LONG v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al

Filing 63

MEMORANDUM (Order to follow as separate docket entry) re: 52 MOTION for Partial Summary Judgment filed by State Farm Mutual Automobile Insurance Company. Signed by Honorable Matthew W. Brann on 3/7/2018. (jr)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
No. 4:15-cv-02404

DANIELLE LONG,

(Judge Brann)

Plaintiff,
v.
STATE FARM MUTUAL
AUTOMOBILE INSURANCE
COMPANY,
Defendant.

MEMORANDUM OPINION
MARCH 7, 2018
I.

BACKGROUND
On November 23, 2015, Plaintiff, Danielle Long, hereinafter “Ms. Long,”

filed a two-count amended complaint against Defendant State Farm Mutual
Automobile Insurance Company, hereinafter “State Farm,” for not covering an
underinsured motorist, hereinafter “UIM,” claim. Count One alleges Breach of
Contract; Count Two asserts Bad Faith.
State Farm filed a motion for partial summary judgment on the bad faith
claim. Both parties briefed the issue; consequently, the motion is justiciable. State
Farm’s partial motion for summary judgment is granted for the ensuing reasons.

II.

DISCUSSION
A.

Standard of Review

“One of the principal purposes of the summary judgment rule is to isolate
and dispose of factually unsupported claims or defenses, and we think it should be
interpreted in a way that allows it to accomplish this purpose.”1 Summary
judgment is appropriate where “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.”2
“Facts that could alter the outcome are ‘material facts,’ and disputes are ‘genuine’
if evidence exists from which a rational person could conclude that the position of
the person with the burden of proof on the disputed issue is correct.”3 “A
defendant meets this standard when there is an absence of evidence that rationally
supports the plaintiff’s case.”4 “A plaintiff, on the other hand, must point to
admissible evidence that would be sufficient to show all elements of a prima facie
case under applicable substantive law.”5
“[T]he inquiry involved in a ruling on a motion for summary judgment or for
a directed verdict necessarily implicates the substantive evidentiary standard of

1

Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

2

Fed. R. Civ. P. 56(a).

3

Clark v. Modern Grp. Ltd., 9 F.3d 321, 326 (3d Cir. 1993) (Hutchinson, J.) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) and Celotex, 477 U.S. at 322).

4

Clark, 9 F.3d at 326.

5

Id.

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proof that would apply at the trial on the merits.”6 Thus, “[i]f the defendant in a
run-of-the-mill civil case moves for summary judgment or for a directed verdict
based on the lack of proof of a material fact, the judge must ask himself not
whether he thinks the evidence unmistakably favors one side or the other but
whether a fair-minded jury could return a verdict for the plaintiff on the evidence
presented.”7 “The mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.”8 “The judge’s inquiry, therefore,
unavoidably asks . . . ‘whether there is [evidence] upon which a jury can properly
proceed to find a verdict for the party producing it, upon whom the onus of proof is
imposed.’”9
The evidentiary record at trial, by rule, will typically never surpass that
which was compiled during the course of discovery. “In this respect, summary
judgment is essentially ‘put up or shut up’ time for the non-moving party.”10
“[A] party seeking summary judgment always bears the initial responsibility
of informing the district court of the basis for its motion, and identifying those
portions of the pleadings, depositions, answers to interrogatories, and admissions

6

Liberty Lobby, Inc., 477 U.S. at 252.

7

Id.

8

Id.

9

Id. (quoting Schuylkill & Dauphin Imp. Co. v. Munson, 81 U.S. 442, 447 (1871)).

10

Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006) (Fisher, J.).

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on file, together with the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact.”11 “[R]egardless of whether the
moving party accompanies its summary judgment motion with affidavits, the
motion may, and should, be granted so long as whatever is before the district court
demonstrates that the standard for the entry of summary judgment, as set forth in
Rule 56(c), is satisfied.”12
Where the movant properly supports his motion, the nonmoving party, to
avoid summary judgment, must answer by setting forth “genuine factual issues that
properly can be resolved only by a finder of fact because they may reasonably be
resolved in favor of either party.”13 For movants and nonmovants alike, the
assertion “that a fact cannot be or is genuinely disputed” must be supported by:
(i) ”citing to particular parts of materials in the record” that go beyond “mere
allegations”; (ii) ”showing that the materials cited do not establish the absence or
presence of a genuine dispute”; or (iii) “showing . . . that an adverse party cannot
produce admissible evidence to support the fact.”14
“When opposing summary judgment, the non-movant may not rest upon
mere allegations, but rather must ‘identify those facts of record which would

11

Celotex, 477 U.S. at 323 (internal quotations omitted).

12

Id.

13

Liberty Lobby, 477 U.S. at 250.

14

Fed. R. Civ. P. 56(c)(1).

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contradict the facts identified by the movant.’”15 Moreover, “[i]f a party fails to
properly support an assertion of fact or fails to properly address another party’s
assertion of fact as required by Rule 56(c), the court may . . . consider the fact
undisputed for purposes of the motion.”16 On motion for summary judgment,
“[t]he court need consider only the cited materials, but it may consider other
materials in the record.”17
“[A]t the summary judgment stage the judge’s function is not himself to
weigh the evidence and determine the truth of the matter but to determine whether
there is a genuine issue for trial.”18 “[T]here is no issue for trial unless there is
sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party.”19 “If the evidence is merely colorable . . . or is not significantly
probative, summary judgment may be granted.”20
B.

Undisputed Facts

On September 16, 2011, in State College, Centre County, Pennsylvania, Ms.
Long was driving an automobile owned by her boyfriend’s step-father.21 Ms. Long

15

Port Auth. of N.Y. and N.J. v. Affiliated FM Ins. Co., 311 F.3d 226, 233 (3d Cir. 2003) (Weis,
J.).

16

Fed. R. Civ. P. 56(e)(2).

17

Fed. R. Civ. P. 56(c)(3).

18

Liberty Lobby, 477 U.S. at 249.

19

Id.

20

Id. at 249–50 (internal citations omitted).

21

ECF No. 54 at ¶ 1, 2 and 4.

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proceeded through an intermittently flashing red stoplight22 when her vehicle
collided with a vehicle that had driven through a periodically flashing yellow light.
Ms. Long was cited for having violated subsection (1) of 75 Pa.C.S.A. § 3114(a),
as follows:
General rule.--Whenever a flashing red or yellow signal is used in a
traffic signal or with a traffic sign it shall require obedience by
vehicular traffic as follows: (1) Flashing red.--When a red lens is
illuminated with rapid intermittent flashes, drivers of vehicles shall
stop in the same manner as at a stop sign, and the right to proceed
shall be subject to the rules applicable after making a stop at a stop
sign as provided in section 3323 (relating to stop signs and yield
signs).23

The driver of the other vehicle was not charged with any offense.
The Court has reviewed the Commonwealth of Pennsylvania police crash
reporting form attached by State Farm as an exhibit to its motion for summary
judgment. It speaks for itself.
Nearly two years after the accident, Ms. Long pursued a UIM claim with
State Farm. State Farm rejected the claim after evaluating the following:

22

Ms. Long asserts that she stopped at the light. The evidentiary documentation suggests the
contrary. Either way, it is agreed that she had travelled past the red light at the point of
collision.

23

75 Pa. Stat. and Cons. Stat. Ann. § 3114.

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Ms. Long’s counsel contested the denial of Ms. Long’s UIM claim with
State Farm. Consequently, on April 10, 2015, Ms. Long underwent an
‘examination under oath’ during which she testified that she had stopped at the
blinking red light.24
C.

Analysis of Pennsylvania’s Insurer Bad Faith law

A bad faith claim is brought annexed to a breach of contract claim against an
insurer. It allows a plaintiff to castigate an insurer for its indefensible denial of the
claim. Pennsylvania’s bad faith statute permits a plaintiff to recover interest,
punitive damages, court costs and attorney fees if the insurer has acted in bad faith
in handling the plaintiff’s claim.

24

ECF No. 54 at ¶ 29.

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Recently the Pennsylvania Supreme Court clarified the definition of ‘bad
faith.’ In Rancosky v. Washington Nat’l Ins. Co., addressing two matters of first
impression. Justice Max Baer writing for that court held that first, to prevail on bad
faith claim, insureds are required to show that insurer did not have reasonable basis
for denying benefits and that insurer knew of or recklessly disregarded lack of
reasonable basis; and second, that proof of insurer’s motive of self-interest or illwill was not prerequisite to prevailing on bad faith claim.25 I quote Justice Baer, at
length, in his explication of the law in this recent, and seminal, case:
In order to answer the question presented in this appeal, an issue of
first impression for this Court, we must interpret Pennsylvania’s bad
faith insurance statute at 42 Pa.C.S. § 8371, which provides, in full, as
follows:
§ 8371. Actions on insurance policies
In an action arising under an insurance policy, if the court finds
that the insurer has acted in bad faith toward the insured, the
court may take all of the following actions:
(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.C.S. § 8371.
*****
[W]hen read in a vacuum, the plain language of Section 8371 provides
little guidance in answering the discrete legal question raised herein,
namely, the level of proof required to prevail in a bad faith claim. In
enacting Section 8371, the General Assembly did not define “bad

25

170 A.3d 364 (Pa. 2017).

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faith” or otherwise set forth the manner in which a party must prove
liability. Therefore, in order to understand the meaning of “bad faith,”
and thus ascertain and effectuate the intent of the General Assembly
in enacting Section 8371, we must utilize the additional tools of
statutory construction outlined above. In particular, we look to the
occasion and necessity for the statute and the circumstances of the
statute’s enactment. 1 Pa.C.S. § 1921(c).
*****
As noted, this Court has not had occasion to consider the precise
contours of bad faith claims arising under Section 8371 since its
enactment. Consequently, the Superior Court’s 1994 decision in
Terletsky has been the preeminent ruling on this issue. There, the
Superior Court observed that in the insurance context, bad faith had
acquired a particular meaning, citing the following definition from the
6th edition of Black’s Law Dictionary:

“Bad faith” on part of the insurer is any frivolous or unfounded
refusal to pay proceeds of a policy; it is not necessary that such
refusal be fraudulent. 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
of or ill will; mere negligence or bad judgment is not bad faith.

Terletsky, 649 A.2d at 688 (quoting Black’s Law Dictionary 139 (6th
ed. 1990) (emphasis added)); see also 1 Pa.C.S. § 1903(a) (providing
that words shall be construed in accordance with the peculiar and
appropriate meaning they have acquired). Citing to D’Ambrosio, the
Superior Court articulated the test for bad faith as follows: “to recover
under a claim of bad faith, the plaintiff must show [1] that the
defendant did not have a reasonable basis for denying benefits under
the policy and [2] that the defendant knew or recklessly disregarded
its lack of reasonable basis in denying the claim.” Id. (citing, inter
alia, D’Ambrosio, 431 A.2d at 971).\

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*****
For the reasons set forth above, we conclude that the Superior Court’s
longstanding two-pronged test, first articulated in Terletsky, presents
an appropriate framework for analyzing bad faith claims under
Section 8371. In particular, we conclude that the Terletsky test, and its
imposition of a recklessness standard for liability under the second
prong, comports with the historical development of bad faith in
Pennsylvania and effectuates the intent of the General Assembly in
enacting Section 8371.12 Accordingly, we hold that proof of an
insurer’s motive of self-interest or ill-will, while potentially probative
of the second prong, is not a mandatory prerequisite to bad faith
recovery under Section 8371.
*****
In summary, we hold that, to prevail in a bad faith insurance claim
pursuant to Section 8371, a plaintiff must demonstrate, by clear and
convincing evidence, (1) that the insurer did not have a reasonable
basis for denying benefits under the policy and (2) that the insurer
knew or recklessly disregarded its lack of a reasonable basis in
denying the claim. 26

At trial, Ms. Long would have to prove bad faith by ‘clear and convincing
evidence,’ defined as follows:
Clear and convincing evidence is evidence that produces in your mind
a firm belief or conviction that the allegations sought to be proved by
the evidence are true. Clear and convincing evidence involves a
higher degree of persuasion than is necessary to meet the
preponderance of the evidence standard. But it does not require proof
beyond a reasonable doubt, the standard applied in criminal cases.27

26

Id. at 370-78.

27

Third Circuit Model Jury Instruction 1.11 (Last Updated October 2017) citing Cruzan v.
Missouri Dep’t of Health, 497 U.S. 261, 285 n.11 (1990), see also Miezejewski v. Infinity
Auto Ins. Co., 609 F. App’x 69 (3d Cir. 2015) (not precedential).

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Applying the clear and convincing evidence standard to the two prong test
the Pennsylvania Supreme Court set forth in Terletsky and recently re-enunciated
in Rancosky, Ms. Long would have to evince a firm belief or conviction in the
minds of the jurors that State Farm both (1) did not have a reasonable basis for
denying her UIM benefits and (2) that State Farm knew or recklessly disregarded
its lack of a reasonable basis in denying the UIM claim.
In considering the first prong of this analysis, I must examine what evidence
State Farm considered in evaluating Ms. Long’s UIM claim. Bad faith claims are
by their very nature fact specific. Today, I need only review the first factor, as the
facts, taken in the light most favorable to Ms. Long, do not support a bad faith
claim against State Farm, let alone by clear and convincing evidence. State Farm
did have a reasonable basis for denying Ms. Long’s claim.
The State Farm examiner assessed the following in denying Ms. Long’s
UIM claim: the facts of the accident provided Ms. Long’s boyfriend; the facts of
the accident provided by Ms. Long; the police report and Ms. Long’s attendant
traffic citation; the police report’s visual depiction of Ms. Long’s vehicle in the
other vehicle’s lane of travel at the point of impact; photos showing damage to the
cars; and the fact that State Farm had paid for the damage to the other vehicle.28

28

ECF No. 54 at ¶ 29.

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The police report, written immediately after the accident, states that the
driver Ms. Long collided with conveyed to the investigating officer that Ms. Long
did not stop for the flashing red light. It also indicates that Ms. Long made no
comment about whether or not she stopped at the flashing red light. I note the
following from the police crash reporting form:

29

The State Farm examiner also considered the fact that Ms. Long was
charged with an infraction of 75 Pa.C.S.A. § 3114(a) (1) for failure to stop for a
flashing red light. The examiner also devoted attention the photographs of the
damaged vehicles and the police officer’s depiction of Ms. Long’s vehicle in the
other vehicle’s lane of travel, as follows:

29

ECF No. 55-1 at 123.

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30

The examiner also considered the fact that State Farm had previously determined it
was responsible for the damage to the other vehicle.
Recently, the United States Court of Appels for the Third Circuit in
Miezejewski v. Infinity Auto Ins. Co upheld a District Court’s grant of summary
judgment as to a bad faith claim, as follows:
Here, the District Court correctly established the plaintiff’s burden to
demonstrate bad faith by clear and convincing evidence. This
heightened standard, under which we must view the evidence
presented, “requires evidence so clear, direct, weighty and convincing
as to enable a clear conviction, without hesitation, about whether or
not the defendant[ ] acted in bad faith.”

30

ECF No. 55-1 at 124.

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The facts, taken in the light most favorable to the Miezejewskis, do
not support their claim, let alone by clear and convincing evidence.
Consistent with Infinity’s “ongoing vital obligation,” its claim
representative acted in good faith—i.e. with a reasonable basis for his
assessments and interactions with the Miezejewskis’ attorney—
throughout “the entire management of the claim.” Both of Infinity’s
pre-litigation settlement offers were within its representative’s initial
valuation of the UIM claim. In conveying the offers, the
representative emphasized that they were not final. He told the
Miezejewskis’ attorney that a higher offer would “require some
additional discovery” concerning Miezejewski’s pre-accident medical
history and additional information about her termination. Notably,
after the close of discovery in this lawsuit, which included a
deposition of the executive who made the termination decision,
Infinity tendered to the Miezejewskis the $15,000 policy limit they
initially sought.
At every turn, Infinity’s claim representative acted reasonably in light
of the evidence, both presented and inexplicably withheld. There is no
evidence whatsoever that Infinity’s handling of the claim was
motivated by “self-interest or ill will.” The Miezejewskis accordingly
fail to demonstrate Infinity’s bad faith by clear and convincing
evidence.31

In the matter at hand, State Farm’s claim examiner based the claim denial on
sufficient evidence to find that it was not responsible for Ms. Long’s UIM claim.
Correspondingly, I find that State Farm had a reasonable basis for denying the
UIM claim.

31

Miezejewski v. Infinity Auto Ins. Co., 609 F. App’x 69, 72–73 (3d Cir. 2015) (unpublished).

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III.

CONCLUSION
Because it seems evident that State Farm had a reasonable basis for denying

Ms. Long’s UIM claim and that she would not be able to prove at time of trial by
clear and convincing evidence otherwise, State Farm’s motion for partial summary
judgment is granted.
An appropriate Order follows.

BY THE COURT:

s/ Matthew W. Brann
Matthew W. Brann
United States District Judge

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