.:
The Superior Court of Pennsylvania has twice held “that a finding
of bad faith permits an award of punitive damages ‘without
additional proof, subject to the trial court’s exercise of discretion.’”
Zimmerman v. Harleysville Mut. Ins. Co., 860 A.2d 167, 174 (Pa.
Super. Ct. 2004) (quoting Hollock v. Erie Ins. Exch., 842 A.2d 409,
419 (Pa. Super. Ct. 2004)); see also Thomas v. State Farm Ins. Co.,
1999 WL 1018279, at *3 (E.D. Pa.1999) (“Reckless behavior
sufficient to support a finding of bad faith under the Terletsky test
is thus also sufficient to impose punitive damages.” (citing Polselli
v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 751 (3d Cir.1994))).
In Polselli, we found “reckless behavior can constitute bad faith”
but did not find that a finding of bad faith is always sufficient to
award punitive damages. 23 F.3d at 751.
Jurinko v. Med. Protective Co., 305 F. App’x 13, 25 (3d Cir. 2008). See also
Smith v. Allstate Ins. Co., 912 F. Supp. 2d 242, 255 (W.D. Pa. 2012) (“[T]his
Court predicts that the Supreme Court of Pennsylvania would interpret section
8371 to permit an award of punitive damages upon a finding of bad faith
alone.”)
I will, as I must, follow the precedential W. V holding. I find it plausible
that Pennsylvania would permit, if not require, a punitive damages award
based on a bad faith verdict. Such a verdict, however, would have to carry
within it the factual basis for a traditional award of punitive damages.
Otherwise, punitive damages would be awarded in every bad faith case; if that

11

had been intended, I would have expected a much clearer legislative statement
to that effect.
At any rate, such a conflict as to punitive damages—even if it existed—
would not require me to dismiss Count 3, the relief sought here. “Because
choice of law analysis is issue-specific, different states’ laws may apply to
different issues in a single case, a principle known as ‘depecage.” Berg Chilling
Sys., Inc. v. Hull Corp., 435 F.3d 455, 462 (3d Cir. 2006) (interpreting
Pennsylvania choice of law rules). Even a true conflict, which I do not find,
would at most require that I relax the punitive damages standard, not dismiss
the claim. As to that issue, should it arise at trial, I will entertain applications.
c.

No true conflict

For the reasons stated above, there is no substantial conflict at all
between New Jersey and Pennsylvania law as to these issues. The court is thus
free to default to the law of the forum (I mean the transferor forum,
Pennsylvania), or to apply the two states’ laws indifferently.
4
Although it is not strictly necessary, in the alternative I briefly address
the issue of whether any conflict, if it existed, would be a “true” one. I believe
that it would not, because this is not a case where each state’s interest would
be affronted by the application of the other’s law. There is no such thing as a
one-sided conflict; in a “true” conflict, both states’ interests must be implicated.
Here, New Jersey’s interest is not.
A true conflict may be presented when one state has adopted a “plaintiffprotecting rule” and the other has adopted a “defendant-protecting rule.”
Hammersmith, 480 F.3d at 230 (quoting Czolla v. Shaposka, 439 Pa. 563, 267

Under New Jersey’s choice of law rules, the result would be the same. See
Maniscalco u. Brother Int’l Corp. (USA), 793 F. Supp. 2d 696, 704 (D.N.J. 2011) (where
there is no actual conflict between the states’ laws, the analysis ends and the court
applies forum law) (citing P.V. v. Camp Jaycee, 197 N.J. 132, 143-44, 962 A.2d 453,
460 (2008)). The following “true” conflict analysis is more pertinent to the
Pennsylvania choice of law approach.
12

A.2d 854, 846 (1970)). For example, the court in Rosen v. Tesoro Petroleum
Corp., 582 A.2d 27, 30—3 1 (Pa. Super. Ct. 1990), found a “true conflict”
between the malicious prosecution laws of laws of Texas and Pennsylvania.
There, however, Texas plaintiffs sought the benefit of a plaintiff-friendly Texas
law which was intended to provide “open access to the judicial system”;
Pennsylvania defendants sought the protection of a Pennsylvania law intended
to shield persons “who may be forced to defend a baseless suit.” Id.
No such configuration is presented here. The obvious policies behind
either state’s bad faith cause of action are to obtain compensation and fair
treatment for insureds, and to impose high standards of professional conduct
upon insurers. As to punitive damages in particular, the policy must be to
punish irresponsible insurers and regulate their conduct.
The insured here is Allegheny, a Pennsylvania corporation which has
been located in Pennsylvania since 1965. Pennsylvania has a clear interest in
protecting Allegheny from overreaching conduct by an insurer. New Jersey has
no direct interest in either helping or hindering Allegheny in its quest to shift
liability to Carolina; nor does it have any interest in regulating Carolina’s
5
conduct, unless there is a New Jersey insured, which is not the case here.
According to its Answer (ECF no. 18 at 2,

¶J

4, 5), Carolina “is an

insurance company incorporated under the laws of the state of Iowa, that is
authorized to issue insurance policies in the Commonwealth of Pennsylvania,
and is so doing with its principal place of business located at 4600 Touchton
Road, Jacksonville, Florida 32246.” Pennsylvania’s interest in protecting its
insured coincides with its interest in regulating an insurer that operates within
its borders. New Jersey, however, has no discernible interest in helping,
hindering, or regulating Carolina, an out-of-state corporation. To the extent
that, say, New Jersey’s punitive damages law may be more protective of

case.

There is no claim by or on behalf of the injured New Jersey motorist in this

13

defendants, it does not matter. There is no New Jersey defendant in this case.
There is no clash of interests, and no true conflict. So the court will defer to
Pennsylvania, and its (for argument’s sake) plaintiff-protecting rule.
Pennsylvania law applies. Carolina’s motion to dismiss Count 3 is
therefore denied.

II.

WELLS FARGO’S MOTION TO DISMISS THIRD PARTY COMPLAINT
Wells Fargo seeks to dismiss the Third Party Complaint brought against

it by Cottrell. The motion will be denied.
Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in
part, if it fails to state a claim upon which relief can be granted. The defendant,
as the moving party, bears the burden of showing that no claim has been
stated. Animal Science Products, Inc. v. China Minmetals Coip., 654 F.3d 462,
469 n. 9 (3d Cir. 2011).
From the seminal modern cases of Bell Atl. Corp. v. Twombly, 550 U.S.
544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the Third Circuit
has extracted a three-step process for reviewing a complaint:
To determine whether a complaint meets the pleading standard,
our analysis unfolds in three steps. First, we outline the elements
a plaintiff must plead to a state a claim for relief. See [Iqbal, 556
U.S.J at 675; Argueta, 643 F.3d at 73. Next, we peel away those
allegations that are no more than conclusions and thus not
entitled to the assumption of truth. See Iqbal, 556 U.S. at 679;
Argueta, 643 F.3d at 73. Finally, we look for well-pled factual
allegations, assume their veracity, and then “determine whether
they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S.
at 679; Argueta, 643 F.3d at 73. This last step is “a context-specific
task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679.
Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). Under Fed. R. Civ. P. 8, the
complaint’s allegations must be factual, not conclusory, and they must be
sufficient to raise a plaintiff’s right to relief above a speculative level, so that a
claim is “plausible on its face.” Twombly, 550 U.S. at 570; see also Umland v.
PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008).
14

Based on the allegations summarized at
pp. 2—3, supra, Cottrell seeks
contribution under the New Jersey Joint Tortfeasors Contribution
Law, N.J.
Stat. Ann.

§ 2A:53A- 1. That Act entitles a defendant against whom judgment

has been entered in excess of his pro rata share to seek contribution
from a
joint tortfeasor. The key to a viable claim is “common liability to the plainti
ff at
the time the cause of action accrued.” Chemj Hill Manor Assocs. v. Faugn
o, 861
A.2d 123, 127—28 (N.J. 2004) (joint liability distinguished from common
or
concurrent negligence).
The Third Party Complaint is therefore contingent in nature. It
adequately sets forth a claim that Wells Fargo contributed to a unitary injury
suffered by Allegheny. Wells Fargo interposes factual issues concerning
its
ability to control the defense, its contractual relations with Carolina, and
other
matters that cannot be disposed of on a motion to dismiss.
Wells Fargo’s motion to dismiss the Third Party Complaint will therefore
be denied.

III.

CONCLUSION

For the reasons set forth above, Carolina Casualty’s motion for partial
summary judgment is DENIED. Wells Fargo’s motion to dismiss the Third
Party Complaint is DENIED. An appropriate Order follows.
Dated: March 17, 2016

HON

15

,J.