By Amaris Elliott-Engel
Of the Legal Staff
I wrote a story earlier this month about how motor vehicle practice has changed after the state Supreme Court overruled in 2006 an insurance regulation mandating the arbitration of all uninsured and underinsured motorist disputes before three lawyers chosen by plaintiff and defense counsel.
After talking with lawyers from both the defense and plaintiff bars, I learned that there are a couple major phenomena in post-Insurance Federation of Pennsylvania v. Koken practice: one, arbitration -- albeit just with a solo arbitrator -- remains a popular way of resolving claims made by the insured against their insurers for coverage under uninsured and underinsured (UM/UIM) motor vehicle polices; and, two, and this area of law will remain unsettled until appellate courts weigh in or procedural rules are drafted. (See my previous story here.)
In a talk Tuesday given to the Philadelphia Association for Defense Counsel, Louis E. Bricklin, a defense attorney with Bennett Bricklin & Saltzburg in Philadelphia, provided more insight on the unsettled nature of this area of law.
Bricklin said he has not seen specific statistics on how often UM/UIM breach of contract claims are brought with bad faith claims, but his firm is seeing cases with the combined causes of action about 50 percent of the time. The cost to file another count, when many cases are initiated electronically now, is just "throw[ing] in a couple more electrons," Bricklin said.
When defense attorneys are considering the removal of cases to federal court, they should be aware that the right of removal expires one year after the suit is initiated, Bricklin said. Even if opposing counsel agrees to cap the amount in controversy, the cap won't be binding during an appeal from arbitration, he said.
On the other hand, defense attorneys must be aware -- if they remove cases to federal court when they are not permitted to do so -- that they are creating the grounds for plaintiffs attorneys to file a claim for bad faith, Bricklin said.
In the wake of Ashcroft v. Iqbal, in which the U.S. Supreme Court held that a party can only survive a motion to dismiss because of sufficient factual material that supports their claim, the 3rd U.S. Circuit Court of Appeals has "zealously acted to close the courthouse door," Bricklin said.
"You need to plead facts," Bricklin said. "From the plaintiff's point of view, you have to show what information was submitted … and what the insurance company did in response."
The Superior Court in O'Hara v. First Liberty Corp. has ruled that insurers can include venue selection clauses in their insurance contracts, Bricklin said.
Venue selection clausues are important because venue will hold for insurers as long as they do business in the venue, which includes places like Philadelphia, Lackawanna and Luzerne counties that are less popular with defense attorneys, Bricklin said.
There is no question that joinder of the claims of the negligence lawsuit against the tortfeasor who caused the accident, a UM/UIM claim against a plaintiff's own insurance company, and a bad-faith claim against the UM/UIM carrier are proper because the actions have common questions of fact, Bricklin said.
But Bricklin said that it is not clear if the claims should stay joined for trial.
Some states say that while it may be prejudicial to a tortfeasor to have a jury informed about the existence of insurance because the insurer is also a named defendant, the prejudice can be cured with instruction and all modern juries know of the existence of insurance, Bricklin said.
New Jersey and other states, however, cloak the fact that there is UM/UIM coverage and have the trial judge mold the verdict in accordance with the liability coverage and the UM/UIM coverage, Bricklin said.
The latter course raises the issue of whether the UM/UIM carrier should also participate in the defense and the ethics of a UM/UIM carrier's counsel standing before the jury and indicating that they are representing the tortfeasor, even though they are representing the UM/UIM carrier whose existence is cloaked from the jury, Bricklin said.
The other problem of consolidating the claims is that plaintiffs lawyers might be able to do discovery regarding insurance adjusters' evaluations of cases, Bricklin said. There has not yet been an instance of an adjuster, sitting in the witness box, being asked what his or her view of the case is, he said.
But that is another issue that has to be tested in the post-Koken era, Bricklin said.
Amaris Elliott-Engel is a reporter for The Legal. She can be contacted at 215-557-2354 or [email protected]. Follow her on Twitter: @AmarisTLI.
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