eNotes: Liability – June 2024 – Pennsylvania

SIGNIFICANT CASE SUMMARIES

Pennsylvania Case Summaries

Dwyer v. Ameriprise Fin., Inc.
Pennsylvania Supreme Court
No. 2 WAP 2023

Decided: April 25, 2024

Supreme Court addresses the availability of treble damages under the UTCPL where punitive damages are awarded on common law claims.

Background

Earl John and Christine Dwyer (“the Dwyers”) brought suit against Ameriprise Financial, Inc. on common-law claims of negligent and fraudulent misrepresentation and a statutory claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) regarding the monthly premiums of their life insurance policy. The jury found Ameriprise’s conduct was outrageous and that the Dwyers were entitled to punitive damages on their common law claims. The Trial Court found the same conduct of Ameriprise violated the UTCPL. While the UTPCPL allows the court, in its discretion, to award “up to three times the actual damages sustained,” the Trial Court declined to make such an award, opining that treble damages under the UTPCPL would be “duplicative of the punitive damages awarded by the jury on the common-law claims.”

The Trial Court awarded $45,570 in compensatory damages plus interest, $75,000 punitive damages on the UTPCPL claim, plus attorneys’ fees. The Court also awarded compensatory damages and attorneys’ fees on the UTPCPL claim totaling $169,173. The Court granted Ameriprise’s Post-Trial Motion for election of remedies agreeing that the Dwyers could not recover compensatory damages twice. Also, the Dwyers moved for post-trial relief arguing that the Trial Court erred by not awarding treble damages. The Trial Court denied the Dwyers’ Motion. The Dwyers then appealed, and the Superior Court affirmed the decision as a permissible exercise of the Trial Court’s discretion. The Superior Court reasoned that because the Dwyers were granted punitive damages and attorneys’ fees, Ameriprise was sufficiently punished and deterred from future similar conduct. The decision was then appealed to the Pennsylvania Supreme Court.

Holding

The Supreme Court reversed the Superior Court. The Court’s analysis of the UTPCPL discussed that the three objectives of the act, “to incentivize private actions for unfair and deceptive trade practices, to compensate plaintiffs, and to deter wrongful conduct,” are incentivized by “the carrot of treble damages.” Treble damages do not serve to just deter conduct, but to incentivize plaintiffs whose claims would otherwise be too small to justify the burden of bringing a private cause of action. The Supreme Court held that the UTPCPL has provided treble damages without consideration or reference to other causes of actions or remedies, and that the Trial Court’s discretion to award treble damages is not bound by the common law entitlement to punitive damages. The Supreme Court held that the Trial Court’s decision was not an exercise of discretion, but a refusal to exercise discretion, and remanded the case for reconsideration of damages.

Questions about this case can be directed to Logan Nagle at (717) 255-7234 or lnagle@tthlaw.com.

Ferraro v. Patterson-Erie Corp. (d/b/a Burger King)
Pennsylvania Supreme Court
No. 1 WAP 2023

Decided: April 25, 2024

Plaintiffs must make consistent efforts to serve Complaint to toll statute of limitations, and use of private process server by sophisticated counsel does not constitute good-faith effort of service when such service violates the Rules of Civil Procedure.

Background

This case arises out of a slip-and-fall accident which occurred on August 26, 2018. Plaintiff, through her counsel, filed a Complaint on March 4, 2020. Plaintiff forwarded instructions and payment to the Sheriff, but service was not completed. Plaintiff thereafter served Burger King by private process server. Eight and half months later, and two and a half months after the expiration of the statute of limitations, Plaintiff re-forwarded the Complaint to the Sheriff, and service by Sheriff was accomplished. Burger King filed an Answer alleging the action was barred by the 2-year statute of limitations. After its Motion for judgment on the pleadings on that basis was denied, an interlocutory appeal was taken to the Superior Court. The Superior Court denied the appeal. An appeal was permitted by the Supreme Court as to whether Plaintiff was properly excused from complying with the Rules of Civil Procedure requiring proper service.

Holding

The Supreme Court reversed. It determined that Plaintiff failed to carry her initial burden of demonstrating that she made a good faith effort to diligently and timely serve the Complaint on Burger King. Even though Plaintiff served the Complaint properly eight and half months later, her lack of action in the meantime was not sufficient to show a good faith attempt. Similarly, the fact that Burger King received actual notice of the suit through service by a private process server did not excuse Plaintiff’s inaction.

Questions about this case can be directed to William Novick at (610) 332-7029 or wnovick@tthlaw.com.

Kramer v. Nationwide Prop. & Cas. Ins. Co.
Pennsylvania Supreme Court
No. 103 MAP 2022

Decided: April 24, 2024

Superior Court’s application of controlled substances exclusion in declaratory judgment action found to be erroneous as a matter of law.

Background

Michael Murry, Jr. (“Decedent”) died of a drug overdose while staying overnight with Adam Kramer at the home of Kramer’s parents (“Parents”), while Parents were away. Decedent’s mother (“Mother”) and Decedent knew Kramer used and distributed narcotics. The Coroner’s office determined that the cause of Decedent’s death was a drug overdose triggered by a combination of fentanyl, heroin and benzodiazepines. Mother sued Kramer and Parents in wrongful death, alleging that Parents entrusted their home to Kramer when they knew or should have known that he used and distributed narcotics and that with that knowledge, they breached a duty of care owed to all invitees, including Decedent. Mother alleged that but for Kramer’s grant of access to the controlled substances to Decedent, Decedent would not have died, and the harm to decedent was foreseeable. Mother also filed a survival action, alleging that as a result of the breach of Parents’ duty of care, Decedent sustained pain and suffering before his death.

Parents were covered by liability insurance through Nationwide (“the Policy”). The Policy provided that Nationwide “will pay damages an insured is legally obligated to pay due to an occurrence resulting from negligent personal acts or negligence arising out of the ownership, maintenance or use of real or personal property,” and defines “occurrence” as “bodily injury . . . resulting from an accident.” “Bodily injury” does not include emotional distress. However, the Policy provides that even if a claim falls within the scope of personal liability coverage, coverage does not apply to bodily injury “resulting from the use, sale, manufacture, delivery, transfer or possession by a person of a controlled substance . . .” (“Controlled Substance Exclusion”). Parents tendered the Complaint to Nationwide and Nationwide issued a denial of coverage, relying on the Controlled Substances Exclusion. The denial prompted Parents to file a declaratory judgment action to request the Trial Court order Nationwide to defend them against Mother’s lawsuit. Nationwide maintained that it properly denied both a defense and indemnify under the exclusion. Both parties sought summary judgment and the Trial Court granted summary judgment in favor of Parents on the basis that Parents’ lawsuit was grounded upon negligent entrustment which is distinct from injuries “resulting from” the use or delivery of a controlled substance and ordered Nationwide to defend Parents. Nationwide appealed, asserting that the Trial Court erred in not enforcing the Controlled Substances Exclusion.

The Superior Court affirmed on alternative grounds, in part admitting that based on the Policy’s definition of “bodily injury,” Nationwide would have no obligation to defend or indemnify Parents for those “discrete classes of damages” alleged in the survival claim; however, adding that since Mother’s wrongful death claim was not limited to “bodily injury,” but may also include “‘emotional distress, mental distress or injury, or any similar injury’ none of which would be the direct result of bodily harm to the decedent’s family itself,” the Controlled Substances Exclusion would not apply to those damages, and Nationwide must grant a defense. The Supreme Court granted Nationwide’s Petition for allowance of appeal to determine whether the Superior Court incorrectly ruled that emotional distress damages are covered under an insurance policy providing liability coverage only for bodily injury, where the policy explicitly excludes emotional distress form the definition of bodily injury.

Holding

The Supreme Court reversed the judgment of the Superior Court which affirmed the Trial Court’s Order granting Parents’ Motion for summary judgment and denied Nationwide’s Motion for summary Judgment. It noted that while the case was litigated in the Trial Court on the applicability of the Controlled Substances Exclusion, the Superior Court’s analysis that Nationwide owed a duty to defend Parents because emotional and mental distress damages in the wrongful death claims were not “bodily injuries,” renders the exclusion “irrelevant,” finding that “the Superior Court’s interpretation that Nationwide was potentially required to pay out for Mother’s emotional and mental distress damages for the wrongful death claim is contrary to the unambiguous provisions of the Policy and erroneous as a matter of law.”

Questions about this case can be directed to Julia Morrison at (717) 441-7056 or jmorrison@tthlaw.com.