PA Superior Court: Unfair Trade Practices Violation = Bad Faith?

In the case of Berg, et al. v. Nationwide, the plaintiffs were insured by Nationwide when their SUV was significantly damaged in an accident.  The plaintiffs took their car to a preferred Nationwide vendor for repair and the car was returned after 4 months.  About a year after the repair, the plaintiffs were advised (by an ex-employee) that their SUV might be subject to structural failure.  Plaintiffs sued Nationwide alleging breach of contract, negligence, common law fraud, conspiracy, violation of the UTPCPL and insurance bad faith, 42 Pa.C.S.A. § 8371.  The jury found for plaintiffs during the first part of a bifurcated trial, deciding that Nationwide violated the catchall provision of the Unfair Trade Practices and Consumer Protections Law.  However, during part two (the bad faith part) of the trial, the trial court granted Nationwide’s motion for a directed verdict in part because it found that Nationwide’s violation of the UPTCPL did not mandate or allow a finding of bad faith against Nationwide.

The Superior Court overturned this decision. It held that its decision in Romano v. Nationwide had direct application to the case at hand. Romano held that a plaintiff seeking damages under the insurer bad faith statute section 8371 may, as a means to prove bad faith, introduce evidence that the insurer violated any of Pennsylvania’s insurance statutes, even if the statute does not provide for a private right of action. Here, the jury’s finding against Nationwide was not sufficient in and of itself to support a finding of bad faith, but Nationwide’s violation of the UPTCPL was held to constitute some evidence of bad faith. The Superior Court went on to explain that because there was some evidence of bad faith, a directed verdict in favor of the insurer was improper.  Yet another peril for insurers to avoid in PA.

Thanks to Remy Cahn for her contribution to this post.

If you would like further information, please write to mbono@wcmlaw.com