HARRISBURG — Insurance companies are the real winners in a recent state Superior Court ruling that vacated a $21 million bad-faith insurance verdict in a more than 20-year-old collision claim, a Philadelphia-based litigator says.
"Insurance companies should be pleased by this," Brian H. Callaway, an associate and commercial litigator at Pepper Hamilton's Philadelphia office, told the Pennsylvania Record. "The Superior Court essentially recognized that insurers are allowed to perform their own independent evaluations of claims and that not all demands for full policy limits have merit."
In a decision that has been anticipated for years, the Superior Court vacated the huge award handed down by a Berks County Common Pleas Court judge in 2014. The appellate court ruled that the insurer in the case, Nationwide Mutual Insurance, had not acted in bad faith.
"The trial court engaged in a limited and highly selective analysis of the facts and drew the most malignant possible inferences from the facts it chose to consider," Superior Court Judge Victor P. Stabile said in the court's split decision.
Pennsylvania Superior Court Judge Victor P. Stabile
"We do not believe our appellate standard of review, circumscribed as it is, requires or even permits us to affirm the trial court's decision in this case. This is especially so given [the] plaintiffs’ burden of proving their case by clear and convincing evidence."
Superior Court Judge Paula Francisco Ott concurred in the opinion, and President Judge Emeritus Correale F. Stevens dissented.
"This court cannot supplant the trial court’s findings with its own," Stevens wrote in his dissent. "Thus, the trial court did not abuse its discretion, and the award of damages does not shock this court’s sense of justice. Therefore, I respectfully dissent and would affirm the trial court."
Callaway said Stevens was wrong to not rule with the majority in this case.
"We respect the president judge emeritus’ dissent, but [we] believe the majority was correct," he said.
The case stems from the 1996 automobile collision claim submitted by Daniel and Sherri Berg to Nationwide, asking for $25,000 for their vehicle, which the couple felt was a total loss, according to the background portion of the Superior Court's decision.
Nationwide objected, claiming that the vehicle could be repaired, sparking a lengthy court battle culminated in the trial court ruling that awarded the Bergs $18 million in punitive damages and $3 million in attorney fees.
In February 2016, Nationwide asked the state Superior Court to overturn the verdict.
"The decision was so anticipated because the trial court’s award of $21 million was so high that it seemed like it might be an outlier," Callaway said.
In its ruling this month, the Superior Court held that the trial court had focused on Nationwide's alleged shortcomings as "a conglomerate insurance company" rather than the facts in the case.
"The most surprising thing about the decision is probably the extent to which the majority pointed out how much of the trial court's decision was based on broad assumptions about the insurance industry in general and not on the facts of this particular case," Callaway said.