Kubrick v. Allstate Insurance

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
1-28-2005
Kubrick v. Allstate Ins Co
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-1314
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Recommended Citation
"Kubrick v. Allstate Ins Co" (2005). 2005 Decisions. Paper 1549.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/1549
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 04-1314
____________
JOAN KUBRICK, ADMINISTRATRIX OF THE
ESTATE OF TIMOTHY KUBRICK, DECEASED;
WILLIAM A. KUBRICK,
Appellants
v.
ALLSTATE INSURANCE COMPANY
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 01-cv-06541)
District Judge: Honorable Cynthia M. Rufe
____________
Submitted Under Third Circuit LAR 34.1(a)
January 27, 2005
Before: SCIRICA, Chief Judge, RENDELL and FISHER, Circuit Judges.
(Filed January 28, 2005 )
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OPINION OF THE COURT
____________
FISHER, Circuit Judge.
Appellants Joan Kubrick, as Administratrix of the estate of her deceased son
Timothy, and her husband, William Kubrick (plaintiffs below), appeal from the grant of
summary judgment in favor of defendant Allstate Insurance Company (“Allstate”) in this
bad faith insurance action under Pennsylvania law. We will affirm.
I. Standard of Review and Governing Law
This Court exercises plenary review of a district court’s grant of summary
judgment, and applies the same standard as the district court below – i.e., summary
judgment is proper where no genuine issue of material fact exists, and where, viewing the
facts in the light most favorable to the party against whom summary judgment was
entered, the moving party is entitled to judgment as a matter of law. Marino v. Industrial
Crating Co., 358 F.3d 241, 247 (3d Cir. 2004). Pennsylvania law applies in this diversity
action.
To make out a bad faith claim under Pennsylvania’s bad faith insurance statute, 42
Pa.C.S.§ 8371, a plaintiff must show by clear and convincing evidence that the insurer
(1) did not have a reasonable basis for denying benefits under the policy; and (2) knew or
recklessly disregarded its lack of reasonable basis in denying the claim. W.V. Realty Inc.
v. Northern Ins. Co. of New York, 334 F.3d 306, 312 (3d Cir. 2003). See also id. at 311
(“bad faith” is not defined in the statute but has been identified by the courts of
Pennsylvania as a “‘frivolous or unfounded refusal to pay proceeds of a policy.’”)
(quoting Terletsky v. Prudential Prop. and Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super.
1994) (internal quotation omitted)). The “clear and convincing” standard requires
evidence of bad faith “‘so clear, direct, weighty and convincing’ so as to enable the
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[factfinder] to make its decision with ‘a clear conviction.’” Polselli v. Nationwide Mut.
Fire Ins. Co., 23 F.3d 474, 752 (3d Cir. 1994) (quoting, inter alia, In re Estate of Fickert,
337 A.2d 592, 594 (Pa. 1975)).
II. Discussion
The factual background of this action, which is lengthy and complicated, was
thoroughly discussed by the District Court and is known to the parties. Accordingly, we
will focus in this opinion on the rationale for our decision.
Appellants point to three courses of conduct by Allstate, whether considered
separately or as a whole, from which a reasonable juror could conclude that Allstate
engaged in bad faith in its handling of the estate’s claim for underinsured motorists’
coverage (UIM) under M r. Kubrick’s policy: (1) the ten year lapse between Allstate’s
initial search of its files in 1989 for Mr. Kubrick’s “sign-down waiver” and its eventual
concession in 1999 that the document could not be located1 ; (2) the lengthy time lapse
between Appellants’ claim for UIM coverage in 1989 and Allstate’s investigation,
undertaken in 1997-1999, into the key factual coverage issues of whether the deceased
resided with his father so as to trigger coverage under Mr. Kubrick’s policy and whether
1
Pennsylvania law requires that bodily injury and UIM limits under a policy be
equal unless the named insured submits a written request for lower UIM limits. See 75
Pa.C.S.A §§ 1731, 1734. Mr. Kubrick’s policy provided for bodily injury limits of
$300,000 (stacked on three vehicles for a total of $900,000); certain policy declarations
suggested he had executed a “sign-down waiver” accepting UIM limits of $15,000 (for a
stacked total of $45,000). Allstate’s failure to produce the “sign-down waiver” mandated
that it recognize a UIM limit of $900,000, which it did in eventually settling the claim.
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the deceased was driving at the time of the accident; and (3) when Allstate should have
conducted its factual investigation into residency and the identity of the driver, which is
an inquiry tied in this case to an alleged intervening change in Pennsylvania law regarding
exhaustion of primary coverage before the claim for UIM against Allstate was ripe. Our
independent review convinces us that Appellants did indeed fail to meet their heightened
burden and that no reasonable juror could find that Allstate acted in bad faith on the
existing summary judgment record.
The delay between assertion of the claim and its eventual settlement was
extraordinarily lengthy, but must be viewed in light of the various and unique junctures
that arose during the handling of this claim. Allstate’s conduct with regard to the missing
sign-down waiver, while perhaps not optimal in certain respects, must be viewed in light
of the fact that Allstate reasonably believed in 1989, based on the then-existing state of
Pennsylvania law, that Appellants’ UIM claim was not ripe and indeed may never have
ripened based on the litigation then pending, of which Allstate was aware, involving the
primary and excess coverage available under other (non-Allstate) policies implicated by
this accident. Allstate cannot be faulted for closing its file at that time without pursuing
factual investigation into the residency and driver issues. Allstate’s subsequent conduct
in conducting the factual investigation cannot reasonably be faulted because the residency
and driver issues represented potentially complete defenses to coverage, which Allstate
was unquestionably entitled to pursue. As to the contention that Allstate should have
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begun its investigation into these factual issues in either 1989 when the claim was filed,
or 1995 when Pennsylvania law allegedly changed, we believe that no reasonable juror
could find that Allstate acted unreasonably in closing the file in 1989, and not reopening
its factual investigation before Appellants renewed their claim in November 1997.2 As to
any delay that ensued after the factual investigation was begun, the record indisputably
reveals that such was attributable to both Allstate and Appellants, and thus, should not
form the basis for a bad faith finding against Allstate. In addition, Appellants have failed
to identify any dispute of material fact that would preclude summary judgment for
Allstate.
Accordingly, we will affirm the entry of summary judgment for Allstate.
2
It is unfortunate for both parties that the factual investigation into residency and
the identity of the driver occurred so long after the accident. We are not unsympathetic to
Appellants’ concern that the trail of evidence was cold by the time Allstate undertook its
investigation some twelve years after the accident. However, this situation was not
created by Allstate alone, but in conjunction with the unique series of events that occurred
in the handling of this claim, including the fact that Appellants did not assert their claim
for UIM coverage by Allstate until four years after the accident.
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