Bad Faith Victory for Pennsylvania Insureds

Bad Faith Victory for Pennsylvania Insureds

Bad Faith Victory for Pennsylvania Insureds

So imagine that you are involved in an automobile accident and injure another person. It is clearly your fault and you demand your motor vehicle liability insurance company to settle the claim. After all this is why you have paid thousands of dollars in insurance premiums over the course of your driving life. Fortunately, the victim makes a demand for settlement within your insurance coverage limits. However, your insurance company refuses to settle the case; and, instead, tells you that you should consult with (and pay) a lawyer to protect your personal assets. You are forced to take time off from work and family and go to trial. You lose big time and are left holding the bag for a judgment that you cannot pay and may now lose everything that you had worked for over the course of your life. What to do? On December 15, 2014, the Pennsylvania Supreme Court determined that an insured may assign the right to recover damages from his insurance company deriving from the insurer's bad faith toward the insured. Jared Wolfe was injured when his vehicle was struck from behind by an automobile driven by Karl Zierle. Wolfe attributed blame to Zierle and demanded $25,000 from Zierle's insurer carrier, Appellant Allstate Property and Casualty Insurance Company. Allstate counter offered $1,200, which Wolfe refused. Wolfe sued Zierle seeking compensatory damages only; however, during discovery, it was determined that Zierle had been intoxicated at the time of the collision. Therefore, Wofe filed an amended complaint to advance a claim for punitive damages. Allstate, in turn, advised Zierle that coverage for punitive damages was unavailable under his policy and, therefore, Zierle might wish to consult with a personal attorney to address this aspect of the litigation. A jury awarded Wolfe $15,000 in compensatory damages and $50,000 in punitive damages. Allstate paid Wolfe $15,000.00. As to the punitive-damages portion, Wolfe and Zierle entered into an agreement whereby Wolfe committed to forbear from executing on Zierle's assets in exchange for an assignment from Zierle of all claims arising under the policy, which he might possess against Allstate. Wolfe sued Allstate alleging that Allstate's refusal to settle reflected bad faith on the carrier's part because Allstate exposed its insured's personal assets. Wolfe sought damages under common- law contract theory, and per Section 8371 of the Judicial Code, 42 Pa.C.S. ยง8371, which served to supplement the remedies previously available to insureds in certain scenarios involving bad-faith conduct by their insurers, inter alia, by authorizing punitive-damages awards. In Allstate v Wolfe, Allstate argued that sanctioning assignments of punitive-damages claims under Section 8371 would foster mischief by encouraging plaintiffs to pursue unreasonable settlement demands and advance bad-faith claims which otherwise never would have been initiated. Wolfe argued assignability would put the claimant on more of an equal footing with the insured's insurance company in settlement negotiations without tipping the balance against the insurer who can still refuse to settle in good faith. Furthermore, Wolfe argued that assignments equalize the strategic advantages between the insured and the insurer, where the insurer's bad faith exposes its policyholder to the sharp thrust of personal liability. Fortunately for PA citizens, the PA Supreme Court held that the entitlement to assert damages under Section 8371 may be assigned by an insured to an injured plaintiff and judgment creditor thereby offering an avenue for protection of one's personal assets.   So imagine that you are involved in an automobile accident and injure another person. It is clearly your fault and you demand your motor vehicle liability insurance company to settle the claim. After all this is why you have paid thousands of dollars in insurance premiums over the course of your driving life. Fortunately, the victim makes a demand for settlement within your insurance coverage limits. However, your insurance company refuses to settle the case; and, instead, tells you that you should consult with (and pay) a lawyer to protect your personal assets. You are forced to take time off from work and family and go to trial. You lose big time and are left holding the bag for a judgment that you cannot pay and may now lose everything that you had worked for over the course of your life. What to do?