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Haugh v. Allstate Insurance Co.

February 28, 2003

DENNIS HAUGH APPELLANT
v.
ALLSTATE INSURANCE COMPANY



On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civ. No. 99-cv-01731) District Judge: Honorable Gary L. Lancaster Argued December 17, 2002

Before: Sloviter, Rendell, and Greenberg, Circuit Judges

The opinion of the court was delivered by: Greenberg, Circuit Judge

PRECEDENTIAL

OPINION OF THE COURT

This matter comes on before this court on an appeal from an order of the district court entered October 22, 2001, granting summary judgment in favor of Allstate Insurance Company in this insurance policy bad faith action predicated on Allstate's failure to settle a claim asserted by appellant Dennis Haugh against its insured, Theodore Uher. The district court held that the statute of limitations barred Haugh's statutory bad faith claim against Allstate and rejected his argument that as Uher's assignee he can assert a separate common law cause of action for breach of Allstate's duty to act in good faith toward Uher. For the reasons set forth herein we disagree with the district court as we cannot say at this time that the action is time barred and we conclude that Haugh adequately has pled a viable common law action. Accordingly, we will reverse the order of October 22, 2001, and remand the case to the district court for further proceedings.

I. BACKGROUND

A. FACTUAL AND PROCEDURAL HISTORY

On September 7, 1993, in McKeesport, Pennsylvania, Uher struck and severely injured Haugh with his automobile. Uher reported the accident to his insurance carrier, Allstate, which assigned Veronica Clarke, an Allstate claims adjuster, to investigate the accident. Based on a visit to and photographs of the accident scene, observation of the damage to Uher's motor vehicle, Uher's and an eyewitness's accounts of the accident, and a police report Clarke determined that Uher was not liable to Haugh.

Following this investigation when Haugh's counsel, Victor Pribanic, contacted Clarke to discuss Haugh's claim Clarke informed him that Allstate had decided to deny the claim based on its determination that Uher was not liable for the accident. Pribanic, however, informed Clarke during the conversation that there were several witnesses who would state that Uher was speeding and had crossed the center line of the roadway where he hit Haugh. In what ultimately proved to be a critical step in his representation of Haugh, Pribanic later wrote Clarke a letter dated March 2, 1994, indicating that his client would be willing to settle his claim on the basis of Allstate paying Uher's policy limit which in fact was $15,000 for a single injured claimant. The letter stated that the offer to settle for the policy limits would be revoked automatically in 30 days if not accepted. Allstate did not advise Uher of this settlement offer and on March 23, 1994, Clarke, without Uher's knowledge, sent Pribanic a letter reiterating Allstate's position that Uher was not liable for the accident. Thereafter by letter dated May 16, 1994, Pribanic informed Clarke that the offer to settle for the policy limits was withdrawn.

Inasmuch as the matter had not been settled, Haugh filed suit against Uher on July 14, 1994, in the Court of Common Pleas of Allegheny County, Pennsylvania, seeking to recover damages for his injuries. Thereafter, Joseph Toth, an Allstate insurance adjuster assigned to handle the claim in litigation, informed Uher in writing that Allstate had hired an attorney to represent him in the suit, the insurance policy limits of $15,000 might be inadequate for the amount claimed as damages, a verdict that exceeded the policy limits would result in personal liability, and he had the right to retain his own counsel. The letter, however, did not advise Uher that Allstate had declined to settle the case for $15,000 before Haugh filed his action. On September 13, 1995, Allstate reversed its position regarding settlement as it offered to settle the case with Haugh for the $15,000 policy limits. Haugh, however, rejected the offer. Subsequently, Haugh's case came on for a trial at which he obtained a verdict on March 13, 1998, for $740,000. *fn1

The verdict led to negotiations between Haugh and Uher resulting in the execution of an assignment agreement on May 28, 1999, in which Haugh acquired Uher's right to any potential bad faith claims against Allstate in exchange for Haugh's promise to refrain from executing on the judgment against Uher. Haugh, however, did not sign this agreement but rather authorized his sister to sign his name to it and she did so. Insofar as we are aware neither Haugh nor Uher ever has challenged the validity of this agreement by reason of Haugh's sister having signed it or for any other reason.

On October 22, 1999, Haugh, as Uher's assignee, filed a bad faith action against Allstate in the district court pursuant to the Pennsylvania bad faith statute, 42 Pa. Cons. Stat. Ann. S 8371 (West 1998),*fn2 claiming that Allstate exhibited bad faith in failing to settle the claim against Uher for the $15,000 policy limits. Haugh also advanced a separate common law cause of action for breach of Allstate's contractual duty to act in good faith. *fn3 Allstate subsequently moved for and then obtained a summary judgment on October 22, 2001, the district court granting its motion on the grounds that Haugh's claim brought under the Pennsylvania bad faith statute was subject to a two-year statute of limitations and was time barred and that Pennsylvania did not recognize a separate common law bad faith action predicated on Allstate's initial refusal to settle the case. In concluding that the action was time barred, the district court held that the bad faith claim accrued at the latest when Pribanic informed Clarke by his May 16, 1994 letter that he was withdrawing the offer to settle for $15,000. Haugh timely filed a notice of appeal on November 19, 2001.

B. JURISDICTION

We have jurisdiction over this matter pursuant to 28 U.S.C. S 1291. The district court had subject matter jurisdiction over this diversity of citizenship case pursuant to 28 U.S.C. S 1332.

II. DISCUSSION

A. STANDARD OF REVIEW

Our review of the district court's grant of a motion for summary judgment is plenary and we apply the same standard employed by the district court under Fed. R. Civ. P. 56(c). See Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 87-88 (3d Cir. 2000). Accordingly, we will affirm the district court's grant of summary judgment in favor of Allstate if it appears that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In reviewing the record, we are required to view the inferences to be drawn from the underlying facts in the light most favorable to Haugh, as the party opposing the motion, and to take his allegations as ...


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