eNotes: Liability – June 2022 – Federal

SIGNIFICANT CASE SUMMARIES

FEDERAL CASE SUMMARIES

Gitelman v. Wilkinson
United States District Court for the Western District of Pennsylvania
2022 U.S. Dist. LEXIS 53750

Decided: March 24, 2022

An injured party has no right to sue the insurer of an alleged tortfeasor unless a provision of the policy or statute creates such a right.

Background

Plaintiff Gitelman was a pedestrian who was walking along a roadway when she was struck by a vehicle driven by Defendant Wilkinson. Plaintiff filed suit in the Allegheny County Court of Common Pleas and then settled with Defendant for $150,000. Plaintiff later tried to withdraw from the settlement claiming fraud and conspiracy among her attorney, Defendant’s attorney, and Defendant’s claims adjuster. Defendant filed a Petition to enforce settlement, which was granted.

Plaintiff appealed to the Superior Court. While the appeal was pending, Plaintiff filed the instant action in federal court claiming, inter alia, that Defendant’s insurer, Travelers, owed her benefits pursuant to Defendant’s insurance policy. Plaintiff argued that she was a third party under Travelers’ policy and entitled to the $500,000 total bodily injury limit. Travelers countered arguing that, as a third party, Plaintiff did not have standing to sue Travelers to enforce any provision of the policy, as she was not a party to the insurance contract.

Holding

The Court agreed with Travelers holding that, since Plaintiff was not a party to the insurance contract, Plaintiff had no standing to sue Travelers to enforce a provision of the policy. Plaintiff’s sole course of action was to sue the Defendant, which she did in state court and obtained a settlement. Therefore, Plaintiff’s remedies with respect to Defendant and Travelers were exhausted, and the Court dismissed the claims against Travelers.

Questions about this case can be directed to Jonathan Danko at (717) 441-3957 or jdanko@tthlaw.com.

AIX Specialty Ins. Co. v. Am. Legion Dep’t of Pa.
No. 21-2338
United States District Court for the Eastern District of Pennsylvania

Decided: March 14, 2022

Liquor liability exclusion in policy does not negate insurer’s duty to defend where there are negligence claims independent of alcohol service claims.

Background

Plaintiff victim sued the American Legion Department of Pennsylvania in state court after being shot by an allegedly drunken patron in one of its alcohol-serving posts. The patron assailant brought a gun into the post, despite the post having hired security guards who were to search for guns upon arrival. In this federal declaratory judgment action, Plaintiff AIX Specialty Insurance issued a business owners insurance policy to Defendant American Legion, which owns the post. The parties filed cross-motions for summary judgment to determine AIX Specialty’s duty to cover the costs of the defense in the underlying action brought by the gunshot victim. Plaintiff AIX Specialty claimed that exclusions within its policy negated the duty to defend. Plaintiff also sought to either reform the policy due to mutual mistake or to void the policy due to alleged material misrepresentations by Defendant.

Holding

The Court compared the language within the four corners of the insurance contract with the four corners of the Complaint to determine if there was coverage. Once the defendant meets the initial burden of establishing coverage, the burden then shifts to the plaintiff to show application of policy exclusions which exclude coverage. The court looks to whether any claim is potentially covered, not just whether the most salient claim is potentially covered. It does not examine whether a claim bears merit; just whether coverage of a claim is possible. Here, in addition to the victim’s claim that Defendant served an intoxicated patron, he also alleged that Defendant provided negligent security services by permitting the patron into the post with a gun. Thus, the liquor liability exclusion did not apply because underlying claims were sufficiently independent of the provision of alcohol. The Court also ruled that genuine issues of material fact relating to the alleged mutual mistake of the parties and the existence of any misrepresentations in the application for insurance precluded summary judgment on these issues. The District Court denied Plaintiff’s Motion for summary judgment and granted, in part, Defendant’s Motion by holding that Plaintiff owed a duty to defend Defendant in the underlying lawsuit.

Questions about this case can be directed to James F. Swartz, III at (610) 332-7028 or jswartz@tthlaw.com.

Mining v. Brickstreet Mut. Ins. Co.
United States District Court for the Western District of Pennsylvania
No. 2:21-CV-00700, 2022 U.S. Dist. LEXIS 42095

Decided: March 9, 2022

Insured’s bad faith claim was barred by the two-year statute of limitations, as the continued or repeated denial of coverage was not considered a new injury.

Background

On March 31, 2017, certain Plaintiffs filed suit against multiple Defendants, including Dana Mining, for claims of negligence. Dana Mining sought defense and indemnity coverage from Federal Insurance Company for the underlying lawsuit under the Mining Industries’ insurance policy issued by Federal. Dana Mining claims that Federal denied coverage on May 3, 2017. On April 6, 2021, Dana Mining asserted a bad faith claim under 42 Pa.C.S. § 8371. Federal filed a Motion to dismiss Dana Mining’s bad faith claim, arguing that it was time-barred by the two-year statute of limitations. Dana Mining argued that the claim was not time-barred as Federal’s actions were a continuation of bad faith, along with a separate instance of bad faith that occurred on March 4, 2020.

Holding

The Court was unpersuaded by the arguments asserted by Dana Mining and held that the bad faith claim was barred by the two-year statute of limitations. The Court stated that the continued or repeated denial of insurance coverage is merely a continuation of the injury caused by the initial denial and does not constitute a new injury where there are no new facts or evidence to support a “new” injury claim.

Questions about this case can be directed to Danielle Vols at (570) 825-6890 or dvols@tthlaw.com.

Robinson v. GEICO Gen. Ins. Co.
United States District Court for the Eastern District of Pennsylvania
No. 21-cv-05059, 2022 U.S. Dist. LEXIS 42405

Decided: March 9, 2022

Plaintiff failed to establish subject matter jurisdiction in federal court when the claimed damages were below $75,000 for purposes of diversity jurisdiction.

Background

Plaintiff, who was allegedly rear-ended by an uninsured driver, brought suit against his automobile insurance company seeking recovery of uninsured motorist benefits or, alternatively, seeking recovery for underinsured motorist benefits. Plaintiff’s automobile insurance policy provided up to $50,000 in coverage under both its uninsured and underinsured sections, less than the $75,000 jurisdictional limit. The Defendant did not file a Motion to dismiss for lack of subject matter jurisdiction, but raised the issue via affirmative defense and the issue was also addressed during the Rule 16 Initial Pre-Trial Conference.

Holding

As subject matter jurisdiction is non-waivable, the Court, sua sponte, dismissed Plaintiff’s Complaint for lack of subject matter jurisdiction as there was no dispute that Plaintiff’s automobile policy only permitted damages up to $50,000, which is less than the $75,000 jurisdictional limit. The Court also denied Plaintiff’s Motion for leave to file an Amended Complaint that sought to add what the Court determined was a “futile” bad faith claim, as the Court found that the proposed additions to the Complaint only contained overbroad conclusory statements and not any new facts that would support a bad faith claim.

Questions about this case can be directed to Brook Dirlam at (412) 926-1438 or bdirlam@tthlaw.com.